The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Huadong Medicine Co., Ltd.
Half Year Report 2020
August 2020
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Section I. Important Declaration, Contents and Definitions
The Board of Directors, Board of Supervisors, directors, supervisors and senior
management of Huadong Medicine Co., Ltd. (hereinafter referred to as the
“Company”) hereby guarantee that the information presented in this half year
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.
Liang Lyu, the Company’s legal representative and the officer in charge of
accounting, and Renbo Qiu, head of accounting department (accounting
supervisor) hereby declare and guarantee that the financial statements in this
half year report are authentic, accurate and complete.
All directors have attended the Board of Directors meeting to review this half
year report.
The future plans, development strategies and other prospective statements in
this half year report shall not be considered as substantial commitment of the
Company to investors. Therefore, investors are kindly reminded to pay attention
to possible investment risks.
The company does not plan to distribute cash dividends, no bonus share will be
issued; and no capital reserve will be converted to increase the share capital.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
According to , if listed
companies have Chinese or other language versions of public notice, they should
ensure the content of versions are the same. In case of discrepancy, the original
Chinese version prevails.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Contents
Section I. Important Declaration, Contents and Definitions ................................................ 2
Section II. Company Profile and Key Financial Indicators .................................................. 7
Section III. Overview of the Company’s Business............................................................... 11
Section IV. Discussion and Analysis of Operations ............................................................. 17
Section V. Important Matters .............................................................................................. 40
Section VI. Share Change and Shareholders ....................................................................... 45
Section VII. Preferred Shares .............................................................................................. 51
Section VIII. Convertible Corporate Bonds ........................................................................ 52
Section IX. Directors, Supervisors, Senior Managers ....................................................... 53
Section X. Information about Corporate Bonds ................................................................. 54
Section XI.Financial Report ............................................................................................... 55
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Definitions
Term refers to Definition
CSRC refers to China Securities Regulatory Commission
SZSE refers to Shenzhen Stock Exchange
Huadong Medicine/the Company/our Company refers to Huadong Medicine Co., Ltd.
CGE refers to China Grand Enterprises, Inc.
Huadong Medicine Group refers to Hangzhou Huadong Medicine Group Co., Ltd.
Zhongmei Huadong refers to Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd.
Jiangdong Company refers to Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd.
Jiuyang Biopharmaceutical company refers to Jiangsu Jiuyang Biopharmaceutical Co., Ltd.
Xi’an Bohua refers to Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd.
Huadong Ningbo Company refers to Huadong Ningbo Medicine Co., Ltd.
Chongqing Peg-Bio refers to Chongqing Peg-Bio Biopharm Co., Ltd.
Qyuns Therapeutics refers to Qyuns Therapeutics Co., Ltd
Sinclair refers to Sinclair Pharma Limited
vTv Company refers to vTv Therapeutics LLC
R2 refers to R2 Technologies,Inc.
MediBeacon refers to MediBeacon Inc.
RAPT refers to RAPT Therapeutics,Inc.
GMP refers to Good Manufacturing Practices
CGMP refers to Current Good Manufacture Practices
GSP refers to Good Supply Practice
BE refers to Bioequivalence
refers to Center for Drug Evaluation (of National Medical Products
CDE
Administration)
MAH refers to Marketing Authorization Holder
FDA refers to (U.S.) Food and Drug Administration
NDA refers to New Drug Application
ANDA refers to (U.S.) Abbreviated New Drug Application
refers to International Council for Harmonisation (of Technical Requirements
ICH
for Pharmaceuticals for Human Use)
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
IND refers to Investigational New Drug
PK/PD refers to pharmacokinetics/pharmacodynamics
CMC refers to Chemistry, Manufacturing and Control
PMA refers to Premarket Application
QA refers to Quality Assurance (department)
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Section II. Company Profile and Key Financial Indicators
I. Company Profile
Stock name (abbreviation) Huadong Medicine Stock code 000963
Changed stock abbreviation(if
any)
Stock listed on Shenzhen Stock Exchange
Company name in Chinese 华东医药股份有限公司
Company name in Chinese
华东医药
(abbreviation)
Company name in English (if
Huadong Medicine Co., Ltd.
any)
Company name in English
Huadong Medicine
(abbreviation, if any)
Legal representative Liang Lyu
II. Contact persons and contact information
Secretary of the Board of Directors Securities affairs representative
Name Bo Chen Lihong Xie
Contact address 866 Moganshan Road, Hangzhou 866 Moganshan Road, Hangzhou
Tel. 0571-89903300 0571-89903300
Fax 0571-89903300 0571-89903300
Email address hz000963@126.com hz000963@126.com
III. Other relevant information
1. Company’s contact information
Whether there is any change in the Company’s registered address, office address, zip code, company website or
company email address during the reporting period.
□Applicable √ N/A
There is no change in the Company’s registered address, office address, zip code, company website or company
email address during the reporting period. Please refer to 2019 Annual Report for details.
2. Information disclosure and place of the report
Whether there is alteration in information disclosure and place of the report during the reporting period.
□ Applicable √ N/A
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
The newspaper designated by the Company for information disclosure, website specified by CSRC for release of the
half-year report, and the place where the half-year report is available for inspection have not changed during the
reporting period, please refer to 2019 Annual Report for details.
IV. Key accounting data and financial indicators
Whether the Company needs to perform a retroactive adjustment or restatement of previous accounting data
□ Yes √ No
Change of the current
The current reporting
Same period last year reporting period over the
period
same period last year(%)
Operating revenue (yuan) 16,660,934,157.64 18,248,667,616.98 -8.70%
Net profit attributable to shareholders of listed
1,731,184,721.25 1,596,283,418.31 8.45%
companies (yuan)
Net profit attributable to shareholders of listed
companies after deducting non-recurring 1,406,723,973.10 1,474,434,387.97 -4.59%
gains/losses (yuan)
Net cash flow from operating activities (yuan) 1,255,542,667.29 963,028,336.86 30.37%
Basic earnings per share (yuan/share) 0.9894 0.9123 8.45%
Diluted earnings per share (yuan/share) 0.9894 0.9123 8.45%
Weighted average return on equity (ROE) 13.12% 14.88% -1.76%
Change of the end of the
End of the current current reporting period
End of last year
reporting period over the end of last
year(%)
Total assets (yuan) 22,502,539,982.08 21,463,974,146.63 4.84%
Net assets attributable to shareholders of listed
13,589,246,070.11 12,309,477,308.00 10.40%
companies (yuan)
Share capital of the Company as of the trading day before disclosure
Share capital of the Company as of the trading day before
1,749,809,548
disclosure (share)
Fully diluted earnings per share calculated on the basis of the latest Share capital
Dividends paid on preferred shares 0.00
Fully diluted earnings per share calculated on the basis of the
0.9894
latest Share capital (yuan/share)
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
V. Differences in accounting data under domestic and overseas accounting standards
1. Differences in net profit and net assets disclosed in financial statements under international and Chinese
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.
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.
VI. Items and amounts of non-recurring gains/losses
√ Applicable □ N/A
Unit: RMB yuan
Item Amount Note
Mainly due to the sale
of the market
distribution rights and
Gains/losses on disposal of non-current
interests in Western
assets (including the written-off part of the 301,040,646.87
Europe of Sinclair, a
accrued assets impairment reserve)
wholly-owned
subsidiary of the
company in the UK.
Mainly due to the
Government grants included in current
confirmation of
gains/losses (excluding those closely related
93,032,855.48 government grants by
to operating activities and measured
subsidiaries in the
according to unified national standards)
current period.
Other non-operating revenue or expenditure
-9,757,738.08
expect above-mentioned items
Less: Amount affected by income tax 46,502,562.11
Amount affected by rights and interests of
13,352,454.01
minority stakeholders (after tax)
Total 324,460,748.15 --
If the Company recognizes an item as a non-recurring gain/loss based on the “Interpretative Announcement No. 1 on Information
Disclosure Criteria for Public Companies – Non-Recurring Profit/Loss” or recognizes an item satisfying the definition of
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
non-recurring gain/loss in the announcement as a recurring gain/loss, reasons should be specified.
□ Applicable √ N/A
No such case during the reporting period.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Section III. Overview of the Company’s Business
I. Main business of the Company during the reporting period
Huadong Medicine Co., Ltd. (stock code: 000963), founded in 1993 and headquartered in
Hangzhou, Zhejiang Province, was listed on Shenzhen Stock Exchange in December 1999. After
more than 20 years of development, the Company’s business covers the whole pharmaceutical
industrial chain. With the medicine industry as its core, the Company expands its medicine business
and aesthetic industry, and has developed into a large comprehensive listed pharmaceutical
company integrating Research and development (R&D), manufacture and sales of medicine.
The pharmaceutical industry of the Company focuses on R&D, production and sales of medication
for specialist departments, chronic diseases and special purposes. The Company has formed core
product pipelines in such fields as chronic kidney diseases, transplantation immunity, internal
secretion and gastrointestinal system, and owns a number of first-line clinical medications with
market advantages in China. Meanwhile, through independent development, external introduction
and project cooperation, the Company focuses on the R&D layout of innovative drugs and generic
drugs with high technical barriers in the three core fields of anti-cancer, internal secretion and
autoimmunity. The Company continues to carry out international product registration, international
certification, consistency evaluation, etc., forming an international pharmaceutical industry system.
The Company’s pharmaceutical commerce has four sections: Western Medicine & Traditional
Chinese Medicine (TCM), medical equipment, ginseng & herb and health industry, covering
medicine wholesale, medicine retail, third-party medicine logistics featured by cold chain, medicine
e-commerce, hospital value-added services and featured big health industry, providing customers
with integrated solutions.
The Company’s aesthetic business focuses on R&D, manufacture and sales of the latest products
and devices in facial micro-plastic surgery and skin management. Sinclair, a wholly-owned
subsidiary headquartered in the United Kingdom, has facilities in France and Netherlands, and
promotes and sells long-acting microspheres for injection、hyaluronic acid,、thread lift and other
products in the global market. Sinclair is the Company’s global operation platform for aesthetic
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
business. Huadong Ningbo Company, a partially-owned subsidiary, is a comprehensive aesthetic
and healthcare platform company integrating R&D, manufacture and sales of aesthetic products and
customized services. It acts as the general agent for Korean YVOIRE hyaluronic acid products in
the Chinese market.
II. Significant changes in major assets
1. Significant changes in major assets
Major assets Note on significant changes
The ending balance is 660.95 million yuan, an increase of 42.36% from the beginning of
Equity assets the period, which is mainly due to the increase of long-term equity investments and other
equity instrument investment in the current period.
Fixed assets None
Intangible assets None
Constructions in progress None
The ending balance is 1,362.25 million yuan, an increase of 107.80% from the beginning
Short-term borrowing of the period, which is mainly due to the increase in bank financing during the current
period to repay mature corporate bonds.
The ending balance is 54.13 million yuan, a decrease of 78.68% compared to the
Contract liabilities beginning of the period, which is mainly due to the decrease in the advance payment for
drugs.
The ending balance is 20.75 million yuan, a decrease of 98.03% from the beginning of
Non-current liabilities due within one
the period, which is mainly due to the maturity and repayment of bonds payable in the
year
current period
2. Major overseas assets
√ Applicable □ N/A
Proportion of Whether
Control
Specific overseas there are any
Reason for Assets size Operating measures to
content of Location Profit or loss assets in the significant
formation mode ensure assets
assets Company’s impairment
safety
net assets risks
Sinclair Control of
Acquisition 1,001.16 Independent
Pharma UK the Board of Profit 7.37% None
of equity million yuan accounting
Limited Directors and
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
examination
& approval
of major
decisions;
daily
supervision
of financial
matters;
entrusting
external
intermediarie
s to conduct
audits
III. Analysis of core competitiveness
1. Open R&D system and continuous improvement of innovation capability
After years of development, the Company has established and improved its independent R&D
system, built a global R&D strategy collaboration ecosystem centered on Zhongmei Huadong,
established a global new drug R&D center, set up joint research offices in Boston and Silicon Valley
in the United States, and cooperated with world-renowned colleges, research institutes, innovative
biotech companies, professional technology platforms and other institutions in new drug R&D
projects. The Company has continuously increased R&D investment, adjusted its existing product
structure in an all-round way, resolutely cleaned up and phased out generic drugs with low barriers
and low commercial value, focused on three core areas of anti-cancer、internal secretion and
autoimmunity, continued to consolidate the company's position as a domestic industry leader in the
fields of diabetes and transplantation immunization drugs, quickly completed the layout of
innovative product pipelines in the core areas, and enabled the Company to effectively supplement
and take the lead in innovative products in the core areas. Independent R&D, external M&A, and
product license-in have rapidly enriched product pipelines in the core areas, forming a good
development trend of continuous proposal and market launch of innovative products, providing new
momentum for medium and long-term growth.
2. Comprehensive capability in international business development
The company is actively pursuing global expansion. Through acquisition of 100% shares in LSE
listed Sinclair, the Company has established a global distribution network for aesthetic products.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Through collaboration with R2 (US), Medibeacon (US) and Kylane (Switzeland), the Company has
added to its portfolio of international commercialisation and development rights. The Company has
accelerated the international registration of products. All its APIs in production have been certified
by FDA or in authoritative markets such as the European Union; its Pantoprazole Sodium
Lyophilized Powder for Injection has been temporarily approved by FDA; and its Acarbose Tablets
gained access to the Austrian market in the European Union. The Company is the first Chinese
medicine enterprise to achieve these results. The Company actively engages itself with international
logistics and purchasing suppliers, realizes the internationalization of purchasing ability, strengthens
international trade cooperation, and achieves positive results in the expansion of international raw
medicine market.
3. Abundant product pipelines for specialist departments and chronic diseases, overall
competitive advantage in the field of diabetes medication
Over the years, the Company has been deeply engaged in medication for specialist departments,
chronic diseases and special purposes, and has built a good brand effect and solid market foundation
in such fields as chronic kidney diseases, transplantation immunity, internal secretion, and digestive
system. Its market share remains in the forefront of domestic similar products. At present, the
Company has 22 core products on the market and 16 varieties under R&D included in the 2019
National Reimbursement Drug List and 10 core products on the market and 4 varieties under R&D
included in the 2018 National Essential Drug List. In the future, the Company will focus on the
R&D layout of innovative products in the three core areas of anti-tumor, internal secretion and
autoimmunity.
As one of the three major chronic diseases in China, diabetes mellitus has long-term development
space for therapeutic drugs, and is the core track of the key layout of domestic and foreign
pharmaceutical companies. Diabetes medication has always been the company's core product line
and a key filed to develop in the future. Zhongmei Huadong has been deeply involved in the
domestic diabetes market for more than ten years, and has formed advantages in marketing channels
and product brands. It has won a place for domestic drugs in the diabetes market where
foreign-funded original research products are strong.
By relying on comprehensive methods such as independent research and development, cooperative
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
development, product introduction, and investment market licensing priority, the company has
continuously increased R&D investment and continued to enrich its product pipeline in the diabetes
field. The company has formed an overall layout of innovative targets and differentiated generic
drug product pipelines in the field of diabetes. From the three perspectives of imitation + innovation
+ biological macro-molecules, the company has built a product that is gradually upgraded and has a
full layout of core therapeutic targets and clinical mainstream drugs. matrix. The mechanism of
action of products under research covers DPP-4 inhibitors, SGLT-2 inhibitors, GLP-1 innovative
drugs and their analogs, insulin analogs, and monoclonal antibodies for the treatment of diabetic
complications, which are in line with the mainstream of the international diabetes treatment layout
and the trend of development.
The company has completed the planning and layout of diabetes macro-molecular drug production
bases in Xiasha and Qiantang new districts of Hangzhou. Compound DPP-4 inhibitors, compound
SGLT-2 inhibitors and liraglutide injections will be approved for marketing in 2021-2022, which is
expected to give full play to the company's existing channel advantages and achieve synergistic
effects. The investment in the company's diabetes pipeline will enter the harvest period, pushing the
company's diabetes products into a new growth stage. It is conducive to further expanding the
domestic and foreign endocrine drug-related markets, maintaining the domestic market leading
position in the field of diabetes drugs, and laying a solid foundation for the company's sustained and
stable growth in the future.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
4. Leading pharmaceutical professional promotion team and market network in China
The pharmaceutical industry of the company takes the academic promotion of clinical value as the
core, promotes a multi-channel marketing model that combines general hospitals, primary medical
institutions, retail and third terminals, and Internet online, and has established a nationwide
marketing network and market network promotion. It has the leading capability in the country,
covering more than 2,400 Class-A hospitals across the country, accounting for about 92% of all
Class-A hospitals, covering more than 9,000 Class-II and class lower hospitals, more than 50,000
primary medical institutions, and more than 180,000 retail pharmacies. The pharmaceutical business
has achieved full coverage in Zhejiang Province, and the cold chain logistics and distribution
business is at the leading level in the industry. In the field of medical beauty, the holding subsidiary
Huadong Ningbo Company has a leading market share in the field of domestic medical beauty. The
core products of the wholly-owned subsidiary Sinclair of the United Kingdom have been launched
in more than 60 countries and regions around the world.
5. Prudent and pragmatic operation style and shareholder return
The Company values management innovation, and strives to meet the demand of market
competition by improving its quality of operation. The compliant and efficient marketing services,
differentiated market positioning, innovative R&D layout and perfect talent planning promote the
Company’s lasting and steady development. Since its listing, the Company has maintained steady
growth in performance for 20 years. Since 2007, the Company has kept the return on equity (ROE)
above 20% for 13 consecutive years, leading A-share listed companies and the medicine industry.
Since its listing 20 years ago, the Company has paid dividends for 17 times, around with a total
value of 4.2 billion yuan, far exceeding the 250 million yuan raised in its IPO. The Company has
brought continuous and stable returns on investment to shareholders.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Section IV. Discussion and Analysis of Operations
I. Overview
For many industries and companies, the first half of 2020 has been an unprecedented and
extremely challenging period. Covid-19 outbreak globally has caused unprecedented
complications to world political and economic environment. Domestic pharmaceutical companies
have not only faced the far-reaching impact of Covid-19 pandemic, but also the complexity caused
by rolling out of the government centralized procurement policy, intensifying competition, and
increasing difficulties associated with business transformation.
Through this challenging environment, Huadong Medicine has forged ahead and stayed focused on
the transition strategy to become an innovative pharmaceutical company, by being resilient to
significant operational pressures, implementing a series of adjustments and conquering numerous
obstacles. We are pleased to share with our shareholders, investors and all our employees that our
Pharmaceutical Manufacturing has continued its growth despite challenging conditions,
maintained its market position and business development, and demonstrated sustainable positive
performance. This is a solid mid-term result, which is particularly critical in supporting our
ongoing transition strategy and development plan.
Phase one of the Company’s Research and Development (R&D) reform program has now
completed. We have restructured our R&D system, with numerous senior research talents
introduced in, created new functions and filled them with qualified personnel. This has
significantly expanded and energized our R&D capabilities. A number of R&D projects have
achieved the milestone established. We have made fast adjustments to sales and marketing
strategies by focusing on community and out-hospital markets and actively expanding new sales
channels such as retail pharmacies and self-funded online sales. In the first half of 2020, our
Pharmaceutical Manufacturing has achieved growth in both revenue and net profit. The profit
model of Pharmaceutical Commerce is continuously evolving. We are focusing on high quality
business development, on solidifying core competitive advantages, on increasing differentiated
commercial services capabilities and establishing professional cold chain logistics network.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Aesthetic business has continued to expand in high-end aesthetic market, with a pipeline of
products with significant market potential that will drive accelerated growth in the future.
The company's unwavering confidence in pursuing the strategy to transform and upgrading is
supported by our superior corporate culture, operational strength cumulated over many years,
diversified and unique product portfolio, excellent talent pool and strong cash flow and balance
sheet. Huadong Medicine, experienced this challenging and stressful environment and the pressure
test, has again demonstrated its robust operation and management capability and the strong
resilience and flexibility against risks. Step by step, we are dedicated to creating and adhere to the
innovation and development pathway with distinctive Huadong Characteristics.
Against the adverse trend, never stopped by any winds or rains, we will continue to advance our
strategies and overcome the obstacles. Try to polish ourselves through the challenges to become a
stronger and better company!
For this reporting period, the Company has achieved operating revenue of RMB 16.66bn, decrease
8.70% on the prior corresponding period (pcp), and net profit attributable to shareholders of RMB
1.73bn, up 8.45% on the pcp. Our core subsidiary, Zhongmei Huadong, has delivered operating
revenue of RMB 6.08bn, up 6.69% on the pcp, and net profit of RMB 1.38bn, up 5.00% on the pcp.
Zhongmei Huadong's 2nd quarter results has been impacted by acarbose's unsuccessful tender in
national drug procurement. Quarterly sales increased 2.74% on the pcp, and net profit decrease
3.67% on the pcp. Huadong Pharmaceutical Distribution Company has rapidly responded to
changing conditions and endured the impacts of the pandemic. For this reporting period, Huadong
Pharmaceutical Distribution Company has delivered operating revenue of RMB 10.76bn, decrease
14.40% on the pcp and its business has demonstrated steady recovery since the pandemic in China
is under general effective control.
During the reporting period, faced with the abrupt outbreak of Covid-19 in China, the Company
rapidly initiated pandemic control and prevention programs, thoroughly implemented the
requirements from disease control bodies to prevent inflow of cases while controlling the spread
within the organization. Under the leadership of the Company senior management and pandemic
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
response working group, with collaboration and effort by all Huadong employees, adopted near
war time control systems and responses, rapidly established disease control networks, assigned
core responsibilities, implemented necessary protocols and procedures, initiated a series of
pandemic response programs, ensured health and safety of employees, successfully recovered from
disruptions to work and production, achieved a critical success in simultaneous battles in
controlling the pandemic and recovering operational activities from the disruptions caused by the
pandemic.
1. Pharmaceutical industry
During the reporting period, the company’s production system faced changes in national
pharmaceutical policies and demand fluctuations caused by centralized drug procurement. In order
to overcame the impact of the epidemic and market uncertainty, the company took ‘technological
innovation and agile production’ into the global pharmaceutical industry chain as its goal. Internally,
coordinated resources, adopted measures such as emergency resumption of production, shift
adjustments and capacity expansion, and promoted outsourcing business externally, ensuring market
supply in the first half of the year. At the same time, fully implemented the cost control plan,
promoted cost management of the entire value chain, achieved cost reductions through multiple
dimensions and levels such as technology upgrades, lean management, bidding negotiations, asset
utilization, etc.. Moreover, strived to improve labor efficiency and production efficiency to build a
new market value and competitive advantages of Huadong Medicine. Carrying out EHS risk
management and controlling around the R&D and production departments to consolidate the
company's EHS normalized management foundation. Practicing the ‘asset-light’ production
organization model, successfully developing a number of cooperative production enterprises, and
gradually forming an open pharmaceutical manufacturing system of Huadong Medicine. In
accordance with the company's strategic development plan, the company will continue to promote
the construction of the Jiangdong II project, to pay attention to build the international R&D and
manufacturing center. Furthermore, to complete the preliminary feasibility study report and
planning design of the Huadong Medicine Life Science Industrial Park, and be fully prepared for
the project to be launched in the second half of the year.
During the reporting period, the company continued to develop a number of clinical studies on
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
innovative medicine, and actively promoted consistency evaluation and listing registration.
Anastrozole tablets were approved for drug registration. Engligliflozin metformin tablets and
omeprazole sodium bicarbonate capsules were declared for production. Domperidone tablets passed
the generic drug consistency evaluation, and the US ANDA data submission for acarbose was
completed; Diabetes indications and weight loss indications of liraglutide injection have entered
phase III clinical studies, and all subjects have been enrolled in diabetes indications; caspofungin
acetate for injection has completed on-site verification, letrozole tablets and micafene for injection
Net Sodium completed the process verification and BE of Fabu, Maxitentan tablets, canagliflozin
tablets, and sorafenib tosylate tablets; at the same time, completed the line product supplement
application and the research work on the issuance and replenishment of related new products. Also
fully developed consistency evaluation of each product. Benchmarking internationally, launching
the CMO/CDMO model, and promoting the international registration of key varieties such as
daptomycin for injection, tacrolimus capsules, and caspofungin for injection as planned. Meanwhile,
Zhejiang Huida Biotechnology Co., Ltd., a wholly-owned subsidiary established at the beginning of
this year, serves as the company's technology innovation platform in the field of microbial
pharmacy, based on the research and development of high-end microbial products and
commercialization at home and abroad. The main research projects currently underway include:
antibodies Conjugate drug toxin library construction, synthetic biology technology development of
anti-tumor and antiparasitic drugs, development of new marine-derived microbial drugs, etc.
Increased the introducing of innovative projects, to achieve new breakthroughs in the field of
immunization. On August 14, 2020, the wholly-owned subsidiary Zhongmei Huadong and Qyuns
Therapeutics Co., Ltd signed a strategic cooperation agreement on equity investment and product
cooperation. (For details, please refer to the ‘Announcement of Huadong Medicine on the Signing
of Equity Investment Agreement and Product Cooperative Development Agreement between
Zhongmei Huadong and Qyuns Therapeutics ’, announcement number 2020-032)
The company regarded scientific research and innovation as the top of all work. During the
reporting period, the construction of the research and innovation system has made great progress.
With the goal of establishing an intensive, efficient, open and shared R&D system, actively promote
R&D system reform, relocate R&D functions, adapt R&D personnel, vigorously introduce
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
high-level R&D talents, and restructure the R&D system with four major R&D function centers,
stimulate scientific research and innovation ability and vitality. On the basis of completing the work
objectives of the first phase, continue to promote the reform of the second phase of the R&D system,
and continue to focus on the three dimensions of R&D management decision-making mechanism,
R&D project management system, and R&D performance and evaluation system, and continuously
stimulate scientific research and innovation capabilities and vitality.
(For details of the R&D work, please refer to the R&D related content in this chapter.)
During the reporting period, Zhongmei Huadong Pharmaceutical Service Corporation aimed to
establish a ‘pharmaceutical service management system adapted to the development of the modern
pharmaceutical industry’, continued to in-depth organizational structure reform, and
comprehensively promoted the layout and construction of the primary market, out-of-hospital
market and self-funded market. Facing the epidemic and market challenges, turning pressure into
motivation, facing difficulties, rapidly adjusting market strategies, digging deeper into the
grassroots market and out-of-hospital markets, actively exploring new retail pharmacies and online
sales channels, developing online markets, and seizing the remaining market. At the same time,
systematically planed the market expansion strategy of subsequent products on the market. In terms
of academic promotion, continue to strengthen patient education around the concept of
"patient-centered", and further improve the professional standards of front line marketers; continue
to develop clinical re-research of listed products, and improve expert consensus and clinical value
recognition through the construction of expert academic platforms. With the gradual
implementation of the second batch of centralized procurement, the impact on the original hospital
market of the company’s acarbose tablets is more obvious, but it has gradually stabilized so far. The
company’s acarbose chewable tablets are actively developing nationwide sales in the hospital
market, based on the current market competition and sales situation, felt confident that the annual
sales volume is not lower than last year's level through the differentiated market positioning of
acarbose tablets and acarbose chewable tablets and continue to deepen the diabetes basic medicine
market and strive for acarbose products. The company's key potential product in the field of
diabetes, pioglitazone metformin tablets and indobufen tablets, a key potential product in the
cardiovascular field, both doubled their sales revenue during the reporting period. After indobufen
21
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
tablets are listed in the 2018 National Essential Drug List and the 2019 National Medical Insurance
List, they are recommended as the recommended application varieties of many guidelines such as
the National Essential Drug Clinical Application Guide (Chemical Drugs and Biological Products).
Increased its academic promotion, the product is currently in the stage of rapid expansion and
growth.
2. Pharmaceutical commerce
During the reporting period, Huadong Medicine Commercial Company (hereinafter referred to as
“the commercial company”) ,as emergent reserve unit of medicine and medical instrument in
Zhejiang province, actively responded to allocation and distribution orders for Commission of
Economy and Information Technology（CEIT）by pooling and distributing resources to the
particular medical institutions and public services. The job has been highly recognized by Zhejiang
National Health Commission (NHC), CEIT, Department of Commerce and other government
departments.
During Covid-19 outbreak in China, the commercial company not only highly effectively
completed the command of allocating medical materials, but also softened the impact of dramatic
order decrease from hospitals in Zhejiang province by taking various effective methods to boost the
company’s revenue. One of the methods was to take fully advantage of the commercial company’s
large-scale medical supply chain to improve the capacity of business network and the ability to deal
with emergent matters.
In term of Nation Volume-Based Procurement Policy, the commercial company ensured the on-time
delivery of chosen drugs, but did not give up the market opportunity of unchosen drugs. With the
aim to obtain the regional franchise right, the commercial company provided the early-stage market
services for innovative drugs, high-level generic drugs and other approved drugs. Following the
diversified medical insurance payment reform such as "full coverage of medical insurance payment
standard" and ‘payment according to disease type’, the commercial company rolled out drug
economics solutions to assist medical institutions to solve various problems. To satisfy the suppliers’
requirement, the services for grassroots medical treatment, private hospitals and retail pharmacies
were continuously to be improved. Since the second quarter, the commercial distribution order rate
22
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
has almost returned to the normal level and the market share in most hospitals has remained stable
or increased. It seemed that the declining trend of sales was gradually reversed.
The company has a competitive advantage in cold chain logistics distribution. Huadong Medicine
Supply Chain Management (Hangzhou) Co., LTD（hereinafter referred to as ‘HMSCM’ ）, a
wholly-owned subsidiary, and Huadong Ningbo Company, a holding subsidiary, both have gained
the qualification to launch the cold chain distribution business. In term of vaccine distribution
business, HMSCM was the first one passing the special vaccine inspection arranged by Zhejiang
Drug Administration, successfully owning the qualifications to develop a vaccine distribution
business. Within Zhejiang Province, the commercial company has the vaccines distribution business
with Merck, Pfizer, GlaxoSmithKline, Zhifei Biotechnology, Kangtai Biotechnology, Watson
Biotechnology and other famous pharmaceutical companies.
3. Aesthetic business
With the Company’s patient-centered business philosophy, Huadong Medicine’s aesthetic business
focuses on the R&D, manufacturing, sales and services of the latest products and devices in the
field of non-surgical facial treatments and skin management. The Company actively introduces
high-tech products and new technologies all over the world to build a high-end and differentiated
aesthetic brand and product portfolio with the characteristics of Huadong’s aesthetic business.
Since the beginning of this year, Covid-19 has affected the Company's aesthetic business at home
and abroad. At present, the Company's aesthetic business has stabilized and is gradually recovering.
It is expected that with Covid-19 being gradually controlled, the Company's domestic and
international aesthetic business will achieve recovery growth. The Company keeps focusing on the
global market, continuously optimizes its product pipeline, and strives to accelerate the
development of aesthetic business once Covid-19 is effectively controlled, so as to realize the
breakthrough of the product launch in China and the Company’s globalization strategy.
During the reporting period, Sinclair, the global operation platform of the Company’s aesthetic
business, actively introduced a range of high-end products and expanded its global market. Sinclair
reached an agreement with Galderma, the world-famous Swiss dermatology pharmaceutical
company, on the transfer of the right of Sculptra (poly-L-lactic acid microspheres) in western
European and completed the transaction, which brought about 30.65 million (after-tax) profit to
23
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Sinclair. Sinclair also signed an agreement with Kylane Laboratories, a Switzerland-based aesthetic
R&D company, to obtain the global exclusive license of its hyaluronic acid filler MaiLi (with
Lidocaine). Having obtained CE Mark in June 2020, MaiLi will be launched in Europe first to
provide consumers with an alternative solution for facial volumization. As for Sinclair’s core
product Ellansé, its China registration, marketing plan and pre-launch activities are all running
smoothly.
In August 2020, the Company signed a strategic cooperation agreement with Jetema, a Korean
listed company, and obtained the exclusive right of its BoNT-A product in China, which further
completed the product pipeline, marking a solid step forward for the globalization of Huadong’s
aesthetic business. The Company plans to start the product’s China registration within this year, so
as to provide better aesthetic products and services to consumers.
During the reporting period, Huadong Ningbo, a holding subsidiary of the Company, developed a
number of customized biological skincare products to provide consumers with gene-customized
skincare solutions. With the concept of personalized customization of biotechnology and cell
skincare, two products of its SANTEMUSE brand were selected for Monde Selection and won the
special Gold Award at the beginning of this year.
On August 20th, 2020, the result of the third batch of Nation Volume-Based Procurement was
released. Anastrazole tablets (specifications ： 1mg) produced by Zhongmei Huadong and
Doperidone tablets (specifications ：10mg) manufactured by Xi’an Bohua won the bidding, which
would significantly increase market share and sales revenue in future and improve brand influence.
Since this year, the company has been rewarded many honors such as “the 2nd New Wealth Best
Listed Company”, “the most worthy of the trust of investors of the listed company inventory, the
pioneer of biological medicine field of innovation”, “2019 China top hundred pharmaceutical
industry”, “Chinese medicine new epidemic zone spreading outstanding contribution enterprise
award” and “the wealth fortune of China's 500 Chinese” ranked at the 273rd.
Experienced Covid-19 and Nation Volume-Based procurement, the company has more clear
development goal and more firm confidence to overcome the outside challenges such as dynamic
commercial environment, medical policy change and fierce industry competition. The company’s
commercial business and aesthetic medicine business still face a lot of outside pressure due to the
24
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
uncertainty and ongoing of Covid-19. However, all staffs with high enthusiasm will stand with the
company to complete the rest of work in 2020. In the latter half of the year, the company will
improve operating efficiency and effectiveness to achieve high-quality development, and continue
to make efforts to complete the annual business plan.
II. Analysis of main business
1. Overview
Refer to “I. Overview” in “Discussion and Analysis of Operations”.
2. Income and cost
(1) Composition of operating revenue
Unit: RMB yuan
The current reporting period Same period last year Year-on-year
Proportion in Proportion in percentage
Amount Amount
operating revenue operating revenue increase/decrease
Total operating
16,660,934,157.64 100% 18,248,667,616.98 100% -8.70%
revenue
By sector
Business 10,760,596,159.30 62.82% 12,570,628,438.98 67.24% -14.40%
Manufacturing 6,238,364,356.65 36.42% 5,860,721,909.00 31.35% 6.44%
International
130,673,336.90 0.76% 264,856,884.91 1.42% -50.66%
aesthetic medicine
Offset (inter-sectoral
-468,699,695.21 -447,539,615.91
offset)
By product
By region
Domestic sales 16,505,022,711.72 99.06% 17,956,938,001.83 98.40% -8.09%
Overseas sales 155,911,445.92 0.94% 291,729,615.15 1.60% -46.56%
25
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
(2) Sectors, products or regions that account for more than 10% of the Company’s operating revenue or
operating profit:
√ Applicable □ N/A
Unit: RMB yuan
Year-on-year Year-on-year Year-on-year
Gross percentage percentage percentage
Operating revenue Operating cost profit increase/decrea increase/decrea increase/decrea
rate se in operating se in operating se in gross
revenue cost profit rate
By sector
Business 10,760,596,159.30 9,945,298,362.46 7.58% -14.40% -14.00% -0.43%
Manufacturing 6,238,364,356.65 1,099,080,469.13 82.38% 6.44% 12.99% -1.02%
International
aesthetic 130,673,336.90 48,595,732.38 62.81% -50.66% -33.89% -9.44%
medicine
Offset
(inter-sectoral -468,699,695.21 -470,580,908.44 / / / /
offset)
By product
By region
Domestic sales 16,505,022,711.72 10,559,889,938.74 36.02% -8.09% -12.55% 3.26%
Overseas sales 155,911,445.92 62,503,716.79 59.91% -46.56% -29.22% -9.82%
III. Analysis of non-main business
√ Applicable □ N/A
Unit: RMB yuan
Proportion
Sustainable or
Amount in total Note on reasons
not
profit
Mainly due to the transfer of market distribution
Gains on asset rights of related products in Western Europe by
301,166,257.18 14.28% No
disposal Sinclair, a wholly owned subsidiary of the Company
in the UK
Mainly due to the confirmation of government grants
Other gains 93,032,855.48 4.41% No
in the current period
26
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
IV. Analysis of assets and liabilities
1. Major changes in asset composition
Unit: RMB yuan
End of the current reporting Change
Same period of last year
period of
Note on major changes
Proportion in Proportion in proportio
Amount Amount
total assets total assets n
Cash and bank 2,470,052,752. 2,560,843,974.
10.98% 11.97% -0.99%
balance 73 44
Mainly due to the acceleration in the
turnover of accounts receivable and the
Accounts 6,485,487,088. 6,853,206,048.
28.82% 32.04% -3.22% increase in the company's total assets
receivable 32 32
and the corresponding decrease in the
proportion of accounts receivable
3,527,719,237. 3,623,467,609.
Inventories 15.68% 16.94% -1.26%
10 69
Real estate
properties for 21,200,079.95 0.09% 23,112,876.08 0.11% -0.02%
investment
Long-term equity 419,056,055.3
1.86% 189,629,699.61 0.89% 0.97%
investments 1
2,144,814,526. 1,961,302,016.
Fixed assets 9.53% 9.17% 0.36%
08 45
Mainly due to the increase of
Zhongmei Huadong R&D platform
Constructions in 2,078,384,147.
9.24% 960,892,180.19 4.49% 4.75% construction and Huadong Medicine
progress 26
Biomedical Science and Technology
Park Project Phase II
Mainly due to the increase in bank
Short-term 1,362,252,205.
6.05% 841,400,000.00 3.93% 2.12% financing in the current period to repay
borrowing 85
mature corporate bonds
Long-term 125,199,582.6
0.56% 138,581,674.64 0.65% -0.09%
borrowing 0
2. Assets and liabilities measured at fair value
√ Applicable □ N/A
Unit: RMB yuan
27
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Cumulative
Impairment
Change in fair changes in Amount
Opening accrued Amount sold Other Closing
Item value for the fair value purchased in
balance during the in this period Changes balance
current period included in this period
current period
equity
Financial
Assets
Investment in
241,675,712.0 241,893,621
other equity 217,909.39
5 .44
instruments
Total of the 241,675,712.0 241,893,621
217,909.39
above 5 .44
Financial
0.00 0.00
Liabilities
Other changes
During the reporting period, whether the company’s main asset measurement attributes have changed significantly
□ Yes √ No
3. Limitation of asset rights at the end of the reporting period
Unit: RMB yuan
Item Book value at the end of the period Reason for limitation
Cash and bank balance 59,180,945.65 Cash deposit
Notes receivable 78,660,590.65 Bill pledge
Real estate properties for 2,022,168.45 Mortgage guarantee for borrowing
investment
Fixed assets 56,761,691.48 Mortgage guarantee for borrowing
Intangible assets 4,457,395.07 Mortgage guarantee for borrowing
Total 201,082,791.30
V. Investment
1. Overview
√ Applicable □ N/A
Investment amount in the reporting period Investment amount in the same period of
Percentage change
(yuan) last year (yuan)
722,699,019.70 737,840,039.17 -2.05%
28
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
2. Significant equity investments acquired during the reporting period
√ Applicable □ N/A
Unit: RMB ten thousand yuan
Profit
Name Progres or loss
of s as of of Involve Disclos
Main Way of Investm Shareh Term of Project Disclos
investe Capital Product the investm d in ure
busines investm ent olding Partner investm ed ure date
d source type balance ent in litigatio index
s ent amount ratio ent income (if any)
compan sheet the n or not (if any)
y date current
period
R&D
of
biologi
cal
chemic
al Comple
Chongq product ted the
ing and Capital second
No
Peg-Bi technol increas capital
Own profit
o ogies; e and 21,000 39.80% / / R&D increas / No N/A N/A
funds for the
Biopha R&D equity e and
time
rm Co., of transfer equity
being
Ltd. ferment acquisit
ation ion
process
optimiz
ation
technol
ogy
Note: From December 2018 to January 2020, the wholly-owned subsidiary Zhongmei Huadong made
capital increase and equity investment in Chongqing Peg-Bio twice. According to the signed by Zhongmei Huadong and Chongqing Peg-Bio in December
2018 The Agreement of Chongqing Peg-Bio Biotechnology Co., Ltd. and the signed in January 2020,
Zhongmei Huadong has invested a total of 210 million yuan and acquired 39.80% of its shares, becoming
the second largest shareholder of Chongqing Peg-Bio. Chongqing Peg-Bio has completed the information
changes in State Administration For Market Regulation on January 16, 2020. As of August 26, 2020,
Zhongmei Huadong has paid 210 million yuan in equity investment in accordance with the contract.
3. Significant non-equity investments in progress during the reporting period
√ Applicable □ N/A
29
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Unit: RMB yuan
Cumulati
Cumulati Reasons
ve actual
Investme ve for not
Industry investme
Investme nt income meeting
involved nt
Way of nt in amount realized the Disclosu Disclosu
Project in the amount Capital Project Projected
investme fixed during by the planned re date re index
name investme by the source progress income
nt assets or the end of schedule (if any) (if any)
nt end of
not reporting the and
project the
period reporting projected
reporting
period income
period
Huadong March 9, http://w
Medicin 2017 ww.cninf
e o.com.cn
Biomedi
Pharmac
cal
Self-built eutical 151,511, 1,479,93 Own
Science Yes 70.00% / / N/A
project manufact 298.39 5,537.10 funds
and
uring
Technolo
gy Park
Project
Phase II
151,511, 1,479,93
Total -- -- -- -- -- / / -- -- --
298.39 5,537.10
4.Financial assets measured at fair value
□ Applicable √ N/A
5. Investment in financial assets
(1) Securities Investment
√ Applicable □ N/A
Unit: RMB yuan
Book Gain/los Accumu
Purchas
Account value at s from lative Selling Gain/los Book
e
Stock Initial ing the fair fair amount s during value at
Type of Stock amount Account Capital
abbrevia investm measure beginni value value in the the the end
stock code in the ing item source
tion ent cost ment ng of changes changes current reportin of the
current
model the in the included period g period period
period
period current in
30
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
period equity
Dome Other
Fair
stic equity
20,20 value 42,00 42,22
and 217,9 217,9 217,9 instru Own
RAPT RAPT 7,400. measu 9,254. 0.00 0.00 7,164.
overs 09.39 09.39 09.39 ment funds
00 remen 79 18
eas invest
t
stock ment
20,20 42,00 42,22
217,9 217,9 217,9
Total 7,400. -- 9,254. 0.00 0.00 7,164. -- --
09.39 09.39 09.39
00 79 18
Date of announcement of
the Board of Directors on
securities investment
approval
Date of announcement of
the Board of Shareholders
on securities investment
approval (if any)
Note: Huadong Pharmaceutical Investment Holdings (Hong Kong) Co., Ltd., a subsidiary of the company,
invested US$3.00 million in 2019 to purchase 218,102 Series C-2 preferred shares of RAPT Therapeutics, Inc.
RAPT Therapeutics, Inc. was listed on the Nasdaq Stock Exchange (stock code: RAPT) on October 30, 2019. As
of the end of the reporting period, Huadong Pharmaceutical Investment Holdings (Hong Kong) Co., Ltd.
accounted for the total amount of RAPT Therapeutics, Inc. 0.89% of the shares.
(2) Derivatives investment
□ Applicable √ N/A
No such case during the reporting period.
VI. Major assets and equity sales
1. Major assets sales
□ Applicable √ N/A
No such case during the reporting period.
2. Major equity sales
□ Applicable √ N/A
31
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
VII. Analysis of wholly-partially owned and shareholding companies
√ Applicable □ N/A
Main subsidiaries and the shareholding companies that have an impact on the Company’s net profit of more than 10%
Unit: RMB yuan
Company Main Registered Operating Operating
Company type Total assets Net assets Net profit
name business capital revenue profit
Production
and
management
Hangzhou of Traditional
Zhongmei Chinese and
8,487,267,96 5,984,075,73 6,083,729,01 1,598,130,82 1,378,241,27
Huadong Subsidiary Western raw 872,308,130
0.13 1.59 0.89 4.21 7.11
Pharmaceutic medicines
al Co., Ltd. and
preparations,
and health
care products
Huadong Sales of
Ningbo biological 987,587,414. 589,174,647. 585,927,346. 93,203,716.6 68,291,730.0
Subsidiary 5,000,000
Medicine products as 88 30 26 9 8
Co., Ltd. proxy
Wholesale of
TCM
materials,
Huadong
TCM
Medicine 1,243,925,78 214,390,964. 1,186,757,22 19,806,454.5 11,988,952.4
Subsidiary decoction 61,300,000
Wenzhou 2.13 18 5.88 9 5
pieces,
Co., Ltd.
chemical
preparations,
etc.
Huadong
Medicine
Warehousing
Supply Chain 172,962,842. 120,038,141. 68,104,298.1 10,211,727.1
Subsidiary and storage 50,729,863 8,042,395.32
Management 08 99 8 2
services
(Hangzhou)
Co., Ltd.
R&D,
Sinclair production
219,962,963. 1,001,158,55 597,806,137. 130,673,336. 195,486,545. 163,708,849.
Pharma Sub-subsidiary and sales of
92 8.93 79 90 46 35
Limited aesthetic
medicine
32
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
products
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ N/A
Methods of acquisition and disposal of Impact on the overall production, operation
Company name
subsidiaries during the reporting period and performance
Technology innovation platform in the
Zhejiang Huida Biotech Co., Ltd. New subsidiary company
field of microbial pharmacy
Shenzhen Xinda Yanchuang Technology New drug research and development and
New subsidiary company
Development Co., Ltd. technical service platform
Ningbo Sinfmuse Medical Investment
Cancellation No significant impact
Management Co., Ltd.
VIII. Structured entities controlled by the Company
□ Applicable √ N/A
IX. Forecast of business performance from January to September 2020
A warning and explanation of the reason for predicting that the cumulative net profit from the beginning of the year to the end of the
next reporting period may be a loss or a significant change compared with the same period of the previous year
□ Applicable √ N/A
X. Research and development (R&D)
1. Overview
Adhering to the corporate philosophy of ‘research-oriented, customer-focused’, the Company
continued to increase R&D investment, set up the innovative drug R&D center, set up a new drug
R&D team with international vision and multinational pharmaceutical enterprise background and
accelerated the deployment of innovative drugs and the introduction of innovative drug projects at
home and abroad. It has completed the approval of several potential innovative drugs in the fields
of anti-tumor, endocrine, immunity and other fields. Company continued to enrich the pipeline
layout of innovative drug R&D. At present, the Company has more than 50 projects under study.
During the reporting period, the Company invested 0.474 billion yuan in medicine R&D with an
increase of 2.50% compared with the same period in 2019.
2. Construction of R&D strategic cooperation ecosystem
The wholly-owned subsidiary Zhejiang Huida Biotech Co., Ltd. was newly established at the
beginning of this year. As the Company's technology platform in the field of microbial pharmacy, it
is based on the R&D and commercialization of high-end microbial products at home and abroad.
33
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
At present, the main research projects include the construction of antibody coupled drug toxin
library, the development of anti-tumor and anti-parasitic drugs by synthetic biological technology,
and the development of new marine-derived microbial drugs, etc.
On the basis of comprehensively improving independent innovation capabilities, the Company has
carried out a full range of joint R&D and industrial cooperation with its shareholding companies
Chongqing Peg-Bio, Qyuns Therapeutics Co., Ltd, and Jiuyuan Gene, leveraged their respective
advantages, and continued to expand the company’s pipeline layout in diabetes peptide drugs and
build a R&D strategic cooperation ecosystem with Zhongmei Huadong as the core, featuring
win-win cooperation, openness and compatibility.
3. R&D of major innovative drugs and biosimilar projects
The Company has formulated a strategic plan for the development of innovative drugs by 2025,
focusing on the existing covered therapeutic areas, clarifying the key direction and number of
innovative projects each year during the planning period, and proposing to complete the approval
and reserve of no less than 15 innovative varieties (including innovative drugs, modified new
drugs, innovative medical beauty products and devices, etc). During the reporting period, the
Company rushed to advance the clinical research progress of a number of innovative drugs and key
biosimilars under research, and strived to be approved as soon as possible. In addition, the
Company is also actively exploring and learning from the construction of an internationally
advanced innovative drug R&D system, continuously optimizing and adjusting the Company’s
overall R&D system structure, and through the introduction of high-end R&D talents, improving
the functional modules of innovative project development, and fully protecting the Company
achievement of strategic planning goals for innovative projects.
The Company's current clinical research progress of key innovative drugs, innovative medical
devices and biosimilar projects are as follows:
(1) Mefatinib: Mefatinib for the treatment of advanced non-small cell lung cancer is
undergoing the phase III clinical trial; for the phase II single-arm clinical trial of rare mutations in
the first/second line, the communication with CDE was completed on the basis of the good
curative effect of the first phase. According to the requirements of CDE communication results,
phase II trials were conducted with low doses in the phase II clinical of rare mutations, with the
aim to directly report to the market with phase II clinical results of rare mutations.
34
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
(2) TTP273: Upgrading and improvement of new prescriptions have been completed, and
phase II international multi-center clinical trials are planned to be carried out simultaneously in the
second half of 2020 to verify the safety and efficacy of the new prescriptions. Relevant
preparations are under way.
(3) HD-NP-102 (dynamic TGFR monitoring system): Through real-time monitoring of
glomerular filtration rate, renal function will be evaluated. IND application will be submitted in
China before the end of 2020, and clinical trials will be initiated in 2021.
(4) Layout of early innovative drug R&D: Innovative drugs such as oral GLP-1 innovative
drugs for the treatment of type 2 diabetes, anti-tumor CDK-targeted innovative drugs, and
recombinant human keratinocyte factor for the treatment of diabetic feet have all been approved
and initiated in pre-clinical research work, such as pharmacology, pharmacology and toxicology.
(5) Biosimilar varieties: The Company's key product in the field of diabetes, Liraglutide
injection has been fully launched in the multi-center phase III clinical trial for type 2 diabetes. All
subjects have been enrolled and are expected to complete all the clinical work by the end of 2020.
The multi-center phase III clinical trial for weight loss indication of this product has been officially
launched. HD-IM-0003 (QX001S) is scheduled for phase III clinical trials in early 2021; The
clinical application for Ranibizumab injection has been submitted, and the relevant supplementary
materials are currently being studied. The supplementary materials are expected to be submitted by
the end of 2020, and the clinical approval will be obtained in the first quarter of 2021. Insulin
degludec injection, insulin aspart injection and glucagon biological analogues are under preclinical
study.
4. R&D of major generic drugs
During the reporting period, the Company carefully carried out dynamic evaluation and sorting of
the existing generic drugs under R&D in a scientific manner, and further clarified the key and
priority varieties. The progress of key varieties are as follows:
(1) In the field of diabetes: Sitagliptin-Metformin Compound Tablets (50/500mg) have passed
the technical review and are expected to get the production approval by the end of 2020;
Empagliflozin-Metformin Compound Tablets (5/500mg) have been applied for production;
Canagliflozin Tablets (0.1g and 0.3g) have been completed BE test and process verification and are
expected to apply for production by the end of 2020. Repaglinide tablets and Sitagliptin-
35
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Metformin tablets (50/850mg) are in the process of formulation optimization, while
Pioglitazone-Metformin tablets (15/850mg) are in a pilot study.
(2) In the field of immunity: the new project of Tacrolimus sustained-release tablets and
granules are preparing for pilot studies.
(3) Anti-tumor field: Anastrozole tablets have been approved for drug production in July 2020;
Letrozole tablets have completed the submission of supplementary materials and are waiting for
on-site verification; Sorafenib tablets have completed the BE test and process verification. It is
expected to declare production at the end of 2020. Ibrutinib capsules and Olaparib tablets are in the
pilot study stage.
(4) Super antibiotic field: Caspofungin acetate for injection has completed the on-site
inspection and is expected to obtain production approval by the end of 2020; Micafungin sodium
for injection has completed the research on issuing supplementary materials.
(5) Digestive tract field: the compound Omeprazole and Sodium Bicarbonate capsules have
been declared for production.
(6) Cardiovascular field: Macitentan tablets have completed the BE test and process
verification and are expected to declare for production by the end of 2020.
5. External cooperation in R&D
During the reporting period, the Company actively cooperated and negotiated new drug projects
with domestic and foreign innovative drug research and development companies and scientific
research institutes, as follows:
(1) As of the disclosure date of this report, Zhongmei Huadong completed the second equity
investment in Chongqing Peg-Bio Biotechnology Co., Ltd.. The shares held by Zhongmei Huadong
have increased from 19.35% to 39.80%. Its two core technologies, PEG-modification platform and
high-efficiency polypeptide tandem expression platform will effectively promote the Company's
product strategic layout in the field of biological macromolecules.
(2) Increase the introduction of innovative projects to achieve new breakthroughs in the field of
immunization. On August 14, 2020, the wholly-owned subsidiary Zhongmei Huadong and Qyuns
Therapeutics Co., Ltd signed a strategic cooperation agreement on equity investment and product
cooperation. Zhongmei Huadong invested 370 million yuan in equity investment in Qyuns
Therapeutics Co., Ltd through capital increase. After the investment, it accounted for 20.56% of the
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
shares and became the second largest shareholder of Qyuns Therapeutics Co., Ltd. By virtue of their
respective advantages in their respective fields, the two parties will carry out extensive and in-depth
cooperative development and commercialization of the ongoing research product line of Qyuns
Therapeutics Co., Ltd. Since then, the Company has officially entered the monoclonal antibody
field, enriched its innovative product pipeline, and expanded its product portfolio in the field of
autoimmune diseases. At the same time, the two parties have signed an agreement on product
cooperation development and commercialization for HD-IM-0003 (QX001S) (A biological
analogue of the original drug StelaraUstekinumab, used for the treatment of psoriasis and Crohn's
disease, etc.) under development by Qyuns Therapeutics Co., Ltd in mainland China. HD-IM-0003
(QX001S) is expected to become the world's first biosimilar of the original drug Uselnumab with
annual sales of more than USD 6 billion. The two major indications, psoriasis and Crohn's disease,
span the two dominant clinical departments of Zhongmei Huadong, the department of immunology
and gastroenterology. HD-IM-0003 (QX001S) is scheduled to begin phase III clinical trials early
next year.
6. R&D of medical beauty products
During the reporting period, the core products of the Company’s wholly-owned subsidiary Sinclair
and its shareholding subsidiary U.S. R2 have achieved positive registration progress in overseas
countries. The new hyaluronic acid of the MaiLi series containing lidocaine has obtained the CE
certification of the European Union in June 2020; F1, a medical device related to frozen freckle
removal and whitening introduced from American R2 Company in the field of medical beauty, has
been approved by US FDA for 510(k) and is expected to be on the market in the US by the end of
2020. The Chinese clinical plan design of the above two products is progressing in an orderly way.
Sinclair's core product, Ellansé, a new long-action micropellet for injection for facial subcutaneous
implantation, can stimulate the production of collagen in beauty seekers' own skin, and improve
wrinkles permanently. Registered clinical trials have been completed in China, and the application
for marketing registration is progressing as planned. Silhouette cosmetic embedding is suitable for
mid-face lifting surgery and reshaping facial reconstruction. The registration in China has started,
and the clinical registration development plan and trial scheme are in preparation.
In August 2020, the Company signed a strategic cooperation agreement with Jetema, a listed
company in South Korea, to introduce its type A botulinum toxin products. The plan will start the
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
registration and declaration in China within this year.
7. Progress of consistency evaluation
During the reporting period, the Company generic quality consistency and curative effect evaluation
work goes well. Pioglitazone hydrochloride (30mg, 15mg) received a consistency evaluation
supplementary application acceptance notice. Mycophenolate mofetil capsules (0.25g) received a
consistency evaluation supplement application acceptance notice. Clarithromycin tablets (0.25g)
and Pioglitazone-Metformin tablets (15mg/500mg) completed the research and submission of
supplementary materials. Domperidone tablets (10mg) passed the consistency evaluation. Other
varieties to be evaluated are in the stage of pharmaceutical research, pilot scale-up or process
verification.
8. Patent work
In recent years, the Company attaches great importance to its own intellectual property protection
and achievements transformation application work. The number of patent applications and
authorization has increased steadily. Over the years, the Company has applied for more than 500
patents at home and abroad, among which more than 260 patents are authorized.
During the reporting period, the Company submitted a total of 20 patent applications and obtained 5
authorized patents.
XI. Risks and countermeasures
1. Industry policies and market impact
At present, China has continuously deepened reform in the field of medicine and health, and
various policies have been introduced intensively. Policies such as national centralized purchasing,
generic drug consistency evaluation, two-vote system, new drug approval, control of the
proportion of hospital drugs, secondary price negotiation in hospitals, and close medical
association will have a significant impact on the R&D, production, and circulation of drugs. At the
same time, with the implementation of medical insurance fee control, the reform of payment
methods, and the further implementation of the generic drug centralized purchasing policy, some
drugs will face the risk of further price reduction.
Countermeasures:The Company will pay close attention to, analyze and grasp major
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
national medicine policies and industry development trends, strengthen the layout of innovative
varieties and R&D investment through endogenous development and outward extension, reduce
production and operation risks through lean production, fully implement the international
development strategy and improve the technological quality advantages of products with
international standards. It will continue to tap the advantageous products and subdivisions of
aesthetic medicine to create new profit points. It will vigorously expand grassroots communities
and OTC markets, and increase the coverage of primary and retail terminal markets to maintain
stable growth in operations.
2. New drug R&D risk
New drug R&D involves a long cycle, large investment and many uncertainties. In the R&D
process, there are also risks such as shortage of high-level talents, failure to obtain registration and
approval for new drug R&D due to curative effect or safety reasons. After new drugs hit the market,
there are also risks such as market demand test, purchasing by bidding, medical insurance payment
access, and market competition for similar products. In addition, the investment in R&D will also
bring certain pressure to the realization of the Company’s current operating objectives.
Countermeasures: The Company will continue to increase investment in new drug R&D,
optimize the innovation mechanism, improve the scientific new drug research evaluation and
decision-making system, and establish close ties with well-known R&D institutions at home and
abroad, focus on the core treatment fields, continue to enrich and optimize the product pipelines
through independent project establishment and external introduction, vigorously develop
innovative drugs and generic drugs with high technical barriers, and gradually eliminate the
backward varieties that are not competitive in the market, increase the introduction of high-level
research personnel, build a research team that covers the entire development cycle of new drugs,
and strengthen the training and encouragement of core technical personnel, and accelerate the
construction of high-standard medicine R&D centers and pilot test bases.
3. Price reduction risk
With the intensified competition in the medicine market and the further promotion of the national
centralized purchasing policy, domestic medicine enterprises will face the pressure of policy-based
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
price reduction for a long time. There will be more competitive manufacturers of similar products,
leading to the risk of failure in bidding, which is also a negative factor affecting the Company’s
business performance.
Countermeasures: Focusing on scientific R&D and technological innovation, the Company will
improve the technological quality advantages of its products with international standards,
strengthen internal management and technological upgrading, strengthen cost competitive
advantages, carry out marketing assessment and incentives and channel sinking, continue to
expand the professional promotion team of county-level markets, vigorously expand primary
communities and OTC markets, and increase the coverage of primary and retail terminal markets
to maintain stable market growth.
Section V Important Matters
I. Annual General Meeting and Extraordinary General Meetings convened during the
reporting period
1. Annual General Meeting convened during the current reporting period
Proportion of
Meeting Nature participating Convened Date Disclosure Date Disclosure Index
investors
2019 Annual General Annual General
No. 2020-026;
Meeting of Meeting of 59.61% June 5th, 2020 June 5th, 2020
www.cninfo.com.cn
Shareholders Shareholders
2. Extraordinary general meetings convened at the request of preferred shareholders with resumed voting
rights:
□ Applicable √ N/A
II. Profit distribution and capitalization of capital reserves plan or proposal for the current
reporting period
□ Applicable √ N/A
The Company did not plan to distribute cash dividends, send bonus shares, or convert capital reserve into share capital during the
first half of 2019.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
III. Unfulfilled and overdue commitments from the related committed parties such as the
Company’s actual controller, shareholders, related parties, acquirer(s), and the Company
during the current reporting period
□ Applicable √ N/A
No such case during the reporting period.
IV. Engagement and disengagement of the accounting firm
Whether the half year report was audited
□ Applicable √ N/A
The Company’s half year report was not audited.
V. Explanation given by the board of directors and supervisory committee regarding the
“non-standard auditor’s report” issued by the accounting firm for the current reporting
period
□ Applicable √ N/A
VI. Explanation given by the board of directors regarding the “non-standard auditor’s
report” issued by the accounting firm for the prior year
□ Applicable √ N/A
VII. Bankruptcy and restructuring
□ Applicable √ N/A
No such case during the reporting period.
VIII. Litigations
Material litigation and arbitration
□ Applicable √ N/A
No such case during the reporting period.
Other litigations
□ Applicable √ N/A
IX. Media queries
□ Applicable √ N/A
There was no prevalent media query during the reporting period.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
X. Punishments and rectifications
□ Applicable √ N/A
No such case during the reporting period.
XI. Integrity of the Company and its controlling shareholders and actual controllers
□ Applicable √ N/A
XII. The implementation of Equity Incentive Plan, Employee Stock Incentive Plan, or other
incentive plans
□ Applicable √ N/A
No such case during the reporting period
XIII. Significant related-party transaction
1. Related-party transactions arising from routine operation
√Applicable □N/A
During the reporting period, the company's daily related-party transactions were implemented in accordance with the resolutions
of the shareholders' meeting.
2. Related-party transactions regarding purchase and disposal of assets or equity
□ Applicable √ N/A
No such case in the reporting period.
3. Significant related-party transactions arising from joint investments on external parties
□ Applicable √ N/A
No such case in the reporting period.
4. Related credit and debt transactions
□ Applicable √ N/A
No related-parties’ creditor’s rights or debts during the reporting period
5. Other significant related party transactions
□ Applicable √ N/A
No other significant related party transactions during the reporting period.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
XIV. The Company’s funds used by the controlling shareholder or its related parties for
non-operating purpose.
□ Applicable √ N/A
No such case during the reporting period.
XV. Significant contracts and their execution
1. Trusteeship, contracting and leasing
（1）Trusteeship
□ Applicable √ N/A
No such case in the reporting period.
（2）Contracting
□ Applicable √ N/A
No such case in the reporting period.
（3）Leasing
□ Applicable √ N/A
No such case in the reporting period.
2. Significant guarantees
√Applicable □ N/A
（1）Details of guarantees
During the reporting period, the company did not have any external guarantees except for providing guarantees for funds and loans
required for the daily operating activities of its subsidiaries in accordance with the resolutions of the board of directors and
shareholders.
（2）Illegal provision of guarantees for external parties
□ Applicable √ N/A
No such case in the reporting period.
3. Entrusted financial management
□ Applicable √ N/A
No entrusted finance during the reporting period.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
4. Other significant contracts
□ Applicable √ N/A
XVI. Social responsibility
1. Significant environmental problems
Whether the Company or the Company’s subsidiaries are critical pollution enterprises disclosed by national environmental
protection department
Yes
2. Fulfillment of the social responsibility of targeted poverty alleviation
□ Applicable √ N/A
XVII. Other significant events
□ Applicable √ N/A
No such case in the reporting period.
XVIII. Other significant events of the Company’s subsidiaries
□ Applicable √ N/A
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Section VI Share Change and Shareholders
I. Changes in Share Capital
1. Table of changes in share capital
Unit: Share
Before the change Changes in the period（＋，－） After the change
Number of Conversion of capital Number of
Proportion New shares Bonus shares Others Subtotal Proportion
shares reserve into shares shares
I. Shares subject to conditional restriction 25,245 0.00% 0 0 0 0 0 25,245 0.00%
1. Shares held by the state 0 0.00% 0 0 0 0 0 0 0.00%
2. Shares held by state-owned corporations 0 0.00% 0 0 0 0 0 0 0.00%
3. Shares held by other domestic investors 25,245 0.00% 0 0 0 0 0 25,245 0.00%
Including: held by domestic corporations 0 0.00% 0 0 0 0 0 0 0.00%
held by domestic natural persons 25,245 0.00% 0 0 0 0 0 25,245 0.00%
4. Shares held by overseas investors 0 0.00% 0 0 0 0 0 0 0.00%
Including: held by overseas corporations 0 0.00% 0 0 0 0 0 0 0.00%
held by overseas natural persons 0 0.00% 0 0 0 0 0 0 0.00%
II. Shares without restriction 1,749,784,303 100.00% 0 0 0 0 0 1,749,784,303 100.00%
1. RMB ordinary shares 1,749,784,303 100.00% 0 0 0 0 0 1,749,784,303 100.00%
2. Domestically listed foreign shares 0 0.00% 0 0 0 0 0 0 0.00%
3. Foreign shares listed overseas 0 0.00% 0 0 0 0 0 0 0.00%
4. Others 0 0.00% 0 0 0 0 0 0 0.00%
III. Total number of shares 1,749,809,548 100.00% 0 0 0 0 0 1,749,809,548 100.00%
Reason for the changes in share capital
□ Applicable √ N/A
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Approval for changes in share capital
□ Applicable √N/A
Transfer of shares
□ Applicable √N/A
Progress of share repurchase
□ Applicable √ N/A
Progress of reducing repurchased shares through centralized bidding
□ Applicable √N/A
Effects of changes in share capital on the basic earnings per share, diluted earnings per share for the most recent year and the most recent period, the net assets per share attributable to the
Company’s shareholders of common shares and other financial indicators
□ Applicable √ N/A
Other disclosures the Company deems necessary or required by securities regulatory authorities
□ Applicable √ N/A
2. Changes in restricted shares
□ Applicable √ N/A
II. Issuance and listing of securities
□ Applicable √ N/A
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
III. Total number of shareholders and their shareholdings
Unit: Share
Total number of preference shareholders with restoration
Total number of common shareholders at the end of the
132,086 of the voting rights at the end of the reporting period (if 0
reporting period
any)
Particulars about shareholders with a shareholding ratio over 5% or the Top 10 shareholders
Share- Total shares held at Changes in The number of common Pledged or frozen
The number of
Nature of shares held with trading
Name of shareholder holding the end of the the reporting shares held without
shareholder restrictions restricted Status Amount
ratio reporting period period trading restriction
shares held
China Grand Enterprises, Inc. 中国远大集团有限 Domestic
non-state-owned 41.77% 730,938,157 0 0 730,938,157 Pledged 263,884,000
责任公司
corporation
Hangzhou Huadong Medicine Group Co., Ltd. 杭 State-owned
16.46% 288,000,000 0 0 288,000,000
州华东医药集团有限公司 corporation
Hong Kong Securities Clearing Company Ltd. 香 Overseas
2.02% 35,403,136 -1,383,584 0 35,403,136
港中央结算有限公司 corporation
National Social Security Fund Portfolio 106 全国社
Other 1.59% 27,797,163 4,455,650 0 27,797,163
保基金一零六组合
China Securities Finance Co., Ltd. 中国证券金融
Other 1.27% 22,186,818 0 0 22,186,818
股份有限公司
Taikang Life Insurance Co., Ltd. – Unit-linked –
Proactive growth 泰康人寿保险有限责任公司— Other 0.56% 9,815,785 -50,926 0 9,815,785
投连—积极成长
Basic Endowment Insurance Fund Portfolio 807 基
Other 0.51% 8,873,423 3,522,910 0 8,873,423
本养老保险基金八零七组合
Domestic natural
#Yi, Jiandong 易建东 0.47% 8,279,987 8,279,987 0 8,279,987
person
Basic Endowment Insurance Fund Portfolio 15041
Other 0.44% 7,623,568 2,505,480 0 7,623,568
基本养老保险基金一五零四一组合
Bank of China Ltd- Harvest Healthcare Equity
Other 0.28% 4,848,229 180,000 0 4,848,229
Securities Investment Fund 中国银行股份有限公
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
司－嘉实医疗保健股票型证券投资基金
Strategic investors or general corporations become the top 10
N/A
shareholders due to the placement of new shares (if any)
Explanation on associated relationship or concerted actions among the The Company does not know whether the above-mentioned shareholders are related parties or whether they are
above-mentioned shareholders: acting-in-concert parties with one another.
Particulars about the Top 10 common shareholders holding unrestricted shares
Type of shares
Name of shareholder Number of unrestricted common shares at the end of reporting period
Type Number
RMB common
China Grand Enterprises, Inc. 中国远大集团有限责任公司 730,938,157 730,938,157
shares
Hangzhou Huadong Medicine Group Co., Ltd. 杭州华东医药集团有限 RMB common
288,000,000 288,000,000
公司 shares
RMB common
Hong Kong Securities Clearing Company Ltd. 香港中央结算有限公司 35,403,136 35,403,136
shares
RMB common
National Social Security Fund Portfolio 106 全国社保基金一零六组合 27,797,163 27,797,163
shares
RMB common
China Securities Finance Co., Ltd. 中国证券金融股份有限公司 22,186,818 22,186,818
shares
Taikang Life Insurance Co., Ltd. – Unit-linked – Proactive growth 泰康 RMB common
9,815,785 9,815,785
人寿保险有限责任公司—投连—积极成长 shares
Basic Endowment Insurance Fund Portfolio 807 基本养老保险基金八零 RMB common
8,873,423 8,873,423
七组合 shares
RMB common
#Yi, Jiandong 易建东 8,279,987 8,279,987
shares
Basic Endowment Insurance Fund Portfolio 15041 基本养老保险基金一 RMB common
7,623,568 7,623,568
五零四一组合 shares
Bank of China Ltd- Harvest Healthcare Equity Securities Investment RMB common
4,848,229 4,848,229
Fund 中国银行股份有限公司－嘉实医疗保健股票型证券投资基金 shares
Explanation on associated relationships and concerted actions among the
Top 10 common shareholders without trading restriction, and between the The Company does not know whether the above-mentioned common shareholders are related parties or whether they
Top 10 common shareholders without trading restriction and the Top 10 are acting-in-concert parties.
common shareholders
Notes on financing and securities loan conducted by top 10 shareholders At the end of the current reporting period, Yi Jiandong, the eighth shareholder of the Company, held 8,250,087 shares
(if any) of the Company through financing and securities loan.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Whether the Company’s Top 10 common shareholders or the Top 10 common shareholders without trading restriction have carried out any agreement to repurchase transaction during the
reporting period
□ Yes √ No
No such case during the reporting period.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
IV. Particulars about change in the controlling shareholder
Change of the controlling shareholder during the current reporting period
□ Applicable √ N/A
No such cases in the reporting period
Change of the actual controller during the reporting period
□ Applicable √ N/A
No such cases in the reporting period
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Section VII Preferred Shares
□ Applicable √ N/A
No such case during the reporting period.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Section VIII Convertible Corporate Bonds
□ Applicable √ N/A
No such case during the reporting period.
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Section IX Directors, Supervisors, Senior Managers
I. Changes in shareholding of directors, supervisors and senior managers
□ Applicable √ N/A
There are no shareholding changes of directors, supervisors and senior management personnel during the reporting period
(referring to 2019 annual report).
II. Change of directors, supervisors and senior managers
□ Applicable √ N/A
There are no changes of directors, supervisors and senior management personnel during the reporting period (referring to
2019 annual report).
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Section X Information about Corporate Bonds
Whether the Company has publicly issued corporate bonds on stock exchange place, which has not terminated or terminated but fail
to collect the full payment before the half year report authorized disclosure date.
No
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Section XI. Financial Report
I. Audit report
Has the half year report been audited?
□ Yes √ No
The half year report has not been audited.
II. Financial statements
The currency unit of statements in the financial notes is: RMB yuan.
1. Consolidated balance sheet
Prepared by: Huadong Medicine Co., Ltd.
June 30th, 2020
Unit: RMB yuan
Item June 30th, 2020 December 31st, 2019
Current assets:
Cash and bank balances 2,470,052,752.73 2,402,730,395.39
Settlement reserve - -
Lending to other banks and other financial institutions - -
Financial assets for trade - -
Financial assets that are measured at fair value and whose changes
- -
are included in current gains/losses
Derivative financial assets - -
Notes receivable
Accounts receivable 6,485,487,088.32 6,092,305,184.47
Accounts receivable for financing 1,223,857,309.55 683,884,625.14
Prepayments 447,717,238.96 363,246,612.94
Premiums receivable - -
Reinsurance accounts receivable - -
Reinsurance contract reserve receivable - -
Other receivables 121,818,122.97 92,201,271.22
Including: Interests receivable - -
Dividends receivable 815,965.44 815,965.44
Financial assets purchased for resale - -
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Item June 30th, 2020 December 31st, 2019
Inventories 3,527,719,237.10 4,038,975,496.93
Contract assets - -
Assets held for sale - -
Non-current assets due within one year - -
Other current assets 19,200,711.58 62,526,471.96
Total current assets 14,295,852,461.21 13,735,870,058.05
Non-current assets:
Loans and prepayments issuance - -
Debt investments - -
Financial assets available for sale - -
Other debt investments - -
Held-to-maturity investments - -
Long-term receivables - -
Long-term equity investments 419,056,055.31 222,595,018.54
Other equity instrument investments 241,893,621.44 241,675,712.05
Other non-current financial assets - -
Real estate properties for investment 21,200,079.95 21,701,908.75
Fixed assets 2,144,814,526.08 2,175,216,842.65
Constructions in progress 2,078,384,147.26 1,829,808,233.19
Biological assets for production - -
Oil & gas assets - -
Right-of-use assets - -
Intangible assets 1,491,462,256.94 1,454,900,160.45
Development expenditures - -
Goodwill 1,469,617,262.10 1,469,617,262.10
Long-term unamortized expenses 9,932,911.76 12,289,677.31
Deferred tax assets 130,993,835.87 116,157,614.47
Other non-current assets 199,332,824.16 184,141,659.07
Total non-current assets 8,206,687,520.87 7,728,104,088.58
Total assets 22,502,539,982.08 21,463,974,146.63
Current liabilities:
Short-term borrowings 1,362,252,205.85 655,549,973.27
Borrowing from the central bank - -
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Item June 30th, 2020 December 31st, 2019
Borrowing from other banks and other financial institutions - -
Financial liabilities for trade - -
Financial liabilities that are measured at fair value and whose
- -
changes are included in current gains/losses
Derivative financial liabilities - -
Notes payable 422,541,634.85 613,374,356.61
Accounts payable 3,708,563,900.91 3,789,054,234.58
Receipts in Advance 1,615,154.91 254,888,911.30
Contract liabilities 54,134,614.38 -
Financial assets sold for repurchase - -
Absorbing deposits and due from banks - -
Receipts for buying and selling securities as proxy - -
Receipts for underwriting securities as proxy - -
Payroll payable 173,771,385.76 132,584,982.71
Taxes payable 359,453,727.61 532,802,157.61
Other payables 1,932,519,496.00 1,365,152,290.99
Including: Interests payable - -
Dividends payable 224,219.60 224,219.60
Handling fees and commissions payable - -
Reinsurance accounts payable - -
Liabilities held for sale - -
Non-current liabilities due within one year 20,746,317.77 1,053,231,727.73
Other current liabilities - -
Total current liabilities 8,035,598,438.04 8,396,638,634.80
Non-current liabilities:
Insurance policy reserve - -
Long-term borrowings 125,199,582.60 -
Bonds payable - -
Including: Preferred shares - -
Perpetual bonds - -
Lease liabilities - -
Long-term payables 49,079,373.13 48,080,030.00
Long-term employee benefits payable - -
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Item June 30th, 2020 December 31st, 2019
Provisions 51,482,784.16 52,066,643.01
Deferred income 56,436,438.73 60,960,255.68
Deferred tax liabilities 45,635,531.26 39,604,343.27
Other non-current liabilities - -
Total non-current liabilities: 327,833,709.88 200,711,271.96
Total liabilities 8,363,432,147.92 8,597,349,906.76
Owners’ Equity:
Share capital 1,749,809,548.00 1,749,809,548.00
Other equity instruments - -
Including: Preferred shares - -
Perpetual bonds - -
Capital reserves 2,157,862,037.14 2,158,080,661.07
Less: Treasury shares - -
Other comprehensive income 61,541,827.03 22,792,488.80
Special reserve - -
Surplus reserves 710,359,967.51 710,359,967.51
General risk reserve - -
Retained earnings 8,909,672,690.43 7,668,434,642.62
Total owners’ equity attributable to owner of the Company 13,589,246,070.11 12,309,477,308.00
Minority interest 549,861,764.05 557,146,931.87
Total owners’ equity 14,139,107,834.16 12,866,624,239.87
Total liabilities & owners’ equity 22,502,539,982.08 21,463,974,146.63
Legal representative: Liang Lyu
Person in charge of accounting work: Liang Lyu
Person in charge of the Accounting Department: Renbo Qiu
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
2. Balance sheet of the parent company
Unit: RMB yuan
Item June 30th, 2020 December 31st, 2019
Current assets:
Cash and bank balances 1,336,541,043.66 893,939,724.56
Financial assets for trade - -
Financial assets measured at fair value and whose changes are included
- -
in current gains/losses
Derivative financial assets - -
Notes receivable - -
Accounts receivable 3,550,755,741.36 3,601,796,850.84
Accounts receivable for financing 375,970,101,31 102,285,661.94
Prepayments 111,464,181.52 183,776,687.98
Other receivables 737,320,561.71 857,127,207.17
Including: Interests receivable - -
Dividends receivable - -
Inventories 1,422,056,544.16 1,726,815,773.41
Contract assets - -
Assets held for sale - -
Non-current assets due within one year - -
Other current assets - 4,529,331.87
Total current assets 7,534,108,173.72 7,370,271,237.77
Non-current assets:
Debt investments - -
Financial assets available for sale - -
Other debt investments - -
Held-to-maturity investments - -
Long-term receivables - -
Long-term equity investments 4,883,803,099.45 4,809,521,228.65
Other equity instrument investments 92,108,957.26 92,108,957.26
Other non-current financial assets - -
Real estate properties for investment 8,358,692.86 8,591,809.18
Fixed assets 143,430,012.76 144,102,366.02
Constructions in progress 21,973,342.44 15,728,406.26
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Item June 30th, 2020 December 31st, 2019
Biological assets for production - -
Oil & gas assets - -
Right-of-use assets - -
Intangible assets 45,140,968.27 45,226,361.12
Development expenditures - -
Goodwill - -
Long-term unamortized expenses 810,795.60 975,689.14
Deferred tax assets 48,924,184.37 48,849,165.52
Other non-current assets 8,076,419.28 8,076,419.28
Total non-current assets 5,252,626,472.29 5,173,180,402.43
Total assets 12,786,734,646.01 12,543,451,640.20
Current liabilities:
Short-term borrowings 930,707,405.39 55,000,000.80
Financial liabilities for trade - -
Financial liabilities that are measured at fair value and whose changes
- -
are included in current gains/losses
Derivative financial liabilities - -
Notes payable 53,979,780.29 81,036,745.94
Accounts payable 2,211,018,826.31 2,469,675,798.54
Receipts in advance - 52,914,932.34
Contract liabilities 57,464,001.86 -
Payroll payable 3,148,520.04 3,203,215.95
Taxes payable 71,670,406.44 32,881,935.68
Other payables 446,072,333.60 638,551,969.04
Including: Interests payable - -
Dividends payable 224,219.60 224,219.60
Liabilities held for sale - -
Non-current liabilities due within one year - 1,028,002,952.88
Other current liabilities - -
Total current liabilities 3,774,061,273.93 4,361,267,551.17
Non-current liabilities:
Long-term borrowing - -
Bonds payable - -
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Item June 30th, 2020 December 31st, 2019
Including: Preferred shares - -
Perpetual bonds - -
Lease liabilities - -
Long-term payables - -
Long-term employee benefits payable - -
Provision - -
Deferred income 41,981,848.41 43,264,785.87
Deferred tax liabilities - -
Other non-current liabilities - -
Total non-current liabilities 41,981,848.41 43,264,785.87
Total liabilities 3,816,043,122.34 4,404,532,337.04
Owners’ Equity:
Share capital 1,749,809,548.00 1,749,809,548.00
Other equity instruments - -
Including: Preferred shares - -
Perpetual bonds - -
Capital reserves 2,168,451,528.01 2,168,451,528.01
Less: Treasury shares - -
Other comprehensive income 847,526.06 847,526.06
Special reserve - -
Surplus reserves 788,215,726.95 788,215,726.95
Retained earnings 4,263,367,194.65 3,431,594,974.14
Total owners’ equity 8,970,691,523.67 8,138,919,303.16
Total liabilities & owners’ equity 12,786,734,646.01 12,543,451,640.20
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
3. Consolidated income statement
Unit: RMB yuan
Amount incurred Amount incurred
Item during the current during the previous
period period
I. Total operating income 16,660,934,157.64 18,248,667,616.98
Including: Operating revenue 16,660,934,157.64 18,248,667,616.98
Interests received - -
Premiums earned - -
Handling fees and commissions received - -
II. Total operating cost 14,896,020,510.59 16,371,950,305.33
Including: Operating cost 10,622,393,655.53 12,163,207,615.70
Interests paid - -
Handling fees and commissions paid - -
Surrender value - -
Net payment of insurance claims - -
Net appropriation of policy reserve - -
Policy dividends paid - -
Reinsurance expenses - -
Business taxes and surcharges 101,439,816.68 105,568,634.37
Selling expenses 3,168,607,371.02 3,053,727,531.60
Administrative expenses 506,362,613.35 526,657,630.43
Research and Development(R&D) expenses 479,685,981.21 468,669,112.56
Financial expenses 17,531,072.80 54,119,780.67
Including: Interests expenses 47,068,116.52 66,248,306.83
Interests income 30,675,897.56 19,838,565.33
Add: Other income 93,032,855.48 86,070,226.02
Investment income -10,002,163.90 -6,159,135.96
Including: Investment gains (losses) in associated enterprise and
-3,173,963.23 8,057,080.97
joint-venture enterprise
Gains on the derecognition of financial assets measured at amortized
- -
cost
Gains on exchange - -
Gains on net exposure hedging - -
Gains on changes in fair value - -
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount incurred Amount incurred
Item during the current during the previous
period period
Credit impairment gains (losses) -29,841,283.63 -64,662,855.38
Impairment gains (losses) of assets - 4,216,269.24
Gains (Losses) on assets disposal 301,166,257.18 111,195,572.05
III. Operating profit 2,119,269,312.18 2,007,377,387.62
Add: Non-operating income 10,190,295.80 4,163,247.36
Less: Non-operating expenses 20,122,066.85 16,437,354.10
IV. Total profit 2,109,337,541.13 1,995,103,280.88
Less: Income tax expenses 334,125,800.82 331,912,875.38
V. Net profit 1,775,211,740.31 1,663,190,405.50
(I) Classification by continuous operation
1. Net profit (losses) from continuous operation 1,775,211,740.31 1,663,190,405.50
2. Net profit (losses) from terminational operation - -
(II) Classification by attribution of ownership
1. Net profit attributable to owners of the parent company 1,731,184,721.25 1,596,283,418.31
2. Profit or loss attributable to minority shareholders 44,027,019.06 66,906,987.19
VI. Other comprehensive income, net of income tax 38,749,338.23 -7,518,326.61
Other comprehensive income attributable to owners of the parent company, net
38,749,338.23 -7,518,326.61
of tax
(I) Other comprehensive income that cannot be reclassified into gains (losses) 217,909.39 -
1.Changes in remeasurement on the defined benefit plan - -
2. Other comprehensive income that cannot be reclassified into
- -
gains/losses under equity method
3. Changes in fair value of other equity instrument investments 217,909.39 -
4. Changes in fair value of credit risk of the enterprise - -
5. Others - -
(II) Other comprehensive income to be reclassified into gains (losses) 38,531,428.84 -7,518,326.61
1. Other comprehensive income that can be reclassified into
- -
gains/losses under equity method
2. Changes in fair value of other debt investments - -
3. Amount of financial assets reclassified into other comprehensive
- -
income
4. Credit impairment reserve of other debt investments - -
5. Cash flow hedging reserve - -
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount incurred Amount incurred
Item during the current during the previous
period period
6. Exchange differences arising on conversion of financial statements
38,531,428.84 -7,518,326.61
denominated in foreign currencies
7. Others - -
Net amount after tax of other comprehensive income attributable to minority
- -
shareholders
VII. Total comprehensive income 1,813,961,078.54 1,655,672,078.89
Total comprehensive income attributable to owners of the parent company 1,769,934,059.48 1,588,765,091.70
Total comprehensive income attributable to minority shareholders 44,027,019.06 66,906,987.19
VIII. Earnings per share (EPS):
(I) Basic EPS 0.9894 0.9123
(II) Diluted EPS 0.9894 0.9123
As for enterprise merger under the same control in the current period, the net profit generated by the merged party before the merger
is 0.00 yuan, and that generated during the previous period is 0.00 yuan.
Legal representative: Liang Lyu
Person in charge of accounting work: Liang Lyu
Person in charge of the Accounting Department: Renbo Qiu
4. Income statement of the parent company
Unit: RMB yuan
Amount incurred
Amount incurred during
Item during the current
the previous period
period
I. Total operating income 7,916,714,385.48 9,210,400,098.69
Less: Total operating cost 7,466,214,287.18 8,669,204,076.13
Business taxes and surcharges 12,247,764.43 9,947,706.39
Selling expenses 176,753,942.93 203,130,230.54
Administrative expenses 69,866,518.00 63,897,687.26
Research and Development (R&D) expenses - -
Financial expenses 17,433,290.41 25,124,191.50
Including: Interests expenses 37,898,542.00 39,884,052.06
Interests income 19,437,282.41 15,767,836.91
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount incurred
Amount incurred during
Item during the current
the previous period
period
Add: Other income 10,042,695.77 2,774,983.45
Investment income 1,167,513,101.57 852,147,856.57
Including: Investment gains (losses) in associated enterprise and
- -
joint-venture enterprise
Gains on the derecognition of financial assets measured at
- -
amortized cost
Gains on net exposure hedging - -
Gains from changes in fair values - -
Credit impairment gains (Losses) 25,531,116.40 -62,996,903.82
Impairment gains (losses) of assets - -
Asset disposal income -6,556.33 111,184,666.83
II. Operating profit 1,377,278,939.94 1,142,206,809.90
Add: Non-operating income 4,902,319.33 3,202,697.60
Less: Non-operating expenses 6,681,349.13 4,336,092.12
III. Total profit 1,375,499,910.14 1,141,073,415.38
Less: Income tax expenses 53,781,016.19 87,991,470.88
IV. Net profit 1,321,718,893.95 1,053,081,944.50
(I) Net profit (losses) from continuous operations 1,321,718,893.95 1,053,081,944.50
(II) Net profit (losses) from discontinued operations - -
V. Other comprehensive income, net of income tax - -
(I) Other comprehensive income that cannot be reclassified into
- -
gains/losses
1. Changes in remeasurement on the defined benefit plan - -
2. Other comprehensive income that cannot be reclassified into
- -
gains/losses under equity method
3. Changes in fair value of other equity instrument investments - -
4. Changes in fair value of credit risk of the enterprise - -
5. Others - -
(II) Other comprehensive income to be reclassified into gains/losses - -
1. Other comprehensive income that can be reclassified into
- -
gains/losses under equity method
2. Changes in fair value of other debt investments - -
3. Gains/losses on changes in fair value of financial assets - -
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount incurred
Amount incurred during
Item during the current
the previous period
period
available for sale
4. Amount of financial assets reclassified into other
- -
comprehensive income
5. Gains/losses on held-to-maturity investments reclassified as
- -
financial assets available for sale
6. Credit impairment reserve of other debt investments - -
7. Cash flow hedging reserve - -
8. Exchange differences from translation of foreign currency
- -
financial statements
9. Others - -
VI. Total comprehensive income 1,321,718,893.95 1,053,081,944.50
VII. Earnings per share (EPS): - -
(I) Basic EPS - -
(II) Diluted EPS - -
5. Consolidated cash flow statement
Unit: RMB yuan
Amount incurred
Amount incurred during
Item during the previous
the current period
period
I. Cash flows from operating activities：
Cash received from sale of goods or rendering of services 17,305,533,832.79 18,923,396,329.01
Net increase in customer deposits and due from banks - -
Net increase in borrowing from the central bank - -
Net increase in borrowing from other financial institutions - -
Cash from the premium of the original insurance policy - -
Net cash from reinsurance - -
Net increase in deposits and investment of the insured - -
Cash from interests, handling fees and commissions - -
Net increase in borrowing from other banks and other financial
- -
institutions
Net increase in funds for repurchase - -
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount incurred
Amount incurred during
Item during the previous
the current period
period
Net cash received for buying and selling securities as proxy - -
Receipts of tax refunds 15,546,329.17 3,229,994.72
Other cash receipts to operating activities 510,015,283.23 611,030,274.34
Sub-total of cash inflows from operating activities 17,831,095,445.19 19,537,656,598.07
Cash payments for goods purchased and services received 10,990,145,679.18 12,781,285,389.24
Net increase in customer loans and prepayments - -
Net increase in deposits of central bank and due from banks - -
Cash payments for original insurance claims - -
Net increase in lending to other banks and other financial institutions - -
Cash payments for interests, handling fees and commissions - -
Cash payments for policy dividends - -
Cash payment to and on behalf of employees 1,139,977,576.42 1,131,751,688.96
Payments of various types of taxes 1,417,914,481.02 1,239,844,402.86
Other cash payments in relation to operating activities 3,027,515,041.28 3,421,746,780.15
Sub-total of cash outflows from operating activities 16,575,552,777.90 18,574,628,261.21
Net cash flow from Operating Activities 1,255,542,667.29 963,028,336.86
II. Cash flows from Investing Activities
Cash receipts from recovery of investments - -
Cash receipts from investment income 900,000.00 900,000.00
Net cash receipts from disposals of fixed assets, intangible assets and
347,790,583.31 54,262,567.55
other long-term assets
Net cash from disposal of subsidiaries and other business units - -
Other cash receipts in relation to investing activities - -
Sub-total of cash inflows from investing activities 348,690,583.31 55,162,567.55
Cash payments for purchase and construction of fixed assets, intangible
522,164,019.70 617,252,846.16
assets and other long-term assets
Cash payments for investment 70,535,000.00 119,387,400.00
Net increase in pledge loans - -
Net cash paid for acquisition of subsidiaries and other business units 130,000,000.00 1,199,793.01
Other cash payments in relation to investing activities - 50,000,000.00
Sub-total of cash outflows for investing activities 722,699,019.70 787,840,039.17
Net cash flow from Investing Activities -374,008,436.39 -732,677,471.62
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount incurred
Amount incurred during
Item during the previous
the current period
period
III. Cash flows from Financing Activities:
Cash receipts from capital contributions - 9,800,000.00
Including: Cash receipts from capital contributions from minority owners
- 9,800,000.00
of subsidiaries
Cash receipts from borrowings 1,681,800,534.35 1,311,739,655.44
Other cash receipts in relation to financing activities 340,000,000.00 4,000,000.00
Sub-total of cash inflows from financing activities 2,021,800,534.35 1,325,539,655.44
Cash repayment of borrowings 1,851,002,797.43 950,935,633.74
Cash payments for distribution of dividends or profits or settlement of
605,214,724.28 634,868,602.38
interest expenses
Including: Dividends and profits paid by subsidiaries to minority
49,000,000.00 49,000,000.00
shareholders
Other cash payments in relation to financing activities 308,940,044.54 17,862,528.23
Sub-total of cash outflows from financing activities 2,765,157,566.25 1,603,666,764.35
Net cash flows from Financing Activities -743,357,031.90 -278,127,108.91
IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents 40,923,061.58 -9,291,082.20
V. Net increase in cash and cash equivalents 179,100,260.58 -57,067,325.87
Add: Opening balance of cash and cash equivalents 2,231,771,546.50 2,398,709,506.06
VI. Closing balance of cash and cash equivalents 2,410,871,807.08 2,341,642,180.19
6. Cash flow statement of the parent company
Unit: RMB yuan
Amount incurred
Amount incurred during
Item during the previous
the current period
period
I. Cash flows from Operating Activities：
Cash receipts from the sale of goods and the rendering of services 8,598,969,576.40 9,926,893,044.27
Receipts of tax refund - 223,445.99
Other cash receipts in relation to operating activities 325,891,677.56 399,652,059.84
Sub-total of cash inflows from operating activities 8,924,861,253.96 10,326,768,550.10
Cash payments for goods acquired and services received 8,075,190,116.72 9,719,493,832.22
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount incurred
Amount incurred during
Item during the previous
the current period
period
Cash payments to and on behalf of employees 123,512,245.38 100,710,485.52
Payments of various types of taxes 120,889,907.22 165,549,358.69
Other cash payments in relation to operating activities 395,669,539.19 490,571,282.82
Sub-total of cash outflows for operating activities 8,715,261,808.51 10,476,324,959.25
Net cash flow from Operating Activities 209,599,445.45 -149,556,409.15
II. Cash flows from Investing Activities
Cash receipts from recovery of investments - -
Cash receipts from investment income 601,000,000.00 431,000,000.00
Net cash receipts from disposals of fixed assets, intangible assets and
45,538.08 53,784,248.61
other long-term assets
Net cash from disposal of subsidiaries and other business units - -
Other cash receipts in relation to investing activities 691,791,772.13 381,500,000.00
Sub-total of cash inflows from investing activities 1,292,837,310.21 866,284,248.61
Cash payments for purchase and construction of fixed assets, intangible
13,910,582.10 28,586,755.97
assets and other long-term assets
Cash payments for investment 74,281,870.80 245,607,400.00
Net cash paid for acquisition of subsidiaries and other business units - -
Other cash payments in relation to investing activities 549,000,000.00 491,750,000.00
Sub-total of cash outflows for investing activities 637,192,452.90 765,944,155.97
Net cash flows from Investing Activities 655,644,857.31 100,340,092.64
III. Cash flows from Financing Activities:
Cash receipts from absorbing investments - -
Cash receipts from borrowings 1,040,651,082.42 654,529,856.00
Other cash receipts in relation to financing activities 673,000,000.00 70,000,000.00
Sub-total of cash inflows from financing activities 1,713,651,082.42 724,529,856.00
Cash repayments of borrowings 1,165,656,610.43 374,529,856.00
Cash payments for distribution of dividends or profits or settlement of
545,718,585.88 548,199,746.43
interest expenses
Other cash payments in relation to financing activities 434,406,787.51 77,000,000.00
Sub-total of cash outflows from financing activities 2,145,781,983.82 999,729,602.43
Net cash flow from Financing Activities -432,130,901.40 -275,199,746.43
IV. Effect of foreign exchange rate changes on Cash and Cash Equivalents 1,987,917.74 5,850.73
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount incurred
Amount incurred during
Item during the previous
the current period
period
V. Net increase in cash and cash equivalents 435,101,319.10 -324,410,212.21
Add: Opening balance of cash and cash equivalents 893,929,724.56 1,384,560,116.18
VI. Closing balance of Cash and Cash Equivalents 1,329,031,043.66 1,060,149,903.97
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
7. Consolidated statement of changes in owners’ Equity
Amount in the current period
Unit: RMB yuan
Amount for the first half of 2020
Ownership interest attributable to the parent company
Item Other
Retained Minority interests Total owners’ equity
Share capital Capital Reserves comprehensive Surplus reserve Sub-total
earnings
income
I. Closing balance of the prior year 1,749,809,548.00 2,158,080,661.07 22,792,488.80 710,359,967.51 7,668,434,642.62 12,309,477,308.00 557,146,931.87 12,866,624,239.87
Add: changes in accounting
- - - - - - - -
policies
Error correction in the
- - - - - - - -
prior periods
Merger of enterprises
- - - - - - - -
under the same control
Others - - - - - - - -
II. Opening balance of the current
1,749,809,548.00 2,158,080,661.07 22,792,488.80 710,359,967.51 7,668,434,642.62 12,309,477,308.00 557,146,931.87 12,866,624,239.87
year
III. Amount of change in the current
- -218,623.93 38,749,338.23 - 1,241,238,047.81 1,279,768,762.11 -7,285,167.82 1,272,483,594.29
period
(I) Total comprehensive income - - 38,749,338.23 - 1,731,184,721.25 1,769,934,059.48 44,027,019.06 1,813,961,078.54
(II) Capital contributed by owners
- - - - - - - -
and capital decreases
1. Common shares invested by
- - - - - - - -
owners
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount for the first half of 2020
Item
Ownership interest attributable to the parent company Minority interests Total owners’ equity
2. Capital invested by holders of
- - - - - - - -
other equity instruments
3. Amount of share-based payment
- - - - - - - -
included in ownership interest
4. Others - - - - - - - -
(III) Profit distribution - - - - -489,946,673.44 -489,946,673.44 -49,000,000.00 -538,946,673.44
1.Withdrawal to surplus reserves - - - - - - - -
2. Withdrawal of general risk
- - - - - - - -
reserve
3.Distributions to shareholders - - - - -489,946,673.44 -489,946,673.44 -49,000,000.00 -538,946,673.44
4.Others - - - - - - - -
(IV) Internal conversion of
- - - - - - - -
ownership interest
1. Capital (or share capital)
increase from capital reserve - - - - - - - -
conversion
2. Capital (or share capital)
increase from surplus reserve - - - - - - - -
conversion
3. Recovery of losses by surplus
- - - - - - - -
reserve
4. Retained earnings from transfer
of changes in the defined benefit - - - - - - - -
plan
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount for the first half of 2020
Item
Ownership interest attributable to the parent company Minority interests Total owners’ equity
5. Retained earnings from transfer
- - - - - - - -
of other comprehensive income
6. Others - - - - - - - -
(V) Special reserve - - - - - - - -
1. Withdrawal in the current period - - - - - - - -
2. Use in the current period - - - - - - - -
(VI) Others - -218,623.93 - - - -218,623.93 -2,312,186.88 -2,530,810.81
IV. Closing balance of the current
1,749,809,548.00 2,157,862,037.14 61,541,827.03 710,359,967.51 8,909,672,690.43 13,589,246,070.11 549,861,764.05 14,139,107,834.16
period
Amount in the prior period
Unit: RMB yuan
Amount for the first half of 2019
Item Ownership interest attributable to the parent company Minority Total owners’
Share capital Capital Reserves Other Surplus reserve Retained Sub-total interests equity
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount for the first half of 2019
Item
Ownership interest attributable to the parent company Minority Total owners’
comprehensive earnings interests equity
income
I. Closing balance of the prior
1,458,174,624.00 2,455,526,993.18 -22,426,154.59 592,903,007.98 5,453,970,525.96 9,938,148,996.53 487,379,570.98 10,425,528,567.51
year
Add: changes in
- - - - - - - -
accounting policies
Error correction in
- - - - - - - -
the prior periods
Merger of
enterprises under the same - - - - - - - -
control
Others - - - - - - - -
II. Opening balance of the
1,458,174,624.00 2,455,526,993.18 -22,426,154.59 592,903,007.98 5,453,970,525.96 9,938,148,996.53 487,379,570.98 10,425,528,567.51
current year
III. Amount of change in the
291,634,924.00 -297,694,046.61 -7,518,326.61 - 1,117,800,483.46 1,104,223,034.24 26,766,109.81 1,130,989,144.05
current period
(I) Total comprehensive
- - -7,518,326.61 - 1,596,283,418.31 1,588,765,091.70 66,906,987.19 1,655,672,078.89
income
(II) Capital contributed by
owners and capital - - - - - - 8,859,122.62 8,859,122.62
decreases
1.Common shares
- - - - - - 9,800,000.00 9,800,000.00
invested by owners
2. Capital invested by - - - - - - - -
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The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount for the first half of 2019
Item
Ownership interest attributable to the parent company Minority Total owners’
holders of other equity interests equity
instruments
3. Amount of
share-based payment included - - - - - - - -
in ownership interest
4. Others - - - - - - -940,877.38 -940,877.38
(III) Profit distribution - - - - -478,482,934.85 -478,482,934.85 -49,000,000.00 -527,482,934.85
1.Withdrawal to surplus
- - - - - - - -
reserves
2. Withdrawal of general
- - - - - - - -
risk reserve
3. Distributions to
- - - - -478,482,934.85 -478,482,934.85 -49,000,000.00 -527,482,934.85
shareholders
4. Others - - - - - - - -
(IV) Internal conversion of
291,634,924.00 -291,634,924.00 - - - - - -
ownership interest
1. Capital (or share capital)
increase from capital 291,634,924.00 -291,634,924.00 - - - - - -
reserve conversion
2. Capital (or share capital)
increase from surplus - - - - - - - -
reserve conversion
3. Recovery of losses by
- - - - - - - -
surplus reserve
75
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Amount for the first half of 2019
Item
Ownership interest attributable to the parent company Minority Total owners’
interests equity
4. Retained earnings from
transfer of changes in the - - - - - - - -
defined benefit plan
5. Retained earnings from
transfer of other - - - - - - - -
comprehensive income
6. Others - - - - - - - -
(V) Special reserve - - - - - - - -
1. Withdrawal in the current
- - - - - - - -
period
2. Use in the current period - - - - - - - -
(VI) Others - -6,059,122.61 - - - -6,059,122.61 - -6,059,122.61
IV. Closing balance of the
1,749,809,548.00 2,157,832,946.57 -29,944,481.20 592,903,007.98 6,571,771,009.42 11,042,372,030.77 514,145,680.79 11,556,517,711.56
current period
8. Statement of changes in ownership interest of the parent company
Amount in the current period
Unit: RMB yuan
Amount for the first half of 2020
Item Other comprehensive Retained Total owners’
Share capital Capital Reserves Surplus reserve
income earnings equity
76
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Item Amount for the first half of 2020
I. Closing balance of the prior year 1,749,809,548.00 2,168,451,528.01 847,526.06 788,215,726.95 3,431,594,974.14 8,138,919,303.16
Add: Changes in accounting policies - - - - - -
Error correction in the prior periods - - - - - -
Merger of enterprises under the same control - - - - - -
Others - - - - - -
II. Opening balance of the current year 1,749,809,548.00 2,168,451,528.01 847,526.06 788,215,726.95 3,431,594,974.14 8,138,919,303.16
III. Amount of change in the current period - - - - 831,772,220.51 831,772,220.51
(I) Total comprehensive income - - - - 1,321,718,893.95 1,321,718,893.95
(II) Capital contributed by owners and capital decreases - - - - - -
1. Common shares invested by owners - - - - - -
2. Capital invested by holders of other equity
- - - - - -
instruments
3. Amount of share-based payment included in
- - - - - -
ownership interest
4. Others - - - - - -
(III) Profit distribution - - - - -489,946,673.44 -489,946,673.44
1.Withdrawal to surplus reserves - - - - - -
2.Distributions to shareholders - - - - -489,946,673.44 -489,946,673.44
3.Others - - - - - -
(IV) Internal conversion of ownership interest - - - - - -
1. Capital (or share capital) increase from capital reserve
- - - - - -
conversion
2. Capital (or share capital) increase from surplus - - - - - -
77
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Item Amount for the first half of 2020
reserve conversion
3. Recovery of losses by surplus reserve - - - - - -
4. Retained earnings from transfer of changes in the
- - - - - -
defined benefit plan
5. Retained earnings from transfer of other
- - - - - -
comprehensive income
6. Others - - - - - -
(V) Special reserve - - - - - -
1. Withdrawal in the current period - - - - - -
2. Use in the current period - - - - - -
(VI) Others - - - - - -
IV. Closing balance of the current period 1,749,809,548.00 2,168,451,528.01 847,526.06 788,215,726.95 4,263,367,194.65 8,970,691,523.67
Amount in the prior period
Unit: RMB yuan
Amount for the first half of 2019
Item Other comprehensive Retained Total owners’
Share capital Capital Reserves Surplus reserve
income earnings equity
I. Closing balance of the prior year 1,458,174,624.00 2,460,086,452.01 - 670,758,767.42 2,855,679,964.25 7,444,699,807.68
Add: Changes in accounting policies - - - - - -
78
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Item Amount for the first half of 2019
Error correction in the prior periods - - - - - -
Merger of enterprises under the same control - - - - - -
Others - - - - - -
II. Opening balance of the current year 1,458,174,624.00 2,460,086,452.01 - 670,758,767.42 2,855,679,964.25 7,444,699,807.68
III. Amount of change in the current period 291,634,924.00 -291,634,924.00 - - 574,599,009.65 574,599,009.65
(I) Total comprehensive income - - - - 1,053,081,944.50 1,053,081,944.50
(II) Capital contributed by owners and capital decreases - - - - - -
1. Common shares invested by owners - - - - - -
2. Capital invested by holders of other equity
- - - - - -
instruments
3. Amount of share-based payment included in
- - - - - -
ownership interest
4. Others - - - - - -
(III) Profit distribution - - - - -478,482,934.85 -478,482,934.85
1.Withdrawal to surplus reserves - - - - - -
2. Distributions to shareholders - - - - -478,482,934.85 -478,482,934.85
3. Others - - - - - -
(IV) Internal conversion of ownership interest 291,634,924.00 -291,634,924.00 - - - -
1. Capital (or share capital) increase from capital reserve
291,634,924.00 -291,634,924.00 - - - -
conversion
2. Capital (or share capital) increase from surplus
- - - - - -
reserve conversion
3. Recovery of losses by surplus reserve - - - - - -
79
The Half Year Report 2020 of Huadong Medicine Co., Ltd.
Item Amount for the first half of 2019
4. Retained earnings from transfer of changes in the
- - - - - -
defined benefit plan
5. Retained earnings from transfer of other
- - - - - -
comprehensive income
6. Others - - - - - -
(V) Special reserve - - - - - -
1. Withdrawal in the current period - - - - - -
2. Use in the current period - - - - - -
(VI) Others - - - - - -
IV. Closing balance of the current period 1,749,809,548.00 2,168,451,528.01 - 670,758,767.42 3,430,278,973.90 8,019,298,817.33
Huadong Medicine Co., Ltd.
Chairman of the Board: Liang Lyu
August 28, 2020
80
