[中报]云南白药(000538):2023年半年度报告（英文版）
原标题:云南白药:2023年半年度报告（英文版） Interim Report 2023 August 2023 Section I Important Notes, Contents, and Definitions The Board of Directors (the “Board”), the Supervisory Committee and the directors, supervisors and senior management of the Company confirm the truthfulness, accuracy and completeness of the contents of this Interim Report and there are no misrepresentation, misleading statement or material omission from this Interim Report, and they accept joint and several responsibilities for the truthfulness, accuracy and completeness of the contents herein. Mr. Dong Ming, the person in charge of the Company, Mr. Ma Jia, the accounting officer, and Ms. Xu Jing, the head of accounting firm (accounting supervisor), hereby declare that they warrant the truthfulness, accuracy, and completeness of the financial statements in this Interim Report. All directors of the Company attended the Board meeting in respect of considering and approving this Interim Report. The information publicly disclosed by the Company on the Securities Times, Shanghai Securities News, China Securities Journal, and http://www.cninfo.com.cn shall prevail. Forward-looking statements included in this Interim Report, including future plans, do not constitute a substantive commitment to investors by the Company. Investors are advised to pay attention to investment risks. The Company kindly requests investors to read through this report and pay special attention to “X. Risks and Countermeasures” in the “Section III Management Discussion and Analysis.” Investors are advised to pay attention to investment risks. During the reporting period, the Company has no plan to distribute cash dividends and bonus shares or convert capital reserves into share capital. This report has been prepared in Chinese and translated into English. Should there be any discrepancies or misunderstandings between the two versions, the Chinese version shall prevail. Contents Section I Important Notes, Contents, and Definitions ............................................. 2 Section II Company Profile and Key Financial Indicators ..................................... 6 Section III Management Discussion and Analysis.................................................... 9 Section IV Corporate Governance ........................................................................... 40 Section V Environmental and Social Responsibilities ........................................... 45 Section VI Significant Events ................................................................................... 52 Section VII Changes in Shareholdings and Particulars about Shareholders ...... 82 Section VIII Preference Shares ................................................................................ 88 Section IX Bonds ....................................................................................................... 89 Section X Financial Statements ................................................................................ 90 Documents Available for Inspection (I) Financial statements affixed with the signatures and stamps of the person in charge of the Company, the accounting officer, the general manager of accounting center; (II) Originals of all the Company’s documents and announcements publicly disclosed on the Securities Times, Shanghai Securities News, China Securities Journal, and http://www.cninfo.com.cn during the reporting period; (III) Other related materials. Definitions
Section II Company Profile and Key Financial Indicators I. Company Profile
1. Contact information of the Company Whether the Company’s registered address, office address, postal code, website, and e-mail address have changed during the reporting period □ Applicable ? Not applicable There was no change in the Company’s registered address, office address, postal code, website, or e-mail address during the reporting period. For more information, please refer to the 2022 Annual Report. 2. Information disclosure and location Whether the information disclosure and location have changed during the reporting period □ Applicable ? Not applicable There was no change in the stock exchange website, media outlets, and their websites where the Company disclosed the Interim Report, or the location where the Interim Report was prepared and placed during the reporting period. For more information, please refer to the 2022 Annual Report. 3. Other information Whether other information has changed during the reporting period IV. Key Accounting Data and Financial Indicators Whether the Company needed retroactive adjustment or restatement of accounting data in prior years or not ?Yes ?No
1. Differences in the net profits and net assets in financial statements disclosed respectively under International Financial Reporting Standards (IFRS) and CAS □ Applicable ? Not applicable During the reporting period, there was no difference in net profits and net assets in financial statements disclosed respectively under IFRS and CAS. 2. Differences in the net profits and net assets in financial statements disclosed respectively under overseas accounting standards and CAS □ Applicable ? Not applicable During the reporting period, there was no difference in the net profits and net assets in financial statements disclosed respectively under overseas accounting standards and CAS. 3. Explanations of the causes to differences in accounting data under CAS and overseas accounting standards □ Applicable ? Not applicable VI. Non-recurring Profits and Losses ? Applicable □ Not applicable
There were no other profits and losses of the Company satisfying the definition of non-recurring profits and losses. Note for the definition of non-recurring profits and losses set out in the No. 1 Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public — Non-recurring Profits and Losses, as recurring profits and losses. □ Applicable ? Not applicable The Company did not define any non-recurring profits and losses set out in the No. 1 Explanatory Announcement on Information Disclosure for Companies Offering Their Securities to the Public — Non-recurring Profits and Losses as recurring profits and losses. Section III Management Discussion and Analysis I. Principal Businesses of the Company during the Reporting Period (I) Overview 1. Industry landscape and development trends The report of the 20th National Congress of the Communist Party of China outlined specific requirements for advancing healthcare system reforms and fostering the integrated development and management of medical insurance, healthcare, and pharmaceuticals. This underscores the ongoing trend of centralized, volume-based procurement and the continued evolution of medical insurance payment methods. Given China’s increasingly aging population, rising health consciousness, growing social healthcare needs, technological innovation, and the continued transformation of the medical sector, the industry has witnessed a swift unleashing of its potential. Furthermore, the pharmaceutical sector has exhibited a positive rebound, buoyed by economic marginal improvement and heightened expectations stemming from certain policies in the new era. China places great emphasis on the development of the traditional Chinese medicine (TCM) industry. Consequently, the TCM sector consistently enjoys the advantages of various national policies, such as the 14th Five-Year Plan for Traditional Chinese Medicine Development and Special Provisions on the Administration of Traditional Chinese Medicine Registration. These policies have opened up new avenues for growth within the TCM sector. In the field of over-the-counter (OTC) TCM, with intensified competition in primary sales channels, branding has emerged as a “barrier” in the retail terminal competition. In the context of a growing industry concentration, the significance of brand value is increasingly pronounced. Top TCM brands in the OTC sector are poised for a trajectory of high-quality development. China strongly supports the preservation and innovation within the prescribed TCM field. The existing centralized procurement system for Chinese patent medicines, adjustments to the basic medicine catalog, and various other measures are advantageous for the inclusion and promotion of TCMs in hospitals, which, in turn, will contribute to enhancing their market shares. Furthermore, as China’s TCM review and approval system continues to evolve and mature, innovative TCMs find themselves in a favorable position for development. During the first half of 2023, the consumer product industry experienced a growth slowdown, as consumer purchases gradually increased with a more rational approach. As consumer product channels are transitioning towards “location-based” and “digital” marketing strategies, e-commerce channels have consistently dominated continuous decline in their market share. The offline consumer product market has shown a slower-than-anticipated recovery. In response, enterprises need to empower their channels and retail terminals with more refined management, gain deeper insights into consumer behavior, and enhance cost competitiveness on the supply side to maintain a competitive edge in this fiercely competitive landscape. 2. Industry position Yunnan Baiyao has consistently focused on integrating TCM into modern life and infusing traditional brands and TCM products with renewed vitality. In the pharmaceutical products domain, the Company’s roots lie in Yunnan Baiyao powder with a century-long legacy. Through persistent exploration and innovation, Yunnan Baiyao has progressively developed a series of core pharmaceutical products encompassing diverse forms like aerosol, plaster, tincture, and woundplast. In the realm of health products, the Company has successfully merged traditional Yunnan Baiyao products with oral care items and created a group of oral care products, notably exemplified by Yunnan Baiyao toothpaste. This achievement stands as a prominent case for TCM enterprises venturing into cross-border innovation and reshaping consumer preferences. Leveraging its successful development strategies in pharmaceutical and health product sectors, the Company has expanded its business footprint into various domains, including natural medicine, TCM decoction pieces, special medicines, medical devices, health and daily chemical products, and healthcare food. This move enables the Company’s evolution from a TCM manufacturing enterprise to a modern, Big Health-oriented entity. In the pharmaceutical distribution segment, the Company has deeply entrenched itself in the Yunnan market, forging robust partnerships with both upstream and downstream customers. Through years of growth, Yunnan Baiyao has established an extensive and multifaceted sales network throughout Yunnan Province, establishing a supply chain service platform for the distribution of pharmaceuticals, medical devices, and related products. This ranks it as the leading pharmaceutical distribution enterprise in Yunnan Province. In July, Brand Finance, a globally recognized brand valuation company, released the Healthcare 2023 - The Annual Report on Ranking of the Most Valuable and Strongest Pharma, Medical Devices and Healthcare Services Brands by Value, in which Yunnan Baiyao was included in the shortlist of the global top 25 most valuable pharmaceutical brands, marking the third time it has earned a place in this list since 2021. In the same month, the Company was included in the shortlist of 2023 Fortune 500 China Listed Companies, marking the 14th consecutive years it has been honored with a place on this list. 3. Product and business Group, Traditional Chinese Medicine (TCM) Resources Business Group and Yunnan Pharmaceutical Co., Ltd (“Yunnan Pharma”) (pharmaceutical distribution). These business groups serve as the foundation for the Company’s production and operations. Pharmaceutical Business Group mainly focuses on Yunnan Baiyao’s key product lines, which include products related to hemostasis, pain relief, swelling reduction, and blood stasis elimination (Yunnan Baiyao Aerosol, Yunnan Baiyao Plaster, Yunnan Baiyao Woundplast, etc). Additionally, the BG extends its offerings to encompass other branded TCMs, catering to various health needs such as tonifying Qi, nourishing blood, and treating conditions like colds, cardiovascular and cerebrovascular diseases, gynecological diseases, and pediatric ailments. Furthermore, the Company is actively involved in the development of botanical supplements and explores scenarios for the home use of medical devices, aiming to identify new avenues for growth. Health Products Business Group, with its core focus on the toothpaste category, relies on its robust brand infrastructure encompassing people, products, and consumer scenarios. Embracing a user-centric approach, the BG actively explores new consumer scenarios and introduces innovative product categories, particularly in the realms of oral care and Yangyuanqing anti-hair loss solutions. Yunnan Baiyao toothpaste is distinguished by its incorporation of active Yunnan Baiyao ingredients, known for their ability to address gum problems, repair mucosal damage, nourish gums, and enhance periodontal health. Furthermore, the Yangyuanqing anti-hair loss lotions feature extracts from various natural sources, including Cacumen biotae, Sophora flavescens roots, Fructus cnidii, Panax notoginseng roots, and more. The product holds an invention patent for hair loss prevention and has received a special cosmetics certificate from the Medical Products Administration, underscoring their effectiveness in preventing hair loss. TCM Resources Business Group capitalizes on Yunnan Province’s unique medicinal plant resources. While ensuring the high-quality, efficient, and cost-effective supply of TCM raw materials across the corporation, it is in a bid to develop both B-end (including Panax notoginseng series, branded medicinal materials, natural plant extracts) and C-end (including TCM decoction pieces and healthcare food) products. Moreover, TCM Resources Business Group is actively involved in the digital transformation, platform-based operations, and integrated management of TCM resource cultivation. This initiative aims to offer customers traceable TCM raw materials that boast cost advantages and consistent high quality. The Company is committed to delivering personalized services and solutions tailored to individual customer needs under the guiding principle of “One Enterprise, One Strategy” in order to establish branded medicinal materials. pharmaceutical distribution companies in Yunnan Province. Its product portfolio now extends to encompass all major retail chain pharmacies in 16 cities within Yunnan Province. Yunnan Pharma actively collaborates with the government and medical institutions to enhance management and service systems, offering high-quality modern pharmaceutical supply chain service solutions to both upstream and downstream customers. 4. Overview of business data During the first half of 2023, the Company proactively adapted to evolving external conditions. It adhered to the core principle of balancing progress with stability, maintaining its commitment to both horizontal and vertical expansion within its existing business sectors. Additionally, the Company vigorously explored new avenues for business growth, enhancing its overall enterprise value. During the reporting period, the Company achieved an operating revenue of RMB 20.309 billion, up 12.73% YoY; a net profit attributable to shareholders of the listed company of RMB 2.828 billion, up 88.47% YoY; a profit and tax of RMB 4.509 billion, up 63.95% YoY; a net cash flow from operating activities of RMB 2.252 billion, up 91.18% YoY; a weighted average return on equity of 7.17%, up 3.28 percentage points YoY; basic earnings per share of RMB 1.58, up 43.64% YoY and an inventory turnover of 92 days, 27 days shorter than the same period of the previous year. At the end of the reporting period, the Company had a net asset attributable to shareholders of the listed company of RMB 38.598 billion, up 0.24% compared to that at the beginning of the year, a balance of RMB 1.541 billion in financial assets held for trading, down 36.21% compared to that at the beginning of the year, and a cash and bank balance of RMB 12.546 billion. (II) Review of key achievements in the first half of the year 1. The four business groups (BGs) constantly consolidated their leading position in market segments by steadily increasing their market share (1) Pharmaceutical Business Group In the first half of 2023, Pharmaceutical Business Group achieved remarkable results driven by its strengthened business focus, improved operational efficiency, and performance growth. The revenue from principal businesses reached RMB 3.852 billion, marking an increase of 14.63% compared to the same period of the previous year. Within this success, the core series of Yunnan Baiyao products maintained steady growth, and other branded TCMs saw a significant surge in sales volume. Among the core series of Yunnan Baiyao products, Yunnan Baiyao Aerosol contributed over RMB 900 million in operating revenue, marking a 18.20% YoY growth. Yunnan Baiyao Plaster and Yunnan Baiyao Capsule also displayed continuous growth in revenue. both the commercial and OTC sectors through mid-platform outputs and product-driven approaches. Notably, the Pudilan Anti-inflammatory Tablet, used for treating colds, recorded an operating revenue exceeding RMB 100 million, an 80% YoY increase. Shang Feng Ting Capsule witnessed a 27% YoY increase in operating revenue, and Huoxiang Zhengqi Oral Liquid, a Chinese patent medicine for relieving heat and dampness, experienced a surge in operating revenue of over 260% YoY, ranking among the Company’s top ten products for the first half of the year. Furthermore, Qixuekang Oral Liquid, a botanical supplement, gained increasing recognition in the market and achieved a revenue increase of nearly 18% YoY. During the reporting period, Pharmaceutical Business Group executed more than 30,000 promotional initiatives of “One Province, One Strategy,” primarily centered around the two major IPs of “health exercises” and “botanical supplement.” These efforts were aimed at boosting drug sales volume growth and engaging potential customers. By implementing traceability and control measures via channels and employing different tactics under the same strategies for core products, the BG achieved consistent increases in sales volume for branded TCMs. Furthermore, significant headway was made in key projects for academic promotion. The BG actively sought hospital collaboration for Gongxuening Capsule, a key variety. It completed the collection, inspection, and data clearing for 484 cases in relevant cooperative hospitals. Additionally, data collection and statistical analysis were conducted on 144 cases related to Yunnan Baiyao Capsule, as part of the National Trauma Medical Center project, with a report of knot provided. Moreover, the study on Qixuekang Oral Liquid for improving various symptoms in patients, such as Qi deficiency and blood stasis, was completed. (2) Health Products Business Group In the first half of 2023, Health Products Business Group achieved a revenue from principal businesses of RMB 3.245 billion, representing a YoY increase of 0.81%. This period also saw multiple breakthroughs in the oral care and anti-hair loss care sectors. In the oral care sector, Yunnan Baiyao toothpaste continued to outpace industry growth, recording a market share of 25% (source: Nielsen Retail Research Data YTD2306) and retaining its top-ranking position in the industry. In the anti-hair loss care sector, Yangyuanqing care products experienced a substantial operating revenue increase of 90% YoY during the reporting period. The 618 Shopping Festival witnessed continuous growth in the anti-hair loss care market, and Yangyuanqing reached record-high online sales volume. The interest-based e-commerce sector contributed up to 80% of the growth, ranking No.1 among domestic anti-hair loss shampoo brands on Tmall platform (source: Shangzhizhen). During the reporting period, the oral care sector seized opportunities to enhance brand visibility both Action - for Higher Care Ability and Oral Health” were conducted in 129 cities. In April, the Jinkoujian Yugan Rainbow Toothbrush was launched and, by the end of the reporting period, it had been sold in over 40,000 stores, claiming the top spot in the list of TikTok-branded toothbrushes. Additionally, the BG’s health products saw an increase in online channel revenue proportion to 16%. During the 618 Shopping Festival, Yunnan Baiyao continued to lead the oral care sector across its online channels, widening the gap with competitors and achieving double-digit growth against the industry trend (source: Shangzhizhen). In the anti-hair loss care sector, the Company concentrated on reinforcing brand terminal construction and boosting sales volume through joint promotion. About 20,000 core retail outlets extensively utilized various sales aids to increase product exposure at the terminal level, and the brand emphasized its proposition of “Cleansing and nurturing, patented product for anti-hair loss.” (3) TCM Resources Business Group In the first half of 2023, TCM Resources Business Group continued its efforts to reduce costs and enhance efficiency, despite challenges such as rising prices of certain raw materials. As a result, the BG achieved an operating revenue from external sales of approximately RMB 879 million, marking a YoY increase of about 21%, while maintaining a focus on ensuring a high-quality, efficient, and cost-effective internal supply of TCM raw materials for the Company. Notably, the key strategic variety, Panax notoginseng, experienced a 30% increase in operating revenue from external sales. During the reporting period, the Company remained committed to promoting branded TCM projects, expanding the range of fresh-processed varieties, and consistently deepening its involvement in the Panax notoginseng industry platform, maintaining its leadership in the Panax notoginseng segment. In the natural plant extraction business, despite falling prices and demand in the natural flavors and spices market, the essence and spice team defied the trend by driving eucalyptus oil to capture an even higher market share. Regarding pharmaceutical services, the Company established Xingzhong Digital Intelligence TCM Service Co., Ltd of Yunnan Baiyao Group as the primary entity for its pharmaceutical services, which was dedicated to creating a comprehensive integrated and digitally-driven pharmaceutical service system that combines TCM service models with modern information technology. Furthermore, the Company achieved new progress in the health products sector, obtaining filing certificates for healthcare foods like Yangzhisu B vitamin tablets, and Healthy Kids B vitamin tablets during this reporting period. (4) Yunnan Pharmaceutical Co., Ltd (Pharmaceutical Distribution) In the first half of 2023, Yunnan Pharma achieved a revenue from principal businesses of RMB 12.364 billion, marking a YoY increase of 13.6%. Despite uncertainties posed by the external environment, Yunnan Pharma pursued new product delivery authorizations from suppliers, strategically integrated channel resources, and collaborated with its subsidiaries with continued efforts to promote and strengthen regional platform construction, leading to a significant revenue growth. Yunnan Pharma’s logistics business continued to maintain its regional advantages and led, in terms of market share, in serving public hospitals at the county level and above in Yunnan Province. During the reporting period, Yunnan Pharma intensified its customer service system, and promoted customer service upgrades by continuously enhancing delivery efficiency and implementing a multi-warehouse operation system. These improvements led to a 35.2% YoY decrease in the logistics order-to-dispatch time in Yunnan Province. In terms of accounts receivable management, Yunnan Pharma adopted stringent credit control measures, including credit sales limits and active customer tracking. Yunnan Pharma utilized electronic reconciliation tools to enhance reconciliation efficiency, reinforced monthly budgeting for collections, and ensured that accounts receivable risks remained manageable. The June-ending inventory of Yunnan Pharma reduced by approximately 12% compared to the beginning of the year. This achievement was made possible through strengthened collaboration in overall supply chain management, continuous improvement in inventory management practices, and dynamic digital inventory management achieved through a combination with refined variety management. To foster business development, Yunnan Pharma independently developed “Dianyibao,” a refined management platform for medical consumables, during the reporting period. This platform is designed as an information management system for the procurement, supply, and circulation of medical consumables, with the national medical insurance code and consumables UDI code as core components. Additionally, Yunnan Pharma continued to advance a modern supply chain system for pharmaceutical distribution characterized by electronic, networked, visual, agile, and intelligent features, showcasing a profound integration of digital technology with business scenarios. 2. Comprehensive promotion efforts to establish a more profound presence across emerging business units (BUs) The Company, following its established development strategies, primarily focuses on developing new business units (BUs). These BUs include the Smart Oral Care Business Unit, Precision Aesthetic Medicine Business Unit, and Zhiyun Health Business Unit. The Company is committed to exploring precisely customized performance growth driver for the Company. Additionally, the Smart Technology Business Unit has officially commenced operations, providing support for the Company’s digital and intelligent strategies. Smart Oral Care BU concentrates on the specialized care market. At the forefront, it utilizes dental science-based specialized brands under the “ToothTalk” name to provide a comprehensive range of oral care products, including intelligent electric toothbrushes, oral irrigators, personalized brush heads, mouthwashes, gels, and oral sprays. At the backend, ToothTalk effectively connects C-end users through the “iKanya” mini program, an oral consultation service platform featuring private-domain traffic operations. Precision Aesthetic Medicine BU establishes a strong presence in offline flagship stores for aesthetic medicine, aiming to cover the entire aesthetic medicine industry chain. Shanghai Yunzhenni Medical Beauty Clinic and Chenggong Comprehensive Clinic of Kunming Yunzhen Medical Technology Co., Ltd have officially been put into operation. Combining online with modern medicine, these clinics provide customers with efficient and convenient integrated skincare solutions throughout their entire life cycle. Furthermore, the BU actively explores opportunities in upstream segments of the industry, focusing on the development of new materials and products to become a comprehensive solution provider with R&D capabilities in the field of aesthetic medicine. Zhiyun Health BU is dedicated to creating a commercial operation platform for functional food and scientific nutrition products. In the field of nourishing products, it innovates and iterates products based on existing products and TCM materials that resonate with the public. This strategy has led to the creation of “a new Chinese nourishing product category made from herbs,” including the “Zibu” tonifying category and “Baixiaoyang” nourishing category. In the first half of the year, both nourishing and functional foods experienced significant increases in sales volume. The concentrated decoctions, a sub-category under the nourishing category, demonstrated outstanding performance and a positive growth trend. In terms of channel operation, building upon the foundation of traditional channel layouts such as “Baiyao Lifestyle+” self-operated stores, the BU has optimized its omnichannel marketing strategy, with a strong focus on e-commerce. It has established a comprehensive store matrix in both shelf e-commerce and content e-commerce, with 23 online stores launched. In August 2023, the Company’s Smart Technology BU officially commenced operations. It is committed to building a global digital platform for Yunnan Baiyao. This BU aligns with the Company’s strategic development direction, focusing on further improving the Company’s digital and intelligent capabilities. It has capitalized on industrial ecosystems through intelligent digital operations and deep digital applications, and creating a digital comprehensive solution to enhance operational efficiency and drive business innovation. The Smart Technology BU comprises five Service Units (B2C SU, B2B SU, Base Support SU, System Construction SU, and Digital Intelligence Applications SU), which, in collaboration with multiple supportive departments and specialist committees, promote the Company’s digital information technology construction needs and achieve its digital strategic goals. 3. Industry-university collaboration to explore fresh concepts in pharmaceutical innovation and development The report of the 20th National Congress of the Communist Party of China emphasized the need to strengthen enterprise-led IUR (Industry-University-Research) collaboration, enhancing goal-oriented efforts and elevating the level of transformation and industrialization of scientific and technological achievements. In recent years, Yunnan Baiyao has partnered with the Peking University Health Science Center to drive continuous innovations in the fields of medicine and healthcare. This collaboration has spanned multiple domains and has yielded significant advancements. The establishment of the Peking University-Yunnan Baiyao International Medical Research Center (PKU-YBIMRC) serves as a crucial bridge and platform for promoting industry-university collaborative research and fostering innovation. It plays a pivotal role in bridging the gap between academic and industrial innovation chains. The “2023 Pharmaceutical Innovation and Technology Frontier Forum” was successfully held at Yunnan Baiyao Group’s Kunming head office from August 8 to 9, 2023. This forum attracted six academicians and brought together over 700 experts and scholars from universities, research institutes, and enterprises. The event provided a platform for discussions and exchanges on cutting-edge medical concepts, technological innovations, and service experiences. It showcased the latest achievements in medical technology development both domestically and internationally and facilitated collaborative efforts aimed at driving medical innovation and development. 4. Strategic cooperation and coordinated development are achieved through equity partnerships During the reporting period, the Company actively advanced their strategic cooperation with Shanghai Pharmaceuticals Holding Co., Ltd (hereinafter referred to as “Shanghai Pharma”) in multiple areas for participating in the corporate governance and operation of the latter, based on its equity partnerships with Shanghai Pharma. First, joint procurement of TCM materials. The “Yuntianshang” TCM Industry Alliance, jointly established with Tianjin Pharmaceutical Holdings Co., Ltd (hereinafter referred to as “Tianjin Pharma”), procurement of more varieties. Second, promotion of OTC variety business cooperation, which is underway. Third, collaboration in innovation and R&D services. Fourth, commercial business cooperation aimed at enhancing supply chain value via further cooperation in products, resources, and channels between both parties. Furthermore, the General Meeting of Shanghai Pharma on June 29 officially elected Mr. Chen Fashu, a director of the Company, as a non-executive director of its eighth Board of Directors, Mr. Dong Ming, a director and CEO of the Company, as an executive director of its eighth Board of Directors, and Mr. Ma Jia, the CFO of the Company, as a supervisor of its eighth Supervisory Committee. The Company’s participation in Shanghai Pharma’s corporate governance promotes the integration of their advantageous resources and coordinated development. 5. High-caliber talents are brought in across various fields, establishing an innovative talent system Talent and innovation capabilities are at the core of competition among modern biopharmaceutical technology enterprises. Yunnan Baiyao’s sustainable development in the new era hinges on the establishment of robust independent R&D and global resource integration capabilities, driven by continuous investment in innovation and complemented by an exceptional talent pool. Regarding management talents, in March, the Company appointed Mr. Zhao Yingming as the Group’s Chief Business Officer and Senior Vice President. He is tasked with leading the development of the Oral Care, Precision Aesthetic Medicine, and Zhiyun Health BUs. Mr. Zhao Yingming’s vast 30-year management experience in the consumer goods and retail sector, coupled with his professional proficiency in both traditional retail and new retail, will effectively enable the Company to expand its new business areas. In August, the Company appointed Mr. Li Shaochun as the Company’s Digital Strategy Scientist and the General Manager of Smart Technology BU. As a former General Manager of the Medical and Life Science Industry at IBM Greater China, he possesses extensive practical experience in medical digitization and Big Health. His expertise will drive innovation and digital development at Yunnan Baiyao. Regarding R&D talents, the PKU-YBIMRC serves as a platform for multidimensional talent exploration, absorption, and recruitment. To date, the Center has attracted 8 senior researchers, 2 new system researchers, and a team of young and middle-aged experts. Simultaneously, the Central Research Institute, positioned at the apex of the Company’s innovative R&D system, has enhanced the Company’s organizational system, platform development, institutional growth, and project execution. It efficiently employs its central coordination function to integrate and align Yunnan Baiyao’s cross-regional R&D resources, efficiently promoting the R&D processes with scientific rigor. 6. R&D investments have been increased consistently to build a scientific and efficient R&D platform The Company continues its commitment to increasing R&D investments. During the reporting period, the Company invested RMB 145 million in R&D, representing a 12.59% YoY increase. In terms of building its R&D capabilities, the Company has established an R&D Management Committee to oversee the entire R&D system. Its R&D strategy is rooted in preserving the essence of Yunnan TCM, facilitating product enhancements, expanding its presence in innovative drugs, utilizing AI for drug design, and carrying out unified and efficient management of resources. The Company has also implemented a scientifically clear and diversified system for （未完）  |