The 2021 Annual Report of Huadong Medicine Co., Ltd.
Huadong Medicine Co., Ltd.
2021 Annual Report
April 2022
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
To the shareholders
Dear shareholders,
Time flies. Nearly three years have passed since I served as the Chairman of the Board of Huadong
Medicine Co., Ltd, during which I have witnessed the historic changes in the pharmaceutical industry
of China. Like most domestic pharmaceutical companies, we are confronted with unprecedented
difficulties and dramatic challenges in this ever-changing era. The continued implementation of VBP
program and the negotiation on medical insurance put an end to the benefits of generic medicines,
moreover ， the resurgence of COVID-19 and the instable external environment placed more
uncertainties within local pharmaceutical industry. Bearing in mind the major mission of generating
business growth, the management team of the Company struggled onward amid the pains that come
with changes, reform and transformation. It cannot be denied that the Company’s financial statements
over the past three years was not as outstanding as that in the previous time. However, all employees
in the Company weathered the test of time and flagging market, achieving innovation-driven results
that transcend financial statements by focusing on the transformation and innovation.
From 2019 to 2021, while reconsidered its positioning and value, the Company recruited more talents,
developed product pipelines faster, made greater progress in R&D capability building and achieved
more improvements in comprehensive strength than ever before, introducing tremendous changes in
and outside the Company. In the past three years, we implemented in nearly 20 BD transactions with
leading international pharmaceutical companies to create a global collaboration network and develop
diversified and differentiated innovative product pipeline in pharmaceutical and aesthetic medicine
fields, speeding up the progress of internationalization. We wasted no time in R&D, and constantly
improved our independent R&D system. At present, the Company has established an open and
science-based international R&D ecosystem with Zhongmei Huadong new drug R&D center as the
core platform and focused on endocrinology, oncology and immunology disease areas. Now the
Company has nearly 40 innovative drugs and biosimilars under development, and proactively created
a world-class ADC R&D platform, laying a solid foundation for the development of pharmaceutical
industry in the future. It achieved rapid progress in core products development. For instance, we were
the first in China to submit the application of domestic Liraglutide injection, which are now under
CDE review; the clinical trial of ADC product - Mirvetuximab moved forward in a quick manner;
and TGFR system moved to the special review procedure as China’s innovative medical device. In
addition, we facilitated the development of innovative business despite pressure and created the
unique example of the cold-chain, so as to foster a new business model. Implementing the
development strategy of domestic and international circulation, we constantly enriched the product
lines of aesthetic medicine and expanded overseas business in this field. At present, we own 35 high-
end global aesthetic medicine products featuring minimally invasive and non-invasive approaches,
and recorded rapid growth in sales revenue. Moreover, the registration of domestic aesthetic medicine
products was promoted orderly, and the blockbuster product Ellansélaunched in domestic market
successfully. At the same time, we also proactively explored the new “blue ocean” of industrial
microbiology and new business layout, initiated and reserved more than 100 products, drawing a
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
second growth curve. Relaying on our endeavors in core business over the past three years, we are
now marching forward on an innovative path with the characteristics of Huadong Medicine, gradually
forming a new development pattern that is driven by innovation, focusing on global market, and has
multiple and diversified business lines. With initial results, we have got attention and appraisal from
the industry and market.
We owe these progresses to the deep-rooted concept of innovation and value. All employees in the
Company straightly faced the weaknesses, vigorously discovered new value and valorously overcame
uncertainties and difficulties. Our working philosophy and thought have been changed tremendously,
laying a solid foundation for innovation-driven transformation.
In the next three years, we will continue to uphold the “scientific-based, patient-centered” philosophy,
implement high quality development strategy with R&D, innovation and international development
at the core, and aim at creating differentiated development features, striving to become a leading
international medicine enterprise driven by scientific research and innovation, and ultimately
realizing the established long-range vision and strategy of Huadong Medicine.
Innovation and R&D remain the theme of the Company’s future roadmap. Therefore, the Company
will invest more in clinical value-oriented R&D of innovative drugs in endocrinology, oncology and
immunology by adopting a model featuring independent development, license-in and collaboration
development. We will implement a “three-step” R&D strategy. To be specific, we have taken the first
step over the past three years in establishing and improving an initial R&D pipeline through
introduction, building a R&D management team and creating primary R&D competence. By 2025,
we will take the second step, integrating introduced products and projects into the Company’s special
R&D ecosystem by learning and absorbing the advantages of them, strengthening independent R&D
capability and improving the building of technical platforms. From 2025 to 2030, we will accomplish
the third step, achieving internal innovation on the basis of the first two steps, and establish a R&D
management system focusing on introduction and independent development, thus serving to realize
the long-term strategy and key objectives.
Aesthetic medicine is one of the core strategic sectors of the Company’s mega health industry.
Upholding the operation philosophy of “facilitating global operation and layout with domestic and
international circulation progressing smoothly”, the Company will continue to strengthen the layout
of product pipelines and boost the registration and launch process of domestic and international
products. With the technological iteration and innovation in the past decade and more, industrial
microbiology is developing at a rapid pace. Seeing the promising future of industrial microbiology,
the Company endeavors to create an industrialized, large-scale and international industrial cluster and
integrate into global industrial chain of industrial microbial drugs R&D. In the future, we will
transform our strategy from introduction to global operation based on products and market, and
ultimately achieve coordinated development among multiply business sectors, creating a health
industry ecosystem with Huadong Medicine characteristics.
We will adopt a forward-looking to tackle with today’s difficulties. The year 2022 remains a year of
uncertainties. Against the backdrop of rapid global changes unseen in a century and complex
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
international political and economic landscape, the innovative drug industry in China ushered in a
new phase oriented to clinical value. We have set defined goals and clear strategies, and obtained
precious experience, but we still face various challenges and risks that come from industry policies,
market competition, pandemic and other factors on the way forward as we are in the early stage of
innovation and reform.
As long as we press ahead with perseverance, a bright future will beckon and emerge. The year 2022
is also a year of possibilities. We will reap rewards by proactive planning. Having faith in the long-
term prospects of China’s medical industry, we will seize the opportunity and strive for our best in
the path of transformation, continue to establish R&D system with a global view, adhere to the
established strategy and plan and focus on refined management and product planning, in a bid to
achieve growth against changing environment and a more brilliant future.
Over the past three years, we worked extremely hard and forged ahead. We wish to express sincere
appreciation to all employees for their hard work, and all shareholders for their understanding and
incomparable trust. To extend our sincere gratitude, the Company has distributed nearly RMB4.6
billion dividends to shareholders in 18 times since listing.
With great ambition in mind, we will never pause our pursuit of a better future. We hope to have the
lasting company of investors who looking for long-term value, constantly challenge and change
ourselves, and overcome fluctuation and downward cycle, thereby embracing the refreshing and
bright future created by Huadong Medicine.
Lv Liang
On Behalf Of Huadong Medicine
April, 2022
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The 2021 Annual Report 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 annual report is authentic, accurate and
complete and free of any false records, misleading statements or material omissions, and shall
undertake individual and joint legal liabilities.
Lv Liang, the Company’s legal representative and the officer in charge of accounting, and
Qiu Renbo, head of accounting department (accounting supervisor) hereby declare and
guarantee that the financial statements in this annual report are authentic, accurate and
complete.
All directors have attended the Board of Directors meeting to review this annual report.
The future plans, development strategies and other forward-looking statements in this
annual report shall not be considered as substantial commitment of the Company to investor，
Investors and related parties should be fully aware of the risks, and understand the differences
between plans, forecasts and commitments.
The risks the Company faces in operation including industry policy and market operation
risk, new drug R&D risk, exchange rate fluctuation risk and goodwill impairment risk. For
details, please refer to “v. Potential risks and responses” under “XI. Prospect of the Company’s
future development” in “Section III. Management Discussion and Analysis”. Therefore,
investors are kindly reminded to pay attention to possible investment risks
The dividend distribution scheme approved at this meeting of the Board of Directors is as
follows: on the basis of 1,749,809,548 ordinary shares of the total share capital of the Company,
RMB2.90 (before tax) of cash dividends per ten ordinary shares will be distributed to all
shareholders; no bonus share will be issued; and no capital reserve will be converted to increase
the capital stock. In case the Company’s total share capital changes before the dividend
distribution scheme is put in place, the proportion of distribution per share will be adjusted
with the shares base unchanged. The aforesaid dividend distribution scheme is subject to the
approval at the Annual General Meeting.
According to “Stock Listing Rules of the Shenzhen Stock Exchange”, if listed companies
have both Chinese and other language version of public notice, they should ensure the content
of both versions are the same. In the case of discrepancy, the original version in Chinese shall
prevail.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Contents
To the shareholders ..................................................................................................................................................................................2
Section I. Important Declaration, Contents and Definitions ....................................................................................................................5
Contents...................................................................................................................................................................................................6
Definitions ...............................................................................................................................................................................................8
Section II. Company Profile and Key Financial Indicators ................................................................................................................... 11
Section III Management Discussion and Analysis .................................................................................................................................16
Section IV. Corporate Governance ........................................................................................................................................................76
Section V. Environment and Social Responsibility ..............................................................................................................................103
Section VI. Important Matters ............................................................................................................................................................. 119
Section VII. Share Change and Shareholders ......................................................................................................................................151
Section VIII. Information on Preferred Shares ....................................................................................................................................159
Section IX. Information on Bonds .......................................................................................................................................................160
Section X. Financial Report.................................................................................................................................................................161
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Contents of Reference File
I. Financial statements signed and stamped by the legal representative, the person in charge of
accounting work and the head of accounting institution (accounting manager).
II. Original audit report stamped by public accountants, and signed and stamped by certified public
accountant.
III. The original of all Company’s documents publicly disclosed in the press designated by CSRC
during the reporting period and the original of announcements.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Definitions
Term refers to Definition
CSRC refers to China Securities Regulatory Commission
SSE 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 Bio refers to Jiangsu Jiuyang Biopharm Co., Ltd.
Xi’an Bohua refers to Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd.
Jiuyuan Gene refers to Hangzhou Jiuyuan Gene Engineering Co., Ltd.
Doer Biologics refers to Zhejiang Doer Biologics 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.
Nuoling Bio refers to Nuoling Biomedical technology (Beijing) Co., Ltd.
Shanghai Grand Industrial and Financial Investment Management
Grand Chanrong refers to
Co., Ltd.
Fuguang Chengdu refers to Fuguang Chengdu Equity Investment Management Co., Ltd.
Hangzhou Gaotou refers to Hangzhou Hi-Tech Venture Capital Management Co., Ltd.
Grand Huachuang refers to Beijing Grand Huachuang Investment Co., Ltd.
Hangzhou Heda refers to Hangzhou Heda Industrial Fund Investment Co., Ltd.
Pharmaceutical Industry Fund/Fuguang Hangzhou Fuguang Hongxin Equity Investment Partnership
refers to
Hongxin (Limited Partnership)
Huachang Hi-Tech refers to Anhui Huachang Hi-Tech Pharmaceutical Co., Ltd.
Meiqi Health refers to Hubei Meiqi Health Technology Co., Ltd.
Takeda refers to Takeda Pharmaceuticals Company Ltd.
Sinclair refers to Sinclair Pharma Limited
vTv refers to vTv Therapeutics LLC
R2 refers to R2 Technologies,Inc.
MediBeacon refers to MediBeacon Inc.
ImmunoGen refers to ImmunoGen, Inc.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Provention Bio refers to Provention Bio, Inc.
RAPT refers to RAPT Therapeutics,Inc.
Kylane refers to Kylane Laboratoires SA
High Tech refers to High Technology Products, S.L.U.
Exscientia refers to Exscientia Ltd.
Heidelberg Pharma refers to Heidelberg Pharma AG
Kiniksa refers to Kiniksa Pharmaceuticals (UK), Ltd.
KiOmed refers to KiOmed Pharma SA
Daewon refers to Daewon Pharmaceutical Co., Ltd.
AKSO refers to AKSO Biopharmaceutical, Inc.
Ashvattha refers to Ashvattha Therapeutic, Inc.
SCOHIA refers to SCOHIA PHARMA, Inc.
GMP refers to Good Manufacturing Practice
cGMP refers to Current Good Manufacture Practices
GSP refers to Good Supply Practice
BE refers to Bioequivalence
Center for Drug Evaluation (of National Medical Products
CDE refers to
Administration)
MAH refers to Marketing Authorization Holder
FDA refers to (U.S.) Food and Drug Administration
NMPA refers to National Medical Products Administration
NHSA refers to National Healthcare Security Administration
NDA refers to New Drug Application
ANDA refers to Abbreviated New Drug Application (or Generic Drug Application)
International Council for Harmonisation (of Technical Requirements
ICH refers to
for Pharmaceuticals for Human Use)
IND refers to Investigational New Drug
PK/PD refers to pharmacokinetics/pharmacodynamics
CMC refers to Chemistry, Manufacturing and Control
CMO refers to Contract Manufacturing Organization
CDMO refers to Contract Development and Manufacturing Organization
QA refers to Quality Assurance (department)
ADC refers to Antibody-Drug Conjugates
BD refers to Business Development
EHS refers to Environment, Health, Safety
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
MRCT refers to International Multi-center Clinical Trial
OTC refers to Over The Counter
refers to Drugs that require medical prescriptions issued by physicians to be
Prescription Drugs
bought and used
refers to Catalogue of Drugs for Basic National Medical
Catalogue of Drugs for Insurance（2021）
Insurance/Employment Injury Insurance/Birth Insurance（2021）
Reporting Period refers to From January 1, 2021 to December 31, 2021
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Section II. Company Profile and Key Financial Indicators
I. Company information
Stock name (abbreviation) Huadong Medicine Stock code 000963
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 Lv Liang
Registered address Floor 7, 9 and 10, Gate No. 1, Building No. 1, 468 Yan’an Road, Hangzhou
Zip code of the registered
310006
address
From the date of listing to July 2012, the registered address was “No. 439 Zhongshanbei Road,
Xiacheng District, Hangzhou”. From July 2012, the registered address was changed to “F9 and 10,
Changes of registered address
Gate No. 1, Building No. 1, 468 Yan’an Road, Hangzhou”. From July 2019, the registered address
was changed to “F7, 9 and 10, Gate No. 1, Building No. 1, 468 Yan’an Road, Hangzhou”.
Office address No.866 Moganshan Road, Hangzhou
Zip code of the office address 310011
Official website www.eastchinapharm.com
Email address hz000963@126.com
II. Contact persons and contact information
Secretary of the Board of Directors Securities affairs representative
Name Chen Bo /
Contact address 866 Moganshan Road, Hangzhou /
Tel. 0571-89903300 /
Fax 0571-89903300 /
III. Channels of disclosure and location of preparation
Website of the Shenzhen Stock Exchange for publishing the annual http://www.szse.cn
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report
China Securities Journal, Securities Times, Shanghai
Media and website for publishing the annual report
Securities News and http://www.cninfo.com.cn
Location of preparation of the Company’s annual report Office of the Company’s Board of Directors
IV. Registration changes
Organization code 91330000143083157E
Changes of the Company’s main business since its
None
listing (if any)
Previous changes of controlling shareholder (if any) None
V. Other information
Certified public accountants
Name Pan-China Certified Public Accounts (Special General Partnership)
Office address F18, Huarun Building B, 1366 Qianjiang Road, Hangzhou, Zhejiang Province
Signing accountants Wang Fukang and Du Jinyu
Sponsors for continuous supervision and guidance during the reporting period
□ Applicable √ N/A
Financial consultant for continuous supervision and guidance during the reporting period
□ Applicable √ N/A
VI. Key accounting data and financial indicators
Whether the Company needs to perform a retroactive adjustment or restatement of previous accounting data
□Yes √No
Percentage
increase/decrease
2021 2020 2019
from last year to this
year
Operating revenue (yuan) 34,563,301,233.67 33,683,058,759.75 2.61% 35,445,698,216.15
Net profit attributable to
shareholders of listed companies 2,301,631,347.64 2,819,861,203.63 -18.38% 2,813,118,702.11
(yuan)
Net profit attributable to
shareholders of listed companies
2,188,946,362.34 2,429,761,433.56 -9.91% 2,574,437,417.52
after deducting non-recurring
gains/losses (yuan)
Net cash flow from operating 3,169,757,867.95 3,411,447,747.56 -7.08% 2,001,698,170.67
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
activities (yuan)
Basic earnings per share
1.3154 1.6115 -18.37% 1.6077
(yuan/share)
Diluted earnings per share
1.3154 1.6115 -18.37% 1.6077
(yuan/share)
Weighted average return on
14.75% 20.95% -6.20% 25.29%
equity (ROE)
Percentage
increase/decrease
End of 2021 End of 2020 End of 2019
from last year to this
year
Total assets (yuan) 26,996,403,366.69 24,201,348,154.75 11.55% 21,463,974,146.63
Net assets attributable to
shareholders of listed companies 16,579,374,323.08 14,619,821,308.60 13.40% 12,309,477,308.00
(yuan)
The Company’s net profit before or after deducting non-recurring gains and losses, whichever is lower, in the last three fiscal years
are all negative, and the audit report of last year shows doubt about the Company’s ability to continue as a going concern.
□Yes √No
The company's net profit before and after deducting non-recurring gains/losses in the last three fiscal years is negative.
□Yes √No
VII. 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.
VIII. Key financial indicators by quarter
Unit: RMB yuan
Q1 Q2 Q3 Q4
Operating revenue 8,896,632,277.36 8,282,805,625.25 8,748,039,460.66 8,635,823,870.40
Net profit attributable to
758,380,756.56 541,965,568.29 595,038,254.49 406,246,768.30
shareholders of listed companies
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Net profit attributable to
shareholders of listed companies
695,792,411.78 498,188,475.40 568,039,187.19 426,926,287.97
after deducting non-recurring
gains/losses
Net cash flow from operating
302,314,164.48 1,436,198,207.63 367,404,454.61 1,063,841,041.23
activities
Whether the above financial indicators or their totals are significantly different from relevant financial indicators in previous
quarterly and semiannual reports by the Company
□ Yes √ No
IX. Items and amounts of non-recurring gains/losses
√ Applicable □ N/A
Unit: RMB yuan
Item 2021 2020 2019 Note
Gains/losses on disposal of non-current
assets (including the written-off part of the -2,354,117.13 319,656,661.95 109,574,836.97
accrued assets impairment reserve)
Tax refund and reduction with ultra vires
examination and approval or without 10,101,524.84 8,424,351.97 4,407,536.93
official approval documents
Government grants included in current
gains/losses (excluding those closely
related to daily business operation and
173,543,413.54 190,906,656.31 112,527,883.18
distributed constantly in accordance with
certain standard quota or quantity in line
with national policies and regulations)
Gains/losses caused by fair value changes
for holding financial assets held for
trading and financial liabilities held for
trading, and investment income for
521,193.82
handling financial assets held for trading,
financial liabilities held for trading and
AFS securities, excluding hedging
business related to operating activities
Reversal of reserve for receivables subject
4,803,651.87 3,845,312.41 1,896,979.79
to independent impairment test
Other non-operating revenue or
expenditure expect above-mentioned -25,651,193.11 -20,500,748.15 77,976,120.18
items
-32,065,178.00 -4,899,999.00
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Other profit and loss items satisfying the
definition of non-recurring gain/loss
Minus: Amount affected by income tax 20,249,495.43 92,420,221.30 47,542,186.99
Amount affected by rights and
interests of minority stakeholders (after -4,035,184.90 14,912,244.12 20,159,885.47
tax)
Total 112,684,985.30 390,099,770.07 238,681,284.59 --
Details of other items of gains/losses meet the definition of non-recurring gains/losses:
√ Applicable □ N/A
[Note]: Employment resettlement fees totaled RMB32,065,178.00 for dismissed employees of Huadong Ningbo Medicine Co., Ltd,
drawn from due liquidation.
Explanation for recognizing an item listed as a non-recurring gain/loss in the “Interpretative Announcement No. 1 on Information
Disclosure Criteria for Public Companies – Non-Recurring Profit/Loss” as a recurring gain/loss
□Applicable √ N/A
Explanation for recognizing an item listed as a non-recurring gain/loss in the “Interpretative Announcement No. 1 on Information
Disclosure Criteria for Public Companies – Non-Recurring Profit/Loss” as a recurring gain/loss
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Section III Management Discussion and Analysis
I. The industry profile during the reporting period
In 2021, China’s medical industry experienced profound reform and accelerating reshuffle, with
industry policies rolling out intensively and innovative results springing up. Cost control of medical
insurance remained the main focus of industry policies. In 2021, China continued to promote the VBP
Program of drugs and medical consumables, expanding both the scope and depth. VBP Program of
generic drugs and high-value consumables became more popular. It is predicted that the coverage of
variety and region will be further expanded. In terms of local level, VBP Program by cross-region
alliances were accelerated with diversified varieties. Inter-provincial alliances have become another
backbone of VBP Program.
The reform of health insurance payment models was in the fast track. NHSA is promoting a
compounded medical insurance payment model with category-based payment as the core, and
piloting diagnosis related group, or DRG payment and Diagnosis & Intervention Packet, or DIP. In
November 2021, NHSA issued the Three-Year Plan of Reform of DGR/DIP Payment Model,
requiring that by the end of 2025, DRG/DIP payment model should cover all eligible medical
institutions providing inpatient services, realizing substantially the full coverage of diseases and
medical insurance funds.
From the perspective of long-term developments of the industry, population aging increased the
needs for necessary medicine market to expand, and trading up in new categories promoted the
development of consumer medical market, releasing more growth opportunities of the industry.
Driven by a series of policies, the medical industry is undergoing profound changes, and is gaining
speed in innovative transformation. The growth logic and prospects of pharmaceutical companies are
also experiencing great changes. More and more traditional pharmaceutical companies defined their
transformation direction towards innovative drugs, and kept increasing the investment in R&D, so as
to achieve high-quality development.
2022 is the year of deepening reform during the period of 14th Five-Year Plan. The development
plan for the pharmaceutical industry will be promulgated and implemented. The innovation iteration
cycle of the pharmaceutical industry will be faster, and the challenges and pressures confronted by
pharmaceutical companies will also be greater. Facing the opportunities and challenges arising from
deepening reform, accelerating technology upgrade, continuous emergence of professionals and
increasing capital support, Chinese pharmaceutical companies are like sailing against the current.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Only through upgrade and innovation can they brave the wind and waves.
II. Main businesses of the Company during the reporting period
Huadong Medicine Co., Ltd, headquartered in Hangzhou, Zhejiang province, was established in
1993. It was listed on the Shenzhen Stock Exchange in December 1999 (stock code: 000963). With
more than two decades endeavors, the Company has expanded its business covering the whole
industrial chain of pharmaceutical industry. While centering on pharmaceutical industry, it also sets
foot in pharmaceutical commerce and aesthetic medicine and has developed into a large
comprehensive pharmaceutical listed company integrating pharmaceutical R&D, production and
distribution.
In terms of pharmaceutical industry, the Company deeply rooted in the R&D, production and
sales of specialty medications, chronic disease medications, and medications for special purposes,
established a well-established pharmaceutical manufacturing and quality research system, formed
core product pipelines focusing on chronic kidney diseases, transplantation immunity, endocrinology,
digestive system and other areas, and has a number of first-line clinical drugs with market advantages
in China. At the same time, through independent development, introduction, project cooperation and
other approaches, it focused on R&D layout of innovative drugs and generic drugs with high-tech
barrier in three core sectors including oncology, endocrinology, and autoimmunity. The Company
constantly carried out international registration, certification and consistency evaluation, and
achieved continuous results. It has formed a pharmaceutical industry system aimed at global market,
and maintained R&D and product cooperation with a number of international innovative R&D
enterprises.
The Company’s pharmaceutical commerce mainly focuses on four business sectors including
traditional Chinese medicine and western medicine, medical devices, ginseng and antler, and health
industry, covering medicine wholesale, medicine retail, third party medical logistics characterized by
cold chain, medical e-commerce, value-added service in hospitals and distinctive comprehensive
health industry. In doing so, it went further in product agency and mark expansion, providing
comprehensive solutions for customers.
Adhering to the strategy of facilitating global operation and layout with domestic and
international circulations progressing smoothly, the Company owns more than 30 minimally invasive
and non-invasive products of aesthetic medicine through a global view and forward-looking plan,
among which 20 products are on the market inside and outside the country, and 10 are international
innovative products under research. The product portfolio covers mainstream non-surgical aesthetic
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
medicine sectors such as facial fillers, thread lift, skin management, body shaping, hair removal, and
cosmetic gynecology, forming an integrated product cluster with the number and scope of products
at the forefront of the industry. Sinclair, a wholly-owned subsidiary of the Company, acts as the global
operation platform of aesthetic medicine. Headquartered in the UK, it also has manufacturing bases
in the Netherlands, France, the United States, Switzerland and Bulgaria. Sinclair promotes and sales
products such as sustained-release microspheres for injection, hyaluronic acid (HA), and face thread
lift products worldwide, and researches and expands energy based aesthetic devices through its
wholly-owned subsidiaries High Tech and Viora in the global market. The Company also wholly
owns Sinclair (Shanghai) Co., Ltd., a subsidiary for the operation and sales in domestic market, as
well as owns the shares in R2 and Kylane, overseas technical R&D companies located in the America
and Switzerland, respectively.
III. Analysis on core competitiveness
i. An open innovative drug R&D system and constant improvement of innovation capacity
The Company highly values innovation and R&D and maintains a high proportion of R&D
investment. The average annual R&D investment in pharmaceutical industry in the past three years
accounted for more than 10% of the operation revenue of pharmaceutical industry. Upholding the
“scientific research-based, patient-centered” philosophy, it strives to create clinical value, medicine
economics value and commerce value. After years of development, it has established a relatively
complete independent innovation system for drug R&D covering drug discovery, pharmaceutical
research, pre-clinical research, clinical research and industrialization, and established a global new
drug R&D center.
The Company’s innovation and R&D focuses on three core treatment areas, including
endocrinology, oncology and autoimmunity. By ways of cooperative drug development and equity
investment, it carried out in-depth strategic cooperation with leading pharmaceutical companies both
in and outside China, and created a global pharmaceutical R&D ecosystem through introduction,
integration and innovation. In particular, in terms of ADC field, the Company further expanded
differential layout. It invested in Qyuns Therapeutics, an antibody R&D and production company,
and Nuoling Bio, a company specialized in ADC linker and conjugate techniques, incubated Zhejiang
Huida Biotech Co., Ltd. (Huida Biotech) which owns the whole product line of ADC payloads, and
controlled Doer Biologics, a multi-antibody platform R&D company. It carried out equity investment
and product cooperation with Heidelberg Pharma, a global emerging technology company in the ADC
field, to form a unique ADC global R&D ecosystem, gradually build a differentiating ADC
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
independent R&D platform, and strengthen and improve antineoplastic product innovation chain and
ADC ecological chain. In the next three years, it plans to develop at least 10 ADC innovative products
and actively promote the registration work and clinical studies.
Through independent R&D, cooperation, license-in and other measures, the Company
continuously developed and formed differentiating innovative product pipelines covering the
lifecycle of R&D. As at the releasing of this report, the Company has nearly 40 innovative drugs and
biosimilars under research, among which 5 are in the phase III of clinical trial and 3 are in phase II,
covering endocrinology, oncology and autoimmunity and other areas, so as to effectively guarantee
the positive momentum of the clinical and launch progress of innovative product, thereby providing
new drivers for medium-and long-term development.
ii. Comprehensive capabilities to develop international business
The company actively promoted the internationalization process. By acquiring 100% equity of
Sinclair, High Tech and Viora, the Company realized the global layout of the aesthetic medicine field.
Though strategic and equity cooperation with a number of American companies, including R2,
MediBeacon, ImmunoGen, Provention Bio and Kiniksa, a Swiss company Kylane, a German
company Heidelberg Pharma, etc., it supplemented and enriched the rights of commercial
development of innovative drugs and high-end aesthetic medicine products both at home and abroad.
It cooperated with Daewon, a South Korean company, to realize the company's first overseas
commercialization license-out of innovative product. It accelerated the international registration of
products. All online chemical APIs were obtained the market certification of FDA, EU and other
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authorities. Daptomycin for Injection, Acarbose Tablets and Pantoprazole Sodium for Injection were
all approved by FDA, and some high-end industrial microorganism ingredients were empowered
strong competitiveness in the international market. It also actively developed international logistics
and procurement suppliers to make its procurement capability keep in line with the international
standard. It pushed CMO/CDMO business go global, and has been integrated into the global
innovative drugs R&D industrial chain.
iii. Diversified product pipelines for specialty diseases and chronic diseases, and
comprehensive competitive advantage of diabetes treatment
Over the years, the Company has been deeply engaged in specialty medications, chronic disease
medications, and medications for special purposes and built a favor brand effect and strong market
base in the treatment of chronic kidney diseases, transplantation and immunity, endocrinology,
digestive system and so on. The market share of these products continuously takes the lead in
domestic market. Focusing on the targets of mainstream clinical treatment of diabetes, the Company
has formed a comprehensive layout of product pipelines of innovative drugs and differentiating
generic drug. At present, it has more than 20 commercialized products and products under
development. In organ transplantation, it realized the full coverage of clinical first-line
immunosuppressive agents and developed multi-tiered follow-up products. It developed first-in-class
drugs in all three core treatment fields, including endocrinology, oncology and autoimmunity. As for
antineoplastic ADC drugs, it has established the layout of multiple global innovative drug and a R&D
ecosystem, forming differentiating advantages. At present, a total of 26 core products on the market
were listed in the Catalog of Medicines Covered by National Basic Medical Insurance, Work-Related
Injury Insurance and Maternity Insurance (2021).
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iv. A leading domestic pharmaceutical care professional team and extensive market
network
In terms of pharmaceutical industry, the Company owns a professional Pharmaceutical Care (PC)
and market development team consisting of 6000 employees. Centering on clinical value and
academic promotion, it promoted a marketing model integrating comprehensive hospitals, medical
institutions in primary level, retail, the third terminal and the Internet, so as to gradually increase the
coverage through multiple channels, thus obtaining good competitive advantages.
Having developed in Zhejiang province for many years, the Company’s pharmaceutical
commerce owns complete business activities and diversified products, and enjoys comprehensive
competitive advantages in market access and network coverage. It constantly improves its four core
capabilities including logistics, information, finance and operation, offering high-end value-added
services such as policy affairs. In addition, it has established cooperative ties with 90% of mainstream
pharmaceutical enterprises at home and abroad, and realized the full coverage of public medical
institutions, major private health care and retail pharmacies in Zhejiang province. Its market share
takes the lead in Zhejiang province, and industry ranking stands at the forefront for many years in a
row. In recent years, the Company has witnessed rapid development of its innovative businesses such
as product agency and market expansion, characteristic comprehensive health industry, third-party
pharmaceutical logistics featured by cold chain, and pharmaceutical e-commerce. It has built a sound
service system and professional ability of cold chain logistics distribution, which takes the lead in
China.
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v. High-end international aesthetic medicine product pipelines covering main minimally
invasive and non-invasive non-surgeries
The Company’s strategic plan in aesthetic medicine started in 2018, when it acquired Sinclair, a
Britain-based company. As Sinclair acquired High Tech and Viora that are specialized in energy
based aesthetic devices in 2021 and 2022, respectively, the Company achieved the full coverage of
non-surgical aesthetic medicine injection products and energy based devices in medium and high-end
market. It owns the global rights in a number of patented products in the fields of facial filler, body
shaping, thread lift, energy based device, etc., and has an international operation and BD team of
aesthetic medicine. Focusing on the global high-end aesthetic medicine market, the Company has
formed an international aesthetic medicine business network covering R&D, manufacturing and
marketing, and built a global aesthetic medicine marketing network by further integrating R&D
resources and capabilities, and relying on four global R&D centers, including Sinclair (UK), High
Tech (Spain), R2 (USA) and Kylane (Switzerland), as well as Sinclair's five global production bases
in the Netherlands, France, the United States, Switzerland and Bulgaria, At present, the Company’s
products were sold in more than 80 countries and regions around the world. The Company owns 35
high-end minimally invasive and non-invasive products of aesthetic medicine, among which 21 are
on the market inside and outside China, and 14 are international innovative products under research.
The product portfolio covers mainstream non-surgical aesthetic medicine sectors such as facial fillers,
thread lift, skin management, body shaping, hair removal, and cosmetic gynecology, forming an
integrated product cluster with the number and scope of products at the forefront of the industry.
vi. Rooted in the strong R&D and industry base and systematically explored the new blue
sea of industrial microbiology
The Company has been engaged in the field of industrial microorganisms for more than 40 years
with a profound industrial foundation. It has successfully developed and manufactured a variety of
microbial drugs and built a system of key technology of microbial products R&D and production.
The scale and technology of existing microorganism fermented products are at the forefront of the
industry. It established two microorganism R&D base: Zhongmei Huadong and Huida Biotech, five
industrial bases including Hangzhou Xiangfu Qiao, Qiantang New Area, Jiuyang Bio, Meiqi Health
and Huachang Hi-Tech, the largest ferment singleton workshop in Zhejiang province as well as the
leading microbial drugs production capability. Its R&D capability covering the whole stage of
microbial engineering, such as bacteria construction, metabolic control, separation and purification,
enzyme catalysis and synthesis and modification. It has formed a complete manufacturing system
covering microbiology R&D, pilot test, commercial production, engineering and utility system
guarantee. At present, the Company has a total of 45 R&D projects of industrial microbiology,
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including 7 special functional chemicals projects, 23 API and high-end medicine intermediate
projects, 12 mega health and aesthetic medicine ingredients projects and 3 biomaterials projects.
Among them, 5 out of special functional chemicals projects are series projects divided in more than
50 sub-projects, and 2 out of API and high-end medicine intermediate projects are series projects
divided in more than 10 sub-projects. The total number of all projects exceeded 100. The Company
established an industrial microbiology department that has organized structure and operates
independently. The department is equipped with a first-class industrial microbiology technical team
including 363 researchers, among which 15 hold Ph.D. degrees, and 21% of the researchers have
master’s degrees or doctor’s degrees. Up to now, it has 23 authorized patents and 59 patents are under
review.
vii. Prudent and pragmatic business style and stable shareholder returns
The Company pays attention to management innovation and strives to meet the demand arising
from market competition by improving management quality. High-quality products, excellent
commercialization ability, compliance and efficient marketing services, differentiating market
positioning, innovative R&D layout, outstanding talent planning are the engine for the Company’s
long-term stable development. Over the 21 years since it was listed, the Company distributes
dividends for 18 times with a total amount of RMB4,577 million, far exceeding the RMB250 million
raised in IPO, and was able to bring sustained and stable investment returns to shareholders.
IV. Analysis on main businesses
1. General information
The year 2021 was a year fraught with challenges from volatile global economic situation, and
the resurging COVID-19 pandemic. The reform of national medical insurance went deeper, the VBP
program became the mainstream, and market competition was intensified. The year 2021 also
presented many opportunities. The 14th Five-Year plan was kicked off, bring the development of
pharmaceutical industry into a new phase. For the Company, its sixth “Three-Year Plan” was
accomplished in 2021, and its innovative transformation and reform came to a crucial time. The
impact caused by policy changes in domestic medical industry and market competition was ongoing,
and the Company’s operation was also faced by many difficulties and uncertainties. During the
reporting period, confronted by complex internal and external environment, the Company fully
implemented the principle of annual work meeting and struggled forward by innovation. It was
committed to promoting the strategic decision of innovation-driven transformation, took solid steps
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to implement all operation and management measures, and constantly deepened the reform of
organizational structure. Besides, it continued to strengthened cooperation on overseas projects,
accelerated the international industrial layout, proactively explored new business operation model,
and expanded to new market sectors. Thanks to the joint efforts of all employees, the Company
overcame multiple difficulties and challenges and achieved steady progresses in the overall operation.
The business objectives of the year were accomplished, and new breakthroughs were made in all key
work.
In 2021, the Company’s operating revenue reached RMB34,563 million, a year-on-year increase
of 2.61%. Net profit attributable to the shareholders of the Company stood at RMB2,302 million,
down by 18.38% year on year, and net profit attributable to shareholders of the Company after
deducting non-recurring profits and losses stood at RMB2,189 million, down by 9.91% year on year.
If calculated according to the same statistic scope (excluding Huadong Ningbo, a controlled
subsidiary entered liquidation), the operating revenue of the Company in 2021 increased by 3.10%
year on year, and net profit attributable to shareholders of the Company after deducting non-recurring
profits and losses decreased by 7.64% year on year. During the reporting period, net cash flows from
operating activities registered RMB3.17 billion, matching with operating revenue and net profit level.
CFO/NI stood at 1.36, an increase from 1.17 in the previous reporting period.
In the fourth quarter of 2021, its operating revenue registered RMB8,636 million, up by 5.54%
year on year, and the net profit attributable to shareholders of the Company after deducting non-
recurring profits and losses registered RMB427 million, up by 7.04% year on year (quarter-on-quarter
indicator in the year has been positive growth).
As at the end of 2021, the Company’s total assets stood at RMB26,996 million, and the net assets
attributable to shareholders of the Company stood at RMB16,579 million. The ratio of liabilities to
assets was 37.25% and return on equity (ROE) was 14.75%.
i. Pharmaceutical industry
During the reporting period, since some products lost bid in VBP program or slashed prices in
negation, Zhongmei Huadong, the Company’s core subsidiary in pharmaceutical industry, recorded
operating revenue of RMB10,109 million, a year-on-year decrease of 8.43%, and the net profit of
RMB2,092 million, a year-on-year decrease of 10.32%. Its ROE stood at 28.63%, remaining above
25% for 15 consecutive years.
Although the Company’s annual operating indicator of pharmaceutical industry suffered
temporary decline, the overall operation maintained good momentum despite challenges and shocks.
While the sales of main products kept growing, the Company improved the layout of innovative
product pipeline through independent R&D and introduction, and took a strategic way to plan and
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integrate industrial microbiology sector, drawing the second growth curve of the Company’s
pharmaceutical manufacturing sector. It seized the market opportunity, made efforts to provide
overseas CDMO services, and actively expanded retail and online market, showing strong resilience
and potential of its pharmaceutical manufacturing business.
1. Building a new pattern of organizational structure to fuel the Company’s strategic
development
In 2021, the Company set up Mega Health Business Department, Strategic Marketing
Department, Operation Management Department, Industrial Microbiology Business Department and
Medical Device Business Department, constantly improving the structural layout. It further adjusted
the structure of production system to achieve integrated management, made the allocation of
production resources more smoothly, and steadily enhanced the average labor efficiency per capita.
Furthermore, it continued to deepen the reform of the organizational structure of R&D system and
restructured CMC Center, further improved the Company's generic drug R&D capacity and CMC
strength. Through talent review and introduction, innovative drug R&D Center gradually established
a professional team versed in the whole process of innovative drug R&D to promote the development
of the Company’s innovation cause on all fronts. It also gradually built a R&D system with innovative
drug R&D center, CMC R&D center and scientific research project management center at the core,
further improving the efficiency of R&D project.
2. Building R&D ecosystem with Huadong Medicine characteristics to boost the
internationalization of innovation-driven development
During the sixth “Three-Year Plan”, the Company intensified efforts to build innovation
platform and integrate resources, and invested in, controlled and incubated many biotechnology
companies with cutting-edge technologies, including Chongqing Peg-Bio, a company owning
polypeptide technology platform, Qyuns Therapeutics, a company focusing on the antibody
technology platform against immune diseases, Nuoling Bio, who owns ADC conjugate techniques,
Doer Biologics, who owns multi-antibody technology platform, and Ashvattha, an American
company specialized in HD technology platform. Gradually, it established an open and science-based
R&D ecosystem with Zhongmei Huadong as the core actor and main focus on endocrinology,
oncology and autoimmunity. In doing so, it built a R&D and operation model emphasizing sharing
and win-win results, significantly enhancing its capabilities in technical platform, product pipelines,
R&D team and other aspects and facilitating the implementation of its innovation-driven
transformation strategy.
The Company vigorously expanded the scope and coverage of the products, introduced a number
of innovative biologic drugs, and kept in line with advanced technologies and productivity at home
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and abroad. By cooperating with leading companies, such as Provention Bio (US), AKSO (US),
Kiniksa (US), SCOHIA (Japan), Takeda (Japan), Heidelberg PharmaIt (Germany), and Shenogen
Pharma Group (China), it acquired the relevant rights of products. It authorized Daewon the exclusive
rights to develop, produce and commercialize TTP273, a product in phase II of clinical test. This
move marked the Company’s first license-out of ongoing product, and was also a milestone in the
Company’s integration into global pharmaceutical R&D innovation. The Company will continue to
uphold the “scientific research-based, patient-centered” philosophy, and persist in promoting the
development of innovative drug industry.
3. Exploring the new blue ocean of industrial microbiology to take a forward-looking
layout of new business sector
In 2021, the Company formulated the strategic plan of industrial microbial sector based on a key
technology system of microbial product R&D and production it built through more than 40 years’
endeavors, as well as a strong technology foundation and leading industrial edges in this field. As the
leading R&D Company in domestic industrial microbiology, Huida Biotech, the Company’s
controlled subsidiary, focuses on the development of microbial products with high technical barriers
and high added value. Based on synthetic biology and multi-scale microbial metabolic regulation
technology, it built system platforms of microorganism construction, metabolite expression and
purification and modification, and developed first-class R&D pipelines covering payloads of ADCs,
modified nucleosides for mRNA drugs, pharmaceuticals of marine biological origin, health and
personal care and other fields. At the same time, it realized the commercialized development of
payloads and modified nucleosides, becoming one of the main manufacturers of modified nucleosides
for mRNA drugs in the world. It is also the core technology base and R&D innovation platform
facilitating the Company’s industrial microbiology development. Since its establishment in 2020,
Huida Biotech has shown the momentum of rapid growth. It has established business relations with
a number of well-known domestic and foreign pharmaceutical enterprises, and over 90% of its
businesses are operated in overseas market. It has scored results in both technological innovation and
business expansion, laying a solid foundation for the sustainable development of its business.
In November 2021, Zhongmei Huadong, together with Huida Biotech and Hubei Angel Biology
Group Co., Ltd (“Angel Bio”) jointly invested RMB250 million to establish a joint venture - Hubei
Meiqi Health Technology Co., Ltd. which is under construction in 2022 and is expected to be put into
operation in 2023. Serving as the Company’s first industrialization platform for industrial
microbiology other than the pharmaceutical field, Meiqi Health integrated the R&D, production and
sales of comprehensive health products. This move represents a milestone of the company's horizontal
layout in the field of industrial microbiology.
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In December 2021, Zhongmei Huadong and Goho Asset Management Co., Ltd, the manager of
Anhui Huachang Hi-Tech Pharmaceutical Co., Ltd. signed the Agreement on Restructuring
Investment with conditions, agreed that Zhongmei Huadong will acquire 100% of Huachang Hi-
Tech’s equity after bankruptcy restructuring. Huachang Hi-Tech will become another
industrialization platform of the Company in the field of industrial microbiology, which focuses on
the industrialization of nucleoside pharmaceuticals, semi-synthetic antiparasitic drug of microbial
origin and other drugs.
On the basis of international development, the Company will closely follow the trend of global
industrial microbiology and new synthetic biology technology, and strive to become the industry
leader in the field of industrial microbiology by creating an “industrialized, large-scale and
international” industrial microbiology industrial cluster.
In 2021, the Company’s total revenue of industrial microbiology reached RMB418 million,
increased by 69.2% year on year. It established the Industrial Microbiology Business Department that
has complete organizational structure and operates independently. The department was equipped with
a first-class industrial microbiology technical team including 363 researchers, and 21% of them have
master’s degrees or doctor’s degrees, among which 15 hold Ph.D. degrees. Up to now, it has 23
authorized patents and 59 patents are under review.
4. Innovating production and operation model and promoting international registration
progress
During the reporting period, the Company continued to innovate operation model, promoted an
agile production and operation system, and built an open production and manufacturing system. All
employees of the Company followed the principle of refined production and full-cost management in
their daily work. It coordinated and integrated various resources including production, procurement,
energy, warehousing, engineering and human resource, and focused on and explored technical
innovation, so as to effectively reduce the production cost and enhance production efficiency and
economic benefits.
It followed the guideline of “compliance, implementation, and speed up” to improve quality
system, vigorously strengthened the management of quality compliance and GMP implementation in
line with international quality management standard, and promoted international registration progress.
In 2021, a total of 6 generic drugs passed consistency evaluation, and 4 varieties of preparations of
chemical generic drugs obtained approval letters. Pantoprazole sodium for injection (40mg) and
daptomycin for injection (500mg) were approved by FDA and obtained the certification for the
American market.
5. Strengthening the development of primary-level, outside-hospital and OTC market, and
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
constantly improving marketing capability
During the reporting period, Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. actively
responded to the operation and market pressure brought by the reform of the domestic medical
industry, closely followed the policy guidance of the national and provincial health commission to
implement various work, and timely adjusted market strategy and marketing team structure. It
stabilized the team performance, put intensified efforts in marketing, and vigorously expanded the
market. Committed to the strategic policy of “paying equal attention to primary-level market and
bigger cities”, it continued to extend its marketing channels deep into the public. It strengthened the
development of primary-level, outside-hospital and OTC retail market, focused more on the building
of outside-hospital team and the coverage of drug stores, intensified patients education and products
clinical pharmaceutical care. During the reporting period, the sales of Corbrin products kept growing,
sales of Acarbose remained stable, the sales income of Kashuangping (Pioglitazone Hydrochloride
and Metformin Hydrochloride) and cardiovascular drugs grew rapidly, and immune products
continued to take the lead of the targeted market.
In 2021, positive results were achieved in centralized procurement and medical insurance assess.
Pantoprazole Sodium for Injectionand Decitabine for Injection (Xiangke) won the bids in the fourth
and fifth national VBP program, respectively. Corbrin Tablets won the bid of Chinese patent medicine
VBP program organized by inter-provincial alliance of 19 provinces with Hubei province taking the
lead. The bidding prices meet expectations, and it is expected that a sales increase will ensue.
Metformin Hydrochloride and Empagliflozin Tablets (I), a drug for diabetes approved to market in
June 2021, was listed in the Catalog of Medicines Covered by National Basic Medical Insurance
(2021) in the negotiation of medical insurance payment standard, for the first time. As a compound
drug, it is also a key product in the Company’s differentiating layout based on the needs of patients.
6. Making steady progress in key construction projects and expanding the Company’s
business network
During the reporting period, the phase II production base of Jiangdong Company, after 4 years
of construction, went in to operation after Corbrin Capsule and Corbrin Tablets was granted
production certification license, fulfilling its strategic goal of product transfer. The domestic and
international registrations of other APIs are also proceeding with plan. Jiangdong Company owns the
domestic first-class drug production equipment, and is expected to become the Company’s main
production base of ingredients and preparations.
During the reporting period, the construction of the Company’s Life Science Industrial Park
based in Gongshu District, Hangzhou, Zhejiang province was carried out as planned. The main
earthwork construction was completed, and the main building structure is predicted to be roofed in
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
December, 2022. The industrial park includes pharmaceutical industry incubation district, aesthetic
medicine business district, health center and other supporting commercial projects, and will become
a future-oriented high-tech life science industrial park that ensures energy conservation and emission
reduction, facilitates innovative development, integrates the industry into the city, and keeps in line
with international standards.
7. Taking solid steps to promote internal management and consolidating the foundation of
innovation-driven development
In 2021, the Company launched high potentials training project, management trainee project,
R&D personal review project, R&D core PM special training project, sailing plan project and other
training projects, gradually improving tiered employee training system based on different fields. To
be specific, it established special training systems for employees in different tiers, urged that targeted
employee development projects should be created in marketing, production, R&D, technology and
other fields, and adjusted training method according to business changes, making training system
more forward-looking and flexible. At the same time, it established and improved a collectivize
management model, in which the parent company sets standards, defines orientation and nurtures
core employees, and all subsidiaries control the cost, refine project and focus on efficiency.
It continued to strengthened EHS risk control and emergency management, organized EHS
comprehensive examination on a regular basis and carried out special emergency drills in various
ways to improve emergency response capacity. What’s more, it increased technical input, and actively
established the dual system of tiered risk control and potential risk investigation, ensuring that risks
are controllable. At the same time, it introduced Automated External Defibrillator (AED) to enhance
the Company’s capability in handling emergency activities. It actively conducted tired EHS education,
and improved training coverage and efficiency through online platform. The investment in safety
(facilities, equipment and fire emergency) in the whole year totaled RMB16.238 million, increased
by 5.8% year on year, and the investment in occupational health totaled RMB12.804 million,
increased by 15.5% year on year.
ii. Pharmaceutical commerce
In 2021, the Company actively innovated business and service model of pharmaceutical
commerce, recorded sales income of RMB23,115 million, increased by 5.94% year on year. In the
face of multiple influences of intensiveVBP Program, local medical alliance centralized procurement
at a lowered price, the implementation of DRGs, and high market demand driven by the stubborn
COVID-19 pandemic, the Company strived to change itself in four aspects, consolidated traditional
businesses, stabilized its cooperation with hospitals, made the plan of outside-hospital market, and
expanded e-commerce. Rooted deeply in Zhejiang market to develop its traditional businesses, it
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
placed equal emphasis on introducing new products and meeting customers’ satisfaction, increased
market share by improving production companies in upstream and providing better services for end
users in downstream. By focusing on innovative business including agency, e-commerce and high-
end third party logistics, it cultivated new profit growth points, built brand reputation in cold chain,
and reshaping its core business competitiveness. As a result, its performance in all sectors returned to
pre-COVID level, and maintained the position in the industry as the best pharmaceutical service
provider in Zhejiang province and the forefront ranking in domestic market.
1. Building a provincial market expansion network and cultivating new profit model
The Company transformed its operation philosophy from pursuing sales volume to pursuing
operation efficiency, and adhered to improving its value through profitability. Leveraging on the
advantage of “platform + product + Internet”, it expanded the service scope of pharmaceutical
commerce, built market development network in Zhejiang province, and refined traditional business
through various channels such as public institutions, private institutions and retail. Centering on
innovative drug introduction, it constantly enriched product lines. It also adjusted procurement
strategy in time, optimized product structure, and increased the share of products with high net profit.
It integrated procurement and sales, strengthened the expansion of key products, introduced new
products through coordination and cooperation, and optimized in-hospital product structure
dynamically. Through professional project management, it provided customers with the whole-
process supply chain services and market access solutions. In addition, it continued to strengthen the
strategic cooperation and special cooperation with a number of international pharmaceutical
companies such as Pfizer, AstraZeneca, Roche, Eli Lilly, Sanofi, Novartis and MSD, to extent the
layout of their chronic disease drugs in the primary-level of Zhejiang province. In addition, it also
enhanced the contract cooperation regarding new launched drugs with domestic emerging innovative
drug companies. It cooperated with customers to improve hospital access rate, and put into place
cooperation projects at a rapid pace, winning the general recognition of customers. Over the year, the
number of cooperation projects with new added suppliers exceeded 40, and the number of new
contract products exceeded 200, generating sales income of RMB1.8 billion.
The Company created a new retailing model by reaching into outside hospital market. Its self-
management retail focuses on opening drug stores in and near hospitals as well as DTP pharmacies,
upgrading community pharmacies, and improving the function of introducing more varieties and
providing safe prescription drugs. Based on the channels and network of traditional business, it
increased productivity to expanded market coverage and share, so as to maintain high growth rate.
Relaying on the network of subsidiaries within Zhejiang, it expanded the sales of medical devices,
ginseng and antler, and other high margin products across the province. It promoted centralized and
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unified management, optimized organizational structure, and improved operation efficiency. In
addition, it strengthened the establishment of tiered talent teams, emphasized on both internal talent
training and talent introduction of innovative sectors, cultivated versatile talents through high
potentials planning, job dispatching and field training, and accelerated job rotation of young officials
and experienced officials. By applying differentiating quantitative assessment in a comprehensive
manner, it optimized information-based management methods, and put human resources into good
use, so as to raise the average labor efficiency per capita.
2. Promoting business innovation and building a technical service platform of
pharmaceutical commerce
Focusing on specialty diseases drugs and special medical devices, the Company started its
business innovation with regional agent and expanded to national agent, built an academic promotion
team and increased the profitability of agent products. It was committed to innovation-driven
transformation, developed rehabilitation and nursing services as the main task, established academic
platforms specialized in rehabilitation, repairing and nursing by cooperating with colleges and
medical associations, so as to build academic science-led mega health industry with Huadong
Medicine characteristics. The Company explored creative products based on the homology of
medicine and food to increase the added value of products. Aiming at serving customers, it improved
information technology capability and developed e-commerce business. Targeting on B2B and B2C
customers, the Company revised and upgraded “Huadong Medicine Online Business Website”, create
“Huadong Pharmacy” flagship store and improve online sales, providing a platform for developing
market outside hospitals. The website was thus elected in the List of Key E-Commerce Platforms in
Zhejiang Province of 2021-2022. It strengthened “Internet plus” medical service model, and worked
with offline medical institutions to provide online services and undertook prescription drugs online
sales business. It integrated pharmaceutical industry and pharmaceutical commerce to build Internet
hospital, to put more efforts in products R&D and update, connected with more Internet hospitals on
prescription outflow routes, and undertook prescriptions dispensing that were paid by online medical
insurance. It built an independent B2B platform – multi-tiered digital pharmaceutical wholesale
platform covering the whole channels, which was operated and managed based on big data. It paid
attention to the key process of operation and management, constantly optimized the system and
improved operation performance, thereby realizing the connection of the whole channels of
pharmaceutical wholesale business and digital customer management.
3. Building an advanced and efficient supply chain distribution system and forming a
logistics network covering the whole Zhejiang province
During the reporting period, the Jinhua pharmaceutical logistics center, invested by the
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Company with a total amount of nearly RMB200 million, was put into operation. This professional
and modern logistics center initiated more than two years ago and covering an area of more than
60,000 square meters, has an annual throughput of more than 10 million pieces and is one of the
Company’s core logistics bases of the centralized and unified logistics distribution system in Zhejiang
province. Jinhua logistics center undertakes the Company’s logistics distribution business in Jinhua,
Quzhou, Lishui, Taizhou, Shaoxing and other areas, and its delivery scope covers as far as township
(district)-level health centers and pharmacies, so as to remove the obstacles on the “last mile” of
pharmaceutical distribution, significantly improving the distribution support to surrounding areas. A
provincial logistics service system relaying on the coordination of the Company’s supply chain
companies located in Hangzhou, Jinhua, and Wenzhou was thus established. In doing so, the
Company realized the full coverage of pharmaceutical logistics distribution throughout the province,
and played an important role in improving the capability of ensuring medical supplies guarantee
capacity of Zhejiang province.
As a national pilot institution of service standardization, the Company strived to promote high-
quality development of digital and intelligent pharmaceutical supply chain, expanded the scale of
third-party logistics service, improved the provincial logistics system featured by cold chain, and
increased the market share of high-end cold chain, so as to consolidate the brand advantage of the
No.1 pharmaceutical cold chain in Zhejiang. Huadong Pharmaceutical Supply Chain Management
Co., Ltd. (“Huadong Supply Chain”), a wholly-owned subsidiary of the Company, focuses on
professional drug distribution characterized by cold chain logistics and high-end vaccine delivery.
Through actively exploring the scientific and technological innovation of cold chain logistics, it won
the third prize of Science and Technology Progress Award of Zhejiang Province, obtained 2 patents
for utility model and 2 software copyrights. In addition to daily delivery tasks of the Company, it also
recorded rapid growth in third-party logistics service business every year. It owns the qualification of
vaccine distribution and was the first in Zhejiang province to pass the special unannounced inspection
of vaccine by Zhejiang Medical Products Administration, thus becoming one of the vaccine hubs in
Zhejiang province. In 2021, it obtained the first express business license of pharmaceutical cold chain
company in Zhejiang province, gaining more incentives to Internet distribution business to individual
customers. It became the exclusive COVID-19 vaccine distribution partner of Zhejiang Provincial
Center for Disease Control and Prevention, and realized the integration of vaccine warehousing and
distribution across the province, effectively completing the annual Covid-19 vaccine distribution task
in the province.
iii. Aesthetic medicine
Aesthetic medicine is a core strategic sector of the Company’s comprehensive health industry.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
With global vision and forward-looking layout, it constantly strengthened international industry
expansion with Sinclair, a wholly-owned subsidiary of the Company based in Britain, as the global
aesthetic medicine operating center, and promoted R&D and innovation through five R&D centers
across the world. It also improved product layout through diversified business model integrating
external cooperation and equity investment. As a result, its commercial network has covered main
aesthetic medicine market in the world and the products were sold to more than 80 countries and
regions. At present, overseas employees account for 84% of the total employees in the Company’s
aesthetic medicine sector. It owns 35 high-end minimally invasive and non-invasive aesthetic
medicine products, among which 21 are on the market inside and outside the country, and 14 are
international innovative products under research. The product portfolio covers mainstream non-
surgical aesthetic medicine sectors such as facial fillers, thread lift, skin management, body shaping,
hair removal, and cosmetic gynecology, forming an integrated product cluster with the number and
scope of products at the forefront of the industry. Several products with great potential are expected
to be sold in domestic and international markets since 2022, which will bring new growth engine for
the Company’s international aesthetic medicine business.
The year 2021 also marked the Company’s breakthrough in developing global strategic layout
of aesthetic medicine business, and in accelerating domestic registration and launch process of its
own aesthetic medicine products. During the reporting period, by acquiring 100% equity of High
Tech, a Spanish company specialized in energy based aesthetic devices, Sinclair extended the product
pipeline to energy based aesthetic devices. In February 2022, Sinclair acquired 100% equity of Viora,
an international company focusing on energy based aesthetic devices, forming effective synergy with
the Company’s existing pipeline of the products. This acquisition not only realized the full coverage
of energy based aesthetic device varieties, but will also create an independent business segment of
Sinclair EBD. High Tech will also relay on the channels and resources of Viora to expand the US
market. Based on this acquisition, the Company also puts forward a product idea of “providing
professional care for women through leading aesthetic medicine technology, and creating ‘V Women
Tech’”.
During the reporting period, Sinclair also signed an agreement with KiOmed, a Belgian company,
to obtain the exclusive license of four ongoing innovative KiOmedine CM-Chitosan products in
global skin aesthetic medicine market (excluding the U.S.). By carrying out technology storage and
product layout with forward-looking, it actively expanded its business into upstream field of new
biological materials, so as to gain the first-mover advantage, enhancing its competitiveness in novel
aesthetic medicine materials.
In 2021, although the overseas pandemic situation still dealt a blow to the Company’s
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
international aesthetic medicine business, recovery growth was achieved in Europe, the America and
other major markets as they gradually eased their control measures. Among them, Europe, Latin
America and Asia-pacific markets were performed better than expectation, showing a rapid growth,
and promoted the overall revenue to maintain fast growth. Sinclair (including the newly acquired
Spanish company High Tech) recorded an annual operating revenue of about RMB665 million (or
GBP76.07 million), increased by 108.51% year on year. Sinclair’s own revenue was increased by
79.24%, with EBITDA reached GBP6.66 million (on consolidated basis), the best performance in its
history (net profit loss in its statement were mainly caused by non-operating factors such as
acquisition expenses, financial expenses and amortization of assets). The income of its core products
Ellansé in the global market was increased by 99%. Two fillers newly launched in European market,
MaiLi novel high-end HA and Lanluma poly-L-lactic acid collagen stimulants, also contributed to
the rapid growth of overseas revenue. After acquisition, High Tech maintained fast growth in
cryolipolysis, laser and radio frequency products, and has the faith to achieve sustained growth and
overall profitability of the international aesthetic medicine business in 2022.
As the operation body of the Company’s domestic aesthetic medicine business, Sinclair
(Shanghai) Co., Ltd. completed the building of the whole group within a year since the establishment.
It now has nearly 200 employees, increased from only 10 at the very beginning. It also formulated
sales, market and brand strategies, and developed systems and institutions concerning supply chain,
quality, information, human resources, finance, legal affairs, etc., within a short period of time.
Adhering to the development strategy of “put beauty-seeker at first”, it strictly selected cooperative
institutions in the Chinese market, and actively carried out and strengthens the training and
certification of doctors, striving to provide safer services with better quality for those seeking beauty.
As at the end of 2021, the number of contracted cooperative hospitals reached 280, and the number
of doctors received training and certification exceeded 500. In 2021, the operating revenue recorded
RMB185 million, and it achieved profits in the first year of operation, overfulfilled annual operating
targets, laying a solid foundation for the goal of rapid development in 2022.
The domestic aesthetic medicine industry was constantly reformed and innovated, with rapid
product upgrade and intensified customers division. In this context, Ellansé, the first imported
regenerative aesthetic medicine products in China that obtained type III medical equipment
certification by NMPA, drew great attention from domestic aesthetic medicine industry since it went
on the Chinese market in August 2021. Relaying on the advantages including instant filling, long-
term maintenance and natural metabolism, it meets the higher demand of customers of pursuing
beauty, and is well recognized by experts and welcomed by professional physicians and the beauty-
seekers. It has become the first choice of many well-known domestic aesthetics institutions, set up
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
the new standard of domestic industry, and touted as the leader in regenerative aesthetic medicine
products for injection. With the increase of market coverage and the improvement of brand promotion,
the market penetration rate of Ellansé is expected to be further enhanced, which will drive the
constantly growth of the Company’s aesthetic medicine business.
During the reporting period, the Company continued to promote the clinical work and
registration of core aesthetic medicine products at home and abroad. The cooling treatment beauty
device Glacial Spa (F0, the life-beauty version of a frozen freckle-removing medical device)
introduced from an American company R2, has obtained license to launch it to Korean and Taiwan
(China) markets. Born in Silicon Valley, Glacial Spa (F0) was invented by a technical team led by
Rox Anderson, M.D., the founder of modern laser medicine, and director of Wellman Center for
Photomedicine at Massachusetts General Hospital (an affiliated teaching hospital of Harvard Medical
School located in Boston). It is the latest treatment of brightening skin of R2, and also a "rising star"
of cryo-technology skin care. Cooltech Define, a cryoadipolysis device, and Perfectha, a biphase
HA filler containing lidocaine, have obtained CE certification of EU. Cooltech Define and Primelase,
a laser hair removal device, have obtained TGA certification of Australia, and are about to initiate
sample inspection for the registration in China. Laser hair removal device Elysion has obtained TGA
certification of Australia. Thread lift product Silhouette Instalift passed the record of Human Genetic
Resources Administration of China in Ministry of Science and Technology of China in February 2021,
and is currently undergoing the subject enrollment of clinical trial. Maili Extreme, a high-end HA
product, received registration inspection report in December 2021. Glacial Rx (F1), a frozen freckle-
removing device, was classified as the Type II medical device by Zhejiang Medical Products
Administration in July 2021 and is currently undergoing the registration preparation in China. In the
other part of the Asia-Pacific region, Glacial Rx (F1) has obtained market license of Korea and
Singapore and has submitted the market application of Indonesia and Malaysia. In addition, the
Company is actively selecting suitable products to accelerate its application for the franchise in
Hainan Boao Lecheng Pilot Zone of International Medical Tourism.
As the country place stricter supervision on the aesthetic medicine industry, the Company will
continue to uphold the operation philosophy of “putting beauty-seekers first and serving them with
professional and rigorous medical technology” and make contributions to promoting the standardized
and health development of the market. Benefiting from the standardized development of the industry,
Sinclair (Shanghai) will continue to lead the development of domestic regenerative aesthetic medicine
product amid the new regulatory and marketing environment, and will have more space to release its
potentials.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
The Company’s aesthetic medicine products that went to market or under R&D
iv. Major BD projects of the Company
1. Innovative drugs
(1) In February 2021, Zhongmei Huadong, the Company’s wholly-owned subsidiary signed an
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
exclusive clinical development and commercialization agreement with an American company
Provention Bio, Inc., and obtained the rights of exclusive clinical development and commercialization
in the Greater China of two clinical indications (treat SLE and prevent or reduce the immunogenicity
of gene therapy) of bispecific antibody PRV-3279, a product under research of Provention Bio.
(2) In April 2021, Zhongmei Huadong, the Company’s wholly-owned subsidiary, and Fuguang
Hongxin jointly invested RMB35 million to hold the equity in Nuoling Bio, a company focusing on
high molecule-drug conjugates R&D platform, allowing the former to enjoy the priority of the right
of assignee of Nuoling Bio’s ongoing products before 2026 as agreed.
(3) In April 2021, Zhongmei Huadong, the Company’s wholly-owned subsidiary, acquired 75%
of the shares of Doer Biologics in RMB487.50 million, to become its controlling shareholder. Doer
Biologics is a Chinese company focusing on the R&D platform of innovative biologic drugs and owns
independent intellectual property rights.
(4) In June 2021, Zhongmei Huadong, the Company’s wholly-owned subsidiary, introduced
SCO-094, a product in Phase I clinical trial of SCOHIA PHARMA, Inc., a Japanese company. The
product is a global innovative dual agonist targeting at GLP-1R and GIPR, for treating diseases such
as type 2 diabetes, obesity and NASH.
(5) In September 2021, Zhongmei Huadong, the Company’s wholly-owned subsidiary, granted
the exclusive rights of development, production and commercialization in South Korea of TTP273,
an oral, small molecule, GLP-1 receptor agonist (for the treatment of type 2 diabetes) that is
innovative in the world, to Daewon Pharmaceutical Co., Ltd., a South Korean company, marking the
first license-out of innovative products of the Company.
(6) In October 2021, the Company entered into a strategic cooperation with Takeda
Pharmaceuticals Company Ltd. (“Takeda”) on the rights of commercialization in China, of Nesina
(Alogliptin Benzoate Tablets), a DDP-4 inhibitor that has went into the Chinese market. This move
further enriched the Company’s anti-diabetes product portfolio, and formed a synergistic effect with
the Company’s existing key products in the field, consolidating and enhancing the Company’s market
competitiveness and industry leading position in domestic anti-diabetes drugs. The alliance between
the two big companies also demonstrated the industry’s recognition of the Company’s commercial
capability in the field.
(7) In October 2021, Zhongmei Huadong and Huadong Medicine Investment Holding (Hong
Kong) Limited, the Company’s wholly-owned subsidiaries, entered into an equity investment
agreement and an exclusive product license agreement with Ashvattha Therapeutic, Inc. an American
company, obtaining the exclusive license of eight products under research in 20 Asian countries and
regions, including China, Singapore and Malaysia. One of the product OP-101 is undergoing phase
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
II clinical trial in America for the treatment of hyperinflammation in hospitalized adults with severe
COVID-19.
2. Aesthetic medicine
(1) In February 2021, Sinclair, the Company’s wholly-owned subsidiary in Britain, acquired
100% equity of High Technology Products, S.L.U., a Spanish energy based aesthetic devices
company, with equity consideration of EUR65 million and milestone payment that does not exceed
EUR20 million, expanding the Company’s aesthetic medicine product pipeline into energy based
aesthetic devices and opening a new era of “minimally invasive and non-invasive” aesthetic medicine.
(2) In September 2021, Sinclair cooperated with KiOmed Pharma SA, a Belgian company, to
obtain the exclusive license of four innovative KiOmedine CM-Chitosan aesthetic medicine
products under development and all chitosan-related aesthetic medicine products developed
subsequently, in global skin aesthetic medicine market (excluding the U.S.), including the rights of
using KiOmed’s intellectual property for development, production and commercialization,
representing another important global strategic layout of the Company in non-surgical aesthetic
medicine.
3. Industrial Microbiology
(1) In November 2021, Zhongmei Huadong, the Company’s wholly-owned subsidiary, and its’s
controlled subsidiary Huida Biotech, signed a joint venture agreement with Hubei Angel Biology
Group Co., Ltd. to jointly establish Hubei Meiqi Health Technology Co., Ltd., promoting the R&D,
production and sales of health and nutritional ingredients and personal care functional ingredients.
(2) In December 2021, Zhongmei Huadong, the Company’s wholly-owned subsidiary, acquired
100% equity of Huachang Hi-Tech after it claimed bankruptcy and restructuring, and invested
RMB108 million as capital increase to repay and clear the expenses for bankruptcy proceedings, the
debts incurred for the common good of creditors and claims in bankruptcy as per Reconstructing Plan
of Huachang Hi-Tech. Huachang Hi-Tech will become another industrialization platform of the
Company in the field of industrial microbiology, which focuses on the industrialization of nucleoside
pharmaceuticals, semi-synthetic antiparasitic drug of microbial origin and other drugs.
For detailed BD transaction of the Company in the first quarter of 2022, please refer to the First
Quarterly Report 2022 of Huadong Medicine Co., Ltd. which was released on the same day as this
report.
v. Awards
During the reporting period, as the Company’s comprehensive competitive strength, efficient
operation and governance, and value creation ability were recognized by the market, it won a number
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
of awards and honors:
Ranked 314th in Fortune China Top 500 Companies, the tenth consecutive year for being listed.
Listed in Top 100 of Chinese Pharmaceutical Companies in 2020 of Menet, maintaining its
ranking as Top 10.
Top 500 Chinese Private Enterprises in 2021 and Top 100 Chinese Pharmaceutical Businesses
in 2020, All-China Federation of Industry and Commerce
Top 100 Chinese Large Enterprises for Innovation in 2021 and Top 500 Chinese Enterprises in
Service Industry in 2021, China Enterprise Confederation
Top 10 Chinese Biomedical Enterprises of Business Development, Pharmcube
“Evergreen Award” of Annual Pharmaceutical R&D Enterprise in 2021, Jiemian.com
“GoldenWis” Award of Outstanding Performance in Chinese Pharmaceutical and Biological
Industry Segments, JRJ. Com
In terms of investor relations management:
The Best Board of Directors, the Best Investor Relations, and the Best Secretary of the Board,
the 12th Tianma Award-Investor Relations of Chinese Companies Listed on the Main Board
Investor Relations Management Award of the Year 2020 and Secretary of the Board Award of
the Year 2020, Jinniu Award
The Most Valuable Company in Investor Relations, the Most Favored Listed Company by
Insurance Funds and Annual Elite Secretary of the Board TOP200, Jinglun Award
In terms of ESG management:
Top 100 A Share Companies in ESG, Securities Times
Outstanding Social Responsibility Award, Quanjing Net
2. Income and cost
(1) Composition of operating revenue
Unit: RMB yuan
2021 2020 Year-on-year
Proportion in Proportion in percentage
Amount Amount
operating revenue operating revenue increase/decrease
Total operating
34,563,301,233.67 100% 33,683,058,759.75 100% 2.61%
revenue
By sector
Business 24,203,730,039.28 70.03% 23,010,850,986.99 66.26% 5.18%
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Manufacturing 10,519,190,765.06 30.43% 11,398,357,479.02 32.82% -7.71%
Aesthetic 448,777,191.66
1,002,027,972.65 2.90% 1.33% 123.28%
medicine[Note1] [Note2]
Including:
International 665,510,309.09 1.93% 319,167,474.26 0.95% 108.51%
aesthetic medicine
Domestic aesthetic
366,560,098.82 1.06% 129,609,717.40 0.38% 182.82%
medicine
Offset (inter-sectoral
-971,513,302.13 -1,045,317,180.52
offset)
By product
By region
Domestic sales 33,883,474,489.91 98.03% 33,321,963,372.21 98.93% 1.69%
Overseas sales 679,826,743.76 1.97% 361,095,387.54 1.07% 88.27%
By sales model
[Note1] The domestic aesthetic medicine business includes the income from the self-operated products of Sinclair (Shanghai), the
income from the aesthetic medicine products of the Company’s pharmaceutical commercial agency and the income from the OTC
weight-loss products of the Company, and excluding the income from the aesthetic medicine products of the holding subsidiary,
Huadong Ningbo Company. The data scope in 2021 is the same as that in 2020.
[Note 2] The revenue of the Company’s aesthetic medicine business (including Huadong Ningbo Company) was amounted to RMB943
million.
(2) The operating revenue or profit accounts for more than 10% of the total by industry, product, region or
sales model
√ Applicable □ N/A
Unit: RMB yuan
Year-on-year Year-on-year
Year-on-year
percentage percentage
Operating percentage
Operating cost Gross profit rate increase/decrease increase/decrease
revenue increase/decrease
in operating in gross profit
in operating cost
revenue rate
By sector
24,203,730,039.2 22,451,262,640.0
Business 7.24% 5.18% 5.50% -0.28%
8 0
10,519,190,765.0
Manufacturing 2,233,384,937.73 78.77% -7.71% 1.37% -1.90%
6
By product
By region
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
33,883,474,489.9 23,721,443,647.6
Domestic sales 29.99% 1.69% 5.79% -2.72%
1 8
Overseas sales 679,826,743.76 235,927,081.30 65.30% 88.27% 85.51% 0.52%
By sales model
If the statistical specifications of the Company’s main business data have been adjusted during the reporting period, the Company’s
main business data of the most recent year should be adjusted according to the specifications at the end of the reporting period.
□ Applicable √ N/A
(3) Whether the Company’s income from in-kind sales is greater than that from labor services
√ Yes □ No
(4) Performance of major sales contracts and major procurement contracts signed by the Company as at the
reporting period
□ Applicable √ N/A
(5) Composition of operating cost
□ Applicable √ N/A
Unit: RMB yuan
2021 2020 Year-on-year
Sector Item Proportion in Proportion in percentage
Amount Amount
operating cost operating cost increase/decrease
Business Operating cost 22,451,262,640.00 90.10% 21,279,818,471.97 90.22% 5.50%
Manufacturing Operating cost 2,233,384,937.73 8.96% 2,203,096,679.98 9.34% 1.37%
International
aesthetic Operating cost 234,272,299.70 0.94% 104,350,496.25 0.44% 124.51%
medicine
Offset (inter-
Operating cost -961,549,148.45 -1,036,783,957.47
sectoral offset)
(6) Whether the scope of consolidation has changed during the reporting period
√ Yes □ No
For details, please refer to “VIII. Change of consolidation scope” in “Section X. Financial Report”.
(7) Significant changes or adjustments to the Company’s business, products or services during the reporting
period
□ Applicable √ N/A
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
(8) Major customers and major suppliers
The Company’s major customers
Total sales amount of the top five customers (yuan) 6,621,074,103.66
Proportion of the total sales amount of the top five
19.16%
customers in the total annual sales amount
Proportion of related parties’ sales amount of the top
five customers’ sales amount in the total annual sales 0.00%
amount
Information of the Company’s top five customers
Proportion in the total annual sales
No. Customer name Sales amount (yuan)
amount
1 Customer a1 2,864,964,134.63 8.29%
2 Customer a2 1,155,703,314.04 3.34%
3 Customer a3 965,022,865.70 2.79%
4 Customer a4 870,068,940.06 2.52%
5 Customer a5 765,314,849.23 2.21%
Total -- 6,621,074,103.66 19.16%
Other information of major customers
□ Applicable √ N/A
Information of the Company’s major suppliers
Total purchase amount of the top five suppliers (yuan) 2,896,604,848.61
Proportion of the total purchase amount of the top five
12.09%
suppliers in the total annual purchase amount
Proportion of related parties’ purchase amount of the
top five customers’ purchase amount in the total annual 0.00%
purchase amount
Information of the Company’s top five suppliers
Proportion in the total annual purchase
No. Supplier name Purchase amount (yuan)
amount
1 Supplier b1 773,982,594.17 3.23%
2 Supplier b2 757,701,231.02 3.16%
3 Supplier b3 567,845,383.99 2.37%
4 Supplier b4 400,190,983.58 1.67%
5 Supplier b5 396,884,655.85 1.66%
Total -- 2,896,604,848.61 12.09%
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Other information of major suppliers
□ Applicable √ N/A
3. Expenses
Unit: RMB yuan
Year-on-year
2021 2020 percentage Note on changes
increase/decrease
Sales expenses 5,424,051,895.28 5,970,614,819.26 -9.15% No significant changes
Administrative
1,166,941,288.41 998,746,330.35 16.84% No significant changes
expenses
Mainly due to the increase of interest
Financial expenses 22,075,055.28 34,200,637.61 -35.45% income and the decrease of exchange
loss
R&D expenses 979,644,017.93 926,725,468.93 5.71% No significant changes
4. R&D investment
√Applicable □ N/A
(1) Overall situation of R&D
Adhering to the corporate the “scientific research-based, patient-centered” philosophy, the
Company constantly increased the investment in R&D and enriched the layout of innovative drug
R&D pipeline, At present, the Company has a R&D team of 1,285 employees, and 36.58% of them
have master’s degrees or doctor’s degrees. In 2021, it recruited more than 100 R&D personnel to join
the team. As at the release of the report, there were a total of 70 pharmaceutical projects under research,
including nearly 40 innovative drugs and biosimilars, among which 5 products are in phase III clinical
trial and 3 are in phase II. During the reporting period, the Company invested RMB1,253 million in
pharmaceutical industry R&D, including RMB963 million in direct R&D, which was increased by
4.87% compared with that of 2020 (RMB918 million). The main R&D work is as follows.
1) Committed to the new drug R&D model integrating independent R&D, cooperative and
commissioned development and license-in, stayed current with the latest drug mechanism of action
and targets, as well as clinical application research progress in the world, accelerated the layout of
innovative drugs and the introduction of innovative drug projects at home and abroad, and initiated
several innovative drug projects with potential.
2) Aimed at clinical value, pharmacoeconomic value and commercial value, and developed a
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
number of innovative products in autoimmunity, endocrinology and anti-tumor.
3) Focused on varieties of clinical superiority and specialty drugs, and accelerated the R&D
layout of generic drugs with high-tech barriers and modified new drugs.
4) Constantly improved the process and quality of APIs and preparations, reduced costs and
actively expanded the dosage forms of on-market drugs to strengthen market competitiveness.
5) Strengthened the comprehensive dynamic evaluation of the varieties under research, and
speeded up the R&D progress of key ongoing varieties through getting projects’ priorities straight
and allocating R&D resources rationally.
6) Established polypeptide differentiating innovation technical platform, immune disease
antibody technical platform, cytotoxins of microbial fermentation technical platform, and innovative
linker and conjugate technical platform to build R&D ecosystem featured by win-win cooperation.
(2) Innovative drugs development plan
The Company established a strategic plan of innovative drug development for the next five years.
Centering on the current treatment areas, it clarified the direction and quantity of innovative projects
initiated each year during this period, put forward that at least 15 innovative projects (including
innovative drugs, modified new drugs and innovative medical devices) shall be initiated and reserved
each year during this period. During the reporting period, the Company spared no efforts in promoting
the progress of clinical trial of innovative drugs under research and key biosimilars, striving to get
approved and go to the market as soon as possible. In addition, by drawing wisdom from international
advanced practice, the Company explored the establishment of a leading innovative drugs R&D
system. It transformed the R&D strategy from “relaying on license-in” to “integrating independent
R&D and license-in”, and from “emphasizing on fast follow” to “identifying differentiating
advantages and innovating at the source”, so as to constantly adjust and optimize the Company’s
overall R&D system structure. Moreover, through introducing high-end R&D talents, it established a
scientific research team covering the lifecycle of innovative drug R&D, so as to improve all functional
modules of innovative project R&D, fully ensuring that the strategic planning objectives of innovative
projects could be achieved.
(3) Progress of clinical trials of key innovative drugs, innovative medical device and
biosimilars
During the reporting period, the Company achieved several R&D processes in innovative drugs,
innovative medical device and biosimilars. The main progress is as follows:
Endocrinology field
TTP273: the first oral GLP-1 receptor agonist small molecule innovative drug in the world, being
developed in Phase II clinical trials in mainland and Taiwan of China.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
HDM1003 (SCO-094): In June 2021, the Company signed an agreement with SCOHIA
PHARMA, Inc., a Japanese company, to jointly develop SCO-094, a dual agonist targeting at GLP-
1R and GIPR for the treatment of diseases such as type 2 diabetes, obesity and NASH. The product
is undergoing phase I clinical trials in the UK and the Company has submitted Pre-IND application
in China and received a reply.
Liraglutide Injection: a GLP-1 receptor agonist. The application of market license of its diabetes
indication has been processed in September 2021.
Ranibizumab Injection: The product has been approved for clinical trial in April 2021, and is
currently undergoing phase III clinical trial.
Oncology field
HDM2002 (Mirvetuximab): Jointly developed by the Company and ImmunoGen, Inc. an
American company, the product is a first-in-class ADC used for the treatment of FRα-high platinum-
resistant ovarian cancer. In November 2021, ImmunoGen announced that its pivotal single-arm
clinical trial (SORAYA trial) met its primary endpoint. The first application for clinical trial in China
was approved by NMPA in March 2021, including a multi-regional phase III clinical trial and a phase
I study to evaluate the safety, tolerability, and pharmacokinetics in Chinese adult patients. A pivotal
single-arm clinical trial in China was also approved by NMPA in August 2021. In December 2021,
the phase I clinical trial PK study and MRCT phase III all announced that the first subject was enrolled
and administrated.
Mefatinib Tablet: a product for the treatment of advanced non-small cell lung cancer. The overall
subjects enrollment in phase III clinical trial has been completed and phase III clinical trials is
expected to be ended in 2022 for the following market license application.
Autoimmunity field
HDM3002 (PRV-3279): In February 2021, the Company introduced American company
Provention Bio, Inc.’s PRV-3279 that was under research. It is used for treating SLE and preventing
or reducing the immunogenicity of gene therapy. The Company has submitted pre-IND application
and received response.
HDM5001 (OP-101): The Company cooperated with Ashvattha Therapeutic, Inc., an American
company it holds shares in, to jointly develop OP-101, which is used for the treatment of
hyperinflammation in hospitalized adults with severe COVID-19. The product is undergoing phase
II clinical trial in America.
HDM3001 (QX001S): Jointly developed by the Company and Qyuns Therapeutics, QX001S is
a biosimilar of innovator drug ustekinumab (Stelara) used for the treatment of moderate and sever
plaque psoriasis of adults. It has been in phase III clinical trials since May 2021.
45
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Innovative Medical Device
HD-NP-102 (MB102 and TGFR): Jointly developed by the Company and the American
company MediBeacon, Inc., the product is designed to measure kidney function through Transdermal
Glomerular Filtration Rate Measurement System (TGFR). It was approved by NMPA to enter the
special review procedure for innovative medical devices in November 2021. The novel fluorescent
tracer agent used with the system, or MB-102 injection (Relmapirazin), is classified as Type I new
drug. The application of phase III MRCT was approved by NMPA in May 2021 and the trail is
expected to be carries in both China and the U.S. in 2022.
For the R&D process of innovative drugs and biosimilars of the Company in the first quarter of
2022, please refer to the First Quarterly Report 2022 of Huadong Medicine Co., Ltd., which was
released on the same day as this report.
46
The 2021 Annual Report of Huadong Medicine Co., Ltd.
R&D pipelines of main innovative drugs and biosimilars as at the release of this report
(4) R&D progress of main generic drugs
During the reporting period, the Company seriously sorted out and evaluated the current varieties
of genetic drugs, and further defined the focus and priority of the ongoing process. As at the release
of the report, the progress of key varieties is as follows:
Treatment
No. Item Strengths Latest progress
field
Metformin Hydrochloride and Empagliflozin Approved by
1 Endocrinology 500/5mg
Tablets (I) NMPA in June
47
The 2021 Annual Report of Huadong Medicine Co., Ltd.
2021
Supplementary
materials were
2 Endocrinology Canagliflozin Tablets 0.1g, 0.3g submitted and is
expected to be
approved in 2022
Completed
Zhejiang
Provincial local
Sitagliptin Phosphate and Metformin Hydrochloride
3 Endocrinology 50/850mg Specification
Tablets
review and is
expected to be
approved in 2022
Completed BE
trial and
Pioglitazone Hydrochloride and Metformin
4 Endocrinology 15/850mg application is
Hydrochloride Tablets
expected to be
submitted in 2022
application has
been submitted
0.03%,
5 Immunity Tacrolimus Ointment and has been
0.1%
processed in
April 2022
Is undergoing BE
6 Immunity Tacrolimus Granules 1mg
trial
Approved by
7 Oncology Letrozole Tablets 2.5mg NMPA in May
2021
Supplementary
materials were
8 Oncology Sorafenib Tosylate Tablets 0.2g submitted and is
expected to be
approved in 2022
Completed BE
trial filing and is
9 Oncology Olaparib Tablets 150mg
about to start BE
trial
Pilot Scale study
10 Oncology Ibrutinib Capsules 140mg
stage
Approved by
11 Anti-infection Micafungin Sodium for Injection 50mg NMPA in June
2021
Approved by
12 Digestion Omeprazole and Sodium Bicarbonate Capsules 20/1100mg NMPA in June
2021
Supplementary
materials were
Cardiovascular
13 Macitentan Tablets 10mg submitted and is
diseases
expected to be
approved in 2022
(5) Progress of international registration
During the reporting period, the company actively carried out international registration, and the
main progress is as follows:
48
The 2021 Annual Report of Huadong Medicine Co., Ltd.
No. Treatment field Item Strengths Note
Pantoprazole
1 Digestion 40 mg Approved by FDA in August 2021
Sodium for Injection
Daptomycin for
2 Anti-infection 500 mg Approved by FDA in November 2021
Injection
Caspofungin Submitted ANDA in September 2021
3 Anti-infection 50 mg, 70 mg
Acetate for Injection and December 2021, respectively
(6) Progress of consistency evaluation
During the reporting period, the Company carried out the consistency evaluation of generic drug
smoothly, and the supplementary applications for consistency evaluation of the following varieties
were approved by NMPA:
No. Treatment field Item Strengths Note
Supplementary application for
Ciclosporin Soft
1 Immunity 10mg consistency evaluation was
Capsules
approved in March 2021
Supplementary application for
2 Oncology Decitabine for Injection 50mg consistency evaluation was
approved in June 2021
Supplementary application for
Pioglitazone
3 Endocrinology 15mg, 30mg consistency evaluation was
Hydrochloride Tablets
approved in August 2021
Supplementary application for
Pantoprazole Sodium for
4 Digestion 80mg consistency evaluation was
Injection
approved in September 2021
Supplementary application for
5 Anti-infection Ornidazole Tablets 0.5g consistency evaluation was
approved in September 2021
Supplementary application for
6 Anti-infection Daptomycin for Injection 0.5g consistency evaluation was
approved in November 2021
(7) Progress of Patents
In recent years, the Company attached great importance to the protection of intellectual property
and the commercialization and application of achievements, and the number of patent applications
and authorization were steadily increased. Over the years the Company applied for more than 620
patents at home and abroad, including over 280 authorized invention patents. Zhongmei Huadong,
the Company’s wholly-controlled subsidiary, is a national intellectual property demonstration
enterprise. In November 2014, it passed the external audit of Zhongzhi (Beijing) Certification Co.,
Ltd., becoming one of the first 147 companies that passed the standards implementation certification.
During the reporting period, the Company successfully passed the reexamination review on
supervising the standard implementation of corporates’ intellectual property.
During the reporting period, the Company’s patent application and maintenance proceeded
49
The 2021 Annual Report of Huadong Medicine Co., Ltd.
smoothly. Zhongmei Huadong, a wholly-owned subsidiary of the Company, applied and submitted a
total of 61 patents, among which 57 were invention patents, 12 were authorized in China.
(8) Progress of aesthetic medicine products R&D and registration
During the reporting period, the progress of aesthetic medicine products R&D and registration
of the Company is as follows:
No. Product Name Type Purpose Progress during the reporting period
Repairing
medium and Obtained Type III medical device
1 Ellansé Injection filler
severe nasolabial certification by NMPA in April 2021
wrinkles
Energy based Skin lightening Market application in South Korea and
2 Glacial Spa
device and brightening Taiwan (China) was approved
Classified as the Type II medical device
by Zhejiang Medical Products
Removing Administration in July 2021, and is
Energy based benign currently undergoing the registration
3 Glacial Rx（F1）
device pigmented skin preparation in China. It obtained market
lesions ect. license of Korea and Singapore, and has
submitted the market application of
Indonesia and Malaysia.
Obtained CE and TGA certification and
Energy based Fat reduction and
4 Cooltech Define is about to initiate sample inspection for
device body shaping
the registration in China.
Perfectha Biphase
5 Injection filler Facial filler Obtained CE certification
HA
Obtained TGA certification and is about
Energy based
6 Primelase Hair removal to initiate sample inspection for the
device
registration in China.
Energy based
7 Elysion Hair removal Obtained TGA certification
device
Passed the record of Human Genetic
Resources Administration of China in
Ministry of Science and Technology of
8 Silhouette Instalift Thread lift Mid-face lifting the People's Republic of China in
February 2021, and is currently
undergoing the subject enrollment of
clinical trial.
Received registration inspection report in
9 Maili Extreme HA Injection filler Facial filler
December 2021.
R&D personnel of the Company
2021 2020 Percentage change
Number of R&D personnel
1,285 1,207 6.46%
(person)
Proportion of R&D personnel 12.92% 12.79% 0.13%
50
The 2021 Annual Report of Huadong Medicine Co., Ltd.
R&D personnel structure by
—— —— ——
education
Bachelor 632 604 4.64%
Master and above 470 380 23.68%
R&D personnel structure by age —— —— ——
＜30 458 444 3.15%
30-40 628 629 -0.16%
>40 199 134 48.51%
R&D investment of the Company
2021 2020 Percentage change
R&D investment amount (yuan)
962,881,963.61 918,180,946.98 4.87%
[Note]
Proportion of R&D investment
9.52% 8.06% 1.46%
in operating revenue
Capitalized R&D investment
0.00 0.00 0.00%
amount (yuan)
Proportion of capitalized R&D
0.00% 0.00% 0.00%
investment in R&D investment
Note：(1) The above R&D investment is from the R&D expenses of the Company’s main industrial controlled subsidiary, which is
mainly used for clinical research of products under research, the upgrade of existing product process, expenses for commissioned
technological development, consistency evaluation and international registration certification. In terms of finances, R&D investment
is listed in expense, and is recognized in the current period without subsequent annual amortization, which will not have a significant
impact on the Company’s future operating results.
In 2021, the Company’s total R&D investment in the pharmaceutical industry was RMB1,253 million, accounting for 12.40% of the
revenue of pharmaceutical industry; of which, RMB963 million was used directly for R&D, an increase of 4.87% from 2020 (RMB918
million), and RMB291 million was used for the introduction of external new drug technologies and rights.
(2) The proportion of the number of R&D personnel means the proportion of the number of people in the Company’s subsidiaries
mainly engaging in pharmaceutical R&D and manufacturing; the proportion of R&D investment in operating revenue means the
proportion of the direct R&D investment of Company’s pharmaceutical industry in the operating revenue of the Company’s
pharmaceutical industry.
(3) The above-mentioned R&D personnel for 2021 are: The total of R&D personnel of the Company’s R&D system and R&D personnel
of the production system.
Reasons and impacts of major changes in the composition of R&D personnel
□ Applicable √ N/A
Reasons for the year-on-year significant change in the proportion of total R&D investment in operating revenue
□ Applicable √ N/A
Reasons for the significant change in the capitalization rate of R&D investment and its rationality
51
The 2021 Annual Report of Huadong Medicine Co., Ltd.
□ Applicable √ N/A
5. Cash flows
Unit: RMB yuan
Item 2021 2020 Year-on-year change
Cash inflows from operating
38,296,617,059.25 37,110,493,946.97 3.20%
activities
Cash outflows for operating
35,126,859,191.30 33,699,046,199.41 4.24%
activities
Net cash flow from operating
3,169,757,867.95 3,411,447,747.56 -7.08%
activities
Cash inflows from investing
251,785,859.22 385,678,726.69 -34.72%
activities
Cash outflows for investing
2,238,468,503.37 2,124,316,150.63 5.37%
activities
Net cash flow from investing
-1,986,682,644.15 -1,738,637,423.94 -14.27%
activities
Cash inflows from financing
2,264,348,880.01 2,211,047,477.21 2.41%
activities
Cash outflows for financing
3,031,802,182.50 2,936,777,488.44 3.24%
activities
Net cash flow from financing
-767,453,302.49 -725,730,011.23 -5.75%
activities
Net increase in cash and cash
422,733,564.91 925,635,526.76 -54.33%
equivalents
Main influencing factors of significant changes in relevant data year on year
√ Applicable □ N/A
The cash inflows from investing activities in the current period are RMB250 million, a decrease of 34.72 % compared with that in the
same period last year (RMB390 million), mainly due to the transfer of distribution rights in the Western European market of related
products of Sinclair, a wholly-owned subsidiary of the Company in Britain, during the current reporting period.
Reasons for the significant difference between the Company’s net cash flow from operating activities and the current year’s net profit
during the reporting period
□ Applicable √N/A
V. Analysis of non-main business
√ Applicable □ N/A
Unit: RMB yuan
52
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Proportion
Sustainable or
Amount in total Note on reasons
not
profit
Investment gains -96,311,975.25 -3.41%
Asset impairment
-16,908,408.55 -0.60%
losses
Non-operating
2,682,255.28 0.09% No
income
Non-operating
30,860,834.95 1.09% No
expenses
Mainly due to the confirmation of government grants
Other gains 174,690,581.52 6.18% No
in the current period
Gains on asset
-31,626.51 0.00%
disposal
VI. Assets and liabilities
1. Major changes in asset composition
Unit: RMB yuan
End of 2021 Beginning of 2021 Change
of
Proportion in Proportion in Note on major changes
Amount Amount proportio
total assets total assets
n
Mainly due to the increase of inflow of
operating net cash during the current
Monetary funds 4,032,424,555.22 14.94% 3,198,080,997.82 13.21% 1.73% period and the increase of balance of
monetary capital at the end of the
period.
Mainly due to the increase of the total
Accounts assets during the current period and the
6,430,482,175.97 23.82% 6,137,675,568.82 25.36% -1.54%
receivable decrease of the proportion of accounts
receivable.
Mainly due to the increase of total
Inventories 3,974,549,648.96 14.72% 4,067,635,254.80 16.81% -2.09% assets during the current period and the
decrease of the proportion of inventory.
Real estate
properties for 14,569,533.94 0.05% 17,792,735.95 0.07% -0.02%
investment
Long-term equity 984,927,398.68 3.65% 850,072,053.02 3.51% 0.14%
53
The 2021 Annual Report of Huadong Medicine Co., Ltd.
investments
Mainly due to the transfer of
Fixed assets 3,077,227,759.84 11.40% 2,420,366,582.92 10.00% 1.40% construction work in process to fixed
assets
Mainly due to the transfer of
Constructions in
1,582,125,201.25 5.86% 2,240,201,926.65 9.26% -3.40% construction work in process to fixed
progress
assets
Right-of-use
153,724,197.81 0.57% 191,718,186.92 0.58% -0.01%
assets
Short-term
1,237,843,228.13 4.59% 1,416,932,884.87 5.85% -1.26%
borrowing
Contract
118,341,141.48 0.44% 94,384,629.77 0.39% 0.05%
liabilities
Long-term
139,178,905.04 0.52% 151,611,367.86 0.63% -0.11%
borrowing
Lease liabilities 80,889,403.39 0.30% 112,194,637.40 0.53% -0.23%
Other non-current
911,062,879.83 3.37% 712,069,194.08 2.94% 0.43%
assets
Foreign assets account for a relatively high proportion
□ Applicable √N/A
2. Assets and liabilities measured at fair value
√Applicable □ N/A
Unit: RMB yuan
Depreciat
Amount Accumulated ion
Gains and Amount of Amount of Amount
at the fair value reserves
losses from buying in selling out Other at the end
Item beginnin changes withdraw
changes in during the during the changes of the
g of the recognized in n during
fair value period period period
period equity the
period
Financial
assets
Other equity
225,453, 20,549,224. 125,695,72 92,381,381. 21,500,84 257,815,8
instrument 8,727,227.92
120.05 62 2.50 75 0.74 44.68
investments
225,453, 20,549,224. 125,695,72 92,381,381. 21,500,84 257,815,8
Total 8,727,227.92
120.05 62 2.50 75 0.74 44.68
Financial 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
54
The 2021 Annual Report of Huadong Medicine Co., Ltd.
liabilities
Other changes
Note: Huadong Medicine Investment Holding (Hong Kong) Limited, a subsidiary of the Company, purchased 218,102 Series C-2
preferred shares of RAPT Therapeutics, Inc. in a total of USD3 million in 2018. RAPT Therapeutics, Inc. listed on NASDAQ exchange
on October 30, 2019 (stock code: RAPT). To date, Huadong Medicine Investment Holding (Hong Kong) Limited holds 60,500 shares
in RAPT after it reduced its stake, accounting for 0.204% of the total shares of RAPT Therapeutics, Inc.
Whether there are significant changes in the main asset measurement attribute of the Company during the Report Period.
□ Yes √ No
3. Limitation of asset rights at the end of the reporting period
Unit: RMB yuan
Item End of the period Reason for limitation
Cash in bank 422,257,330.57 Certificate of deposit
Other monetary funds 30,026,586.48 Cash deposit
Bills receivable 874,373.29 Bill pledge
Total 453,158,290.34
VII. 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)
1,793,453,494.62 2,195,588,789.55 -18.32%
2. Significant equity investments acquired during the reporting period
√ Applicable □ N/A
Unit: RMB yuan
Profit
Name Pro or loss
of Term Progress as ject of Involve Disclos
Main Way of Investm Shareh Disclos
investe Capital of Product of the ed investm d in ure
busines investm ent olding Partner ure date
d source invest type balance inc ent in litigatio index
s ent amount ratio (if any)
compan ment sheet date om the n or not (if any)
y e current
period
Hangzh Equity Newly 98,000, 49.00% Own Fuguang Long Equity The 0.0 - No January cninfo
55
The 2021 Annual Report of Huadong Medicine Co., Ltd.
ou investm establis 000.00 funds Chengdu term Pharmaceut 0 2,458,6 8, 2021 (http://
Fuguan ent; hed Equity ical 21.86 www.c
g Venture Investm Industry ninfo.c
Hongxi investm ent Fund has om.cn)
n ent Manage completed
Equity ment the first
Invest Co., phase of
ment Ltd., fund
Partner Hangzho raising, the
ship u Hi- industrial
(Limite Tech and
d Venture commercial
Partner Capital registration
ship) Manage of the fund
ment has been
Co., completed.
Ltd., The fund
Hangzho has
u Heda completed
Industria the filing
l Fund with Asset
Investm Manageme
ent Co., nt
Ltd., Association
Shangha of China on
i Grand April 2,
Industria 2021.
l and
Financia
l
Investm
ent
Manage
ment
Co., Ltd.
Zhejian cninfo
Equity
g Doer Pharma 487,50 - April (http://
Acquisi Own Long Investment 0.0
Biologi ceutical 0,000.0 75.00% / Equity 42,247, No 28, www.c
tion funds term was 0
cs Co., R&D 0 286.36 2021 ninfo.c
completed
Ltd. om.cn)
High Non- cninfo
Own Equity April
Technol invasiv Acquisi 596,511 100.00 Long 0.0 26,866, (http://
funds / Equity settlement No 30,
ogy e tion ,747.89 % term 0 182.85 www.c
/externa was 2021
Product energy ninfo.c
56
The 2021 Annual Report of Huadong Medicine Co., Ltd.
s, based l completed om.cn)
S.L.U. aestheti financi
c ng
devices
,
integrat
ing
R&D,
product
ion and
sales
1,182,0 -
0.0
Total -- -- 11,747. -- -- -- -- -- -- 17,839, -- -- --
0
89 725.37
3. Significant non-equity investments in progress during the reporting period
√ Applicable □ N/A
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, cninfo
Medicin 2017 (http://w
e ww.cninf
Biomedi o.com.cn
Pharmac
cal )
Self-built eutical 37,233,8 1,753,56 Own
Science Yes 98.00% 0.00 0.00 N/A
project manufact 65.88 5,772.68 funds
and
uring
Technolo
gy Park
Project
Phase II
Huadong Pharmac cninfo
Self-built 79,707,6 80,843,7 Own April 21,
Medicin Yes eutical 20.00% 0.00 0.00 N/A (http://w
project 24.77 87.97 funds 2021
e Life R&D ww.cninf
57
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Science o.com.cn
Industria )
l Park
(Xiangfu
south
plot)
project
387,907, 1,716,33
Total -- -- -- -- -- / / -- -- --
668.09 1,906.80
4. Investment in financial assets
(1) Securities Investment
√ Applicable □ N/A
Unit: RMB yuan
Gain/los Accumu
Book
s from lative Purchas
Account value at Selling Gain/los Book
fair fair e
Stock Initial ing the amount s during value at
Type of Stock value value amount Account Capital
abbrevia investm measure beginni in the the the end
stock code changes changes in the ing item source
tion ent cost ment ng of current reportin of the
in the included current
model the period g period period
current in period
period
period equity
Dome Other
Fair
stic equity
20,20 value 23,58 2,228, 8,856, 11,34 14,46
and instru Own
RAPT RAPT 7,400. measu 2,877. 824.6 357.3 0.00 9,950. 1,751.
overs ment funds
00 remen 56 1 6 55 62
eas invest
t
stock ment
20,20 23,58 2,228, 8,856, 11,34 14,46
Total 7,400. -- 2,877. 824.6 357.3 0.00 9,950. 0.00 1,751. -- --
00 56 1 6 55 62
Date of announcement of
the Board of Directors on
N/A
securities investment
approval
58
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Date of announcement of
the Board of
Shareholders on N/A
securities investment
approval (if any)
(2) Derivatives investment
□ Applicable √ N/A
No such case during the reporting period.
5. Use of raised funds
□ Applicable √ N/A
No such case during the reporting period.
VIII. 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
IX. 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
Hangzhou management
Zhongmei of Traditional
11,335,945,9 8,149,184,79 10,109,229,3 2,398,280,86 2,091,718,53
Huadong Subsidiary Chinese and 872,308,130
34.96 1.88 75.51 2.46 1.92
Pharmaceutic Western raw
al Co., Ltd. medicines
and
preparations,
59
The 2021 Annual Report of Huadong Medicine Co., Ltd.
and health
care products
Wholesale of
TCM
materials,
Huadong
TCM
Medicine 1,261,588,19 272,616,982. 2,751,905,97 56,291,104.4 41,509,566.7
Subsidiary decoction 61,300,000
Wenzhou 4.25 13 7.50 2 4
pieces,
Co., Ltd.
chemical
preparations,
etc.
Huadong
Medicine
Warehousing
Supply Chain 351,774,456. 149,575,767. 182,772,941. 31,218,716.1 20,186,268.7
Subsidiary and storage 50,729,863
Management 99 22 57 4 9
services
(Hangzhou)
Co., Ltd.
R&D,
production
Sinclair - -
and sales of 219,962,963. 1,718,716,64 322,699,871. 665,510,309.
Pharma Sub-subsidiary 116,989,531. 133,857,951.
aesthetic 92 3.29 17 09
Limited 06 86
medicine
products
Acquisition and disposal of subsidiaries during the reporting period
√ Applicable □ N/A
Methods of acquisition and disposal of Impact on the overall production,
Company name
subsidiaries during the reporting period operation and performance
Zhejiang Doer Biologics Co., Ltd. Acquisition Multi-antibody technical platform
International BD of the Company’s
High Technology Products, S.L.U. Acquisition
energy based aesthetic devices
Hubei Meiqi Health Technology Co., Industrial microbiology comprehensive
Newly established
Ltd. health business operation platform
Chengdu Haili Internet Hospital Co.,
Newly established International hospital operation platform
Ltd.
X. Structured entities controlled by the Company
□ Applicable √ N/A
XI. Prospect of the Company’s future development
i. Prospect of macro economy and pharmaceutical industry
60
The 2021 Annual Report of Huadong Medicine Co., Ltd.
In 2021, the world entered a period of turbulence and reform amid resurgent global pandemic
and rapid global changes unseen in a century. The international landscape experienced profound and
complex evolution, and major powers in the world engaged in sever competition over international
rules-setting and regional hotspot issues. Geopolitical maneuvering was intensified, regional hotspot
issues were increased, and international governance were in trouble. Human society is in an era with
endless challenges and increasing risks. In the face of unprecedented challenges, all countries are
exploring a way out. Peace and development remain the themes of our times. World multi-
polarization, economic globalization, IT application and cultural diversity keeps developing. Since
the outbreak of COVID-19, countries have attached greater importance to the strategic position of the
pharmaceutical industry, and international competition in talent, technology and other areas has
become increasingly fierce. At the same time, economic globalization is battling against headwinds,
and industrial chain and supply chain are being reshaped at a faster pace, posing challenges to the
export of China’s traditional products and the extension to higher value chain.
In 2021, China’s economy as a whole was going steadily the track of recovery. Its economic
performance and pandemic response both led the world, and major indicators meet the annual targets.
China’s pharmaceutical industry also faced increasing changes. External environment, policy changes,
technological innovation and other factors continued to, on the one hand, exert an important influence
on pharmaceutical companies, and on the other hand, led the industry to an era of innovation.
According to IQVIA’s latest data and prediction, global expense on drugs amounted to about
USD1.4 trillion in 2021. It is predicted that global drug market will grow at 3%-6% CAGR from 2022
to 2026, with total drug expense in 2026 reaching nearly USD1.8 trillion (including that of COVID-
19 vaccine). Among it, the CAGR for drug expense of emerging markets will stand at 5%-8%, slightly
higher than that of developed markets of 2%-5%. In terms of treatment field, oncology, immunity,
diabetes and neurology will be the key areas of drug expense in the next five years. With the
upgrading innovation environment and strong policy incentives, China’s pharmaceutical industry is
gaining speed in innovation, leading the development of emerging markets. In 2021, China’s
pharmaceutical industry persisted in innovation despite resurgence COVID-19. More and more
innovative drugs were covered by the catalog of medical insurance, and innovation achievements are
benefiting more patients.
According to IQVIA, China spent USD169 billion on drugs in 2021, up more than USD100
billion from USD68 billion in 2011. In the next five years, driven by the increase of the number and
consumption of innovative drugs, China’s drug expense will grow at 3.8% CAGR, or USD35 billion,
and is expected to reach USD205 billion in 2026.
ii. Industry development tend
61
The 2021 Annual Report of Huadong Medicine Co., Ltd.
1. Domestic pharmaceutical industry
Population aging is a major national condition goes throughout China’s social and economic
development. Data from the seventh national census showed that the number of people aged 60 and
above has reached 264 million, accounting for 18.7% of the total population and increased 10 million
compared with that in the end of 2019, which indicates an obvious trend of population aging. This
situation leads to a strong rigid demand for drugs, as well as an increasing demand for medical care
and chronic disease drugs. With the increase of per capita disposable income, accelerating population
aging, rising medical insurance income and higher participation in the basic medical insurance system,
China’s pharmaceutical industry will maintain long-term development.
At the same time, as China continues to deepen the reform of national health care system,
improve drug review and approval system, implement the VBP Program of medicines and medical
devices, reform health care insurance payment model, and promote rational clinical drug use,
pharmaceutical industry will face active and profound influence in its development. Since 2019,
pharmaceutical manufacturing industry has slowed down its growth, and relevant enterprises suffered
from short-term operation pressure. Since 2021, medical reform policies were constantly improved
and extended, and the general principle of price control and reduction stayed unchanged. Dynamic
adjustment mechanism of national drug reimbursement list was basically established, and volume-
based centralized procurement of drugs and high-value medical consumables has become the
mainstream.
With the deepening reform of VBP program system, this type of drug procurement will become
the primary model of public healthcare institutions. In the future, the more innovative procurement
measures will be developed. For example, centralized procurement will be conducted according to
unified rules for varieties with strong universality. Differentiating procurement policies will be
applied for different high-value medical consumables according to their varieties. Special centralized
procurement policy will be applied for varieties with strong characteristics. Drugs for the treatment
of similar indication will be integrated. Price negotiation will be taken in different stage according to
market dynamics for varieties that be influenced significantly by supply and demand. At the same
time, the category has also been expanded from chemical drugs to biological drugs, high-value
medical consumables and so on. In this context, the profits of generic drugs were largely squeezed,
and it is a crucial issue for companies, who have to follow the trend of VBP program, to overcome
the difficulties by transformation and reform.
At present, China has stepped in the second tier of pharmaceutical innovation in the world. The
number of innovative drugs only ranked after the United State, but with relatively large gap. In recent
years, with the rapid improvement of R&D capability of domestic pharmaceutical companies, the gap
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of clinical practices compared with foreign companies was further narrowed, but some sever
phenomena, such as overcrowded targets, overlapped indications, and increasing homogeneity still
exist, underscoring the problems of the waste of resources and fierce competition in similar drugs. In
November 2021, the official draft of the Guiding Principles for Clinical Research and Development
of Anti-tumor Drugs Oriented by Clinical Value is released by CDE, in which the core value of
“driven by the demand of patients and oriented by clinical value to meet the unfulfilled clinical
demands” was recognized by all walks of society. This policy adjustment emphasizing on clinical
value will have a lasting impact on the development of innovative drugs and CXO industry and
directly affect pharmaceutical companies’ R&D logistic and strategies, leading them to a virtuous
cycle of R&D to increase the benefits for patients, and promoting the orderly long-term development
of pharmaceutical innovation in China.
In the long run, the transition from Me-too/Me-better to BIC, and finally to FIC, is an important
way for China to transform from a country with large pharmaceutical industry to a country with
advanced pharmaceutical industry.
In January 2022, nine ministries, including the Ministry of Industry and Information Technology
and National Development and Reform Commission, released the “14th Five-Year Plan” Outline for
the Development of Pharmaceutical Industry (“the Outline”), and put forward the development
objectives in the next five year and the long-range objectives through next 15 years. By 2025, major
economic indicators will achieve medium-high growth, innovation achievements in frontier fields
will be prominent, innovation impetus will be strengthened, modernization of industrial chain will be
significantly improved, the supply guarantee system of pharmaceutical devices will be further
improved, and internationalization level will be comprehensively improved. By 2035, the overall
strength of the pharmaceutical industry will improve. Innovation-driven development will take shape,
the industrial structure will be upgraded, and more products will be produced with better quality to
meet people's health needs at a higher level, providing solid support for building a healthy China in
all respects. A series of specific targets are also set in the Outline: In terms of economies of scale, the
Outline proposes that during the 14th Five-Year Plan period, the average annual growth rate of
operating revenue and total profits of the pharmaceutical industry should be kept above 8%, the
proportion of added value in all industries should be increased to about 5%, and the concentration
degree of leading enterprises in the industry should be further improved. In terms of R&D investment,
the Outline proposed that R&D investment in the whole industry will increase by more than 10%
annually during the 14th Five-Year Plan period. By 2025, sales growth volume of innovative products
will account for a higher proportion in the growth volume of industry’s operating revenue
2. Aesthetic medicine
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China’s aesthetic medicine industry has grown rapidly in recent years, thanks to the increase of
per capita disposable income, the significant development of medical technology, demographic
changes, and the higher social acceptance of medical aesthetic services. According to the report of
Frost & Sullivan, a world-renowned market research agency, China’s market share of aesthetic
medicine ranks second only to that of the United State. China’s aesthetic medicine market grows
much faster than the global market. It has a huge consumption base and is the world’s fastest growing
market with great growth potential. Frost & Sullivan predicts that the compound growth rate of global
aesthetic medicine market over the five-year period from 2018 to 2023 will be 7%, while the
compound growth rate of China’s aesthetic medicine market over the five-year period from 2019 to
2024 will reach 17.3%, much higher than global average. In terms of market scale, global aesthetic
medicine market was worth USD135.7 billion in 2018, and China’s aesthetic medicine market in
2024 is estimated to be worth USD315.8 billion, becoming the world’s largest market in this field.
The blooming China’s medical aesthetic market is not only a result of the local, social and economic
transformation, but also a result of the globalization of cultural, aesthetic ideology and medical
cosmetology technology. Frost & Sullivan estimates that an RMB653.5 billion market in China will
be developed by 2030, and the CGAR of China’s aesthetic medicine market from 2020 to 2030 will
be 15.5%. At the same time, the market penetration rate of aesthetic medicine in China is far lower
than that of the US, Brazil, South Korea and other countries, meaning that aesthetic medicine industry
in China will continue to grow rapidly for a long time in the future. Measured by the times of aesthetic
medical treatment per thousand people, the penetration of in China is significantly lower than that in
Japan, Brazil, the US and South Korea, and is less than one-fifth of that in South Korea, and one-third
of that in the US.
The rapid growth of domestic aesthetic medicine industry also underscores the problems such
as illegal operation, false publicity, damage to the personal safety and the rights and interests of
consumers. The chaos of the industry has been outside the supervision of authorities for a long time,
and it is urgent to standardize the regulation of the industry. During the reporting period, the relevant
departments of the state released several documents and regulations to expand the scope of
supervision and strengthen supervision, guiding and promoting the standardized development of the
aesthetic medicine industry. In June 2021, eight ministries, including NHSA, jointly released the
Special Rectification Work Plan on Cracking Down on Illegal Aesthetic medicine Services to take
relevant actions. In 2021, State Administration for Market Regulation released the Guidelines for
Law Enforcement regarding Advertising in the Aesthetic medicine, in order to standardize and
strengthen the supervision on aesthetic medicine advertising and effectively maintain the order of
aesthetic medicine advertising market, protecting the legitimate rights and interests of consumers.
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The guideline also defines the detailed requirements and regulatory responsibilities of the publication
of medical beauty advertisements, and particularly discourages the promotion that causes anxiety
about appearance. In November 2021, the Ministry of Public Security of China issued a notice on
fight against the crime of illegal production and sale of medical cosmetic products, such as
manufacturing and selling fake and inferior products, and selling medical cosmetic products imported
from illegal ways. As the supervision on aesthetic medicine industry becomes more intensified,
industry supervision and policy guidance are expected to become normal, and standardized operation
will be the inevitable choice of related organizations. Under the guidance of policies, the industry
will be led to a path of healthy and orderly development, and will become more centralized, eco-
concerned, transparent and standardized
iii. Innovative development strategy of the Company’s business sectors
1. Development plan of pharmaceutical industry
In the future development, the Company will emphasize on meeting the clinical demands in
scientific research and R&D, and pursue innovation and differencing competitiveness in new drug
R&D and project launching as well as decision-making. It will focus on clinical value, clinical
pharmacoeconomic characteristics, commercial value, aim at long-term pipeline layout and place
equal importance on generic drugs upgrade and innovative drugs development. Innovative drug
development will be our foundation and priority in creating core competitiveness. In other words, the
Company will closely follow up the global trend of technology development and product R&D in the
cutting-edge fields such as biological drugs, gene therapy and antibody drugs, focus on the layout and
development of innovative drugs with outstanding clinical value and generic drugs with high-tech
barriers targeted on serious diseases and chronic diseases such as antineoplastic drugs, endocrine
drugs and autoimmune drugs, forming differentiating and advanced pipeline layout of innovative
products. It will transform its R&D philosophy from “emphasizing on fast follow” to “identifying
differentiating advantages and innovating at the source”. We will deepen global cooperation and
product introduction on all fronts, accelerate our capabilities of learning from and integrating external
advanced resources and technologies and make more connection with them, and establish a global
ecosystem of strategic R&D cooperation with Zhongmei Huazhong at its core. We will shift from
relaying on license in to emphasizing on independent R&D while maintaining license in, creating the
dual engine of innovation and R&D to constantly enrich product pipelines and improve the medium-
and long-term plan of innovative products. At the same time, we will continue to enhance our
capability of international operation and make more efforts in the license-out of our distinctive
products and advanced technologies and patents.
It will continue to increase R&D investment, and enrich and optimize product pipelines. In
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addition, it will strive to raise the proportion of R&D investment to sales income of pharmaceutical
industry to over 10% per year, and use R&D funds more effectively. Through independent R&D and
license-in, it will initiate and reserve at least 15 innovative projects (including drugs and medical
devices, ect.) every year, and ensure that each existing product line has innovative product supplement
and is led by innovative products, thus forming diversified product pipelines and sound product
structure. A virtuous development trajectory with constant stream of innovative products to be
launched will be created in 2022, helping to realize the phased target that 30% of the total revenue of
pharmaceutical industry are generated by innovative business in 2025.
It will introduce high-end talents at a faster pace to create a high level scientific research team,
and foster a cultural environment that values innovation, encourages success, and allows failure. It
will strengthen the establishment of internal R&D systems and technical platforms, and build a
success-oriented and market-based performance mechanism. It will also promote the implementation
of innovation-driven international strategy by creating an open-minded scientific team with
prominent competence, great passion and strong responsibility that forges ahead in an innovative and
enterprising spirit. It will establish dynamic evaluation mechanism of R&D projects. By setting up
an external expert academic committee, the Company will improve the decision-making and
management of R&D and product introduction, ensuring that scientific research innovation work are
science-based, advanced and feasible.
2. Development plan of pharmaceutical commerce
Upholding the principle of focusing on services and promoting transformation through
innovation, it will keep our business base in Zhejiang province, constantly increase brand influence,
and maintain our leading industry position in Zhejiang province. It will not simply pursue the
expansion in scale, but emphasize both scale and efficiency. It will strength the establishment of
systems and improve operating capability by refining operation and management. Besides, it will
build a modern pharmaceutical logistic network covering the whole province, go all out to create
high-end third party pharmaceutical logistics featured by cold chain, thus enhancing our value added
service capability. It will vigorously develop new business model such as general agency, business
custody and BTC pharmacies, so as to cultivate innovative business. It will consolidate in-hospital
market, expand outside-hospital market, and apply Internet platforms. Through new technologies
such as big data, AI and IoT, it will innovate our services for suppliers, and extent service supply
chain. Relaying on the platform and network of pharmaceutical circulation linking upstream
manufacturers and downstream users, it will upgrade and improve traditional operation model, build
a pharmaceutical supply chain that keeps in line with the time, and gradually become a provider of
modern value-added pharmaceutical services, pursuing sustainable high-quality development.
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3. Development plan of aesthetic medicine
The Company will stick to the principle of “facilitating global operation and layout with
domestic and international circulations progressing smoothly” in aesthetic medicine development. To
be specific, it will take its core subsidiary Sinclair as the main global operating platform, and build it
into a world-class aesthetic medicine enterprise, so as to create new development space, realizing
global operation and layout. Chinese aesthetic medicine market is of great importance to the Company.
It will introduce more high-tech products with great potentials into China, and relay on its strong
domestic registration and marketing competence to expand domestic market. Internationally, based
on its marketing foundation in China and the rapid growth of the industry, it will promote the approval
and commercialization of more competitive aesthetic medicine product in international markets. In
doing so, it will create a new development pattern featuring dual circulation, in which domestic and
overseas markets reinforce each other.
In the future, the Company will continue to focus on global high-end aesthetic medicine market.
By developing four global R&D centers in Sinclair (UK), High Tech (Spain), R2 (US) and Kylane
(Switzerland), it will further integrate R&D resources and capabilities, upgrade and optimize product
structure in active, and enrich and improve industrial layout. In addition, five global production bases
in the Netherlands, France, the United States, Switzerland and Bulgaria will ensure the productivity
of aesthetic medicine products in the way toward internationalization, so as to better fulfill the market
demand for future development.
iv. Operation plan of 2022
The year 2022 kicks off the Company’s seventh “Three-Year Plan”, and its innovation-driven
transformation comes to a crucial time. In 2022, the Company will adhere to the development
philosophy of all business sectors clarified in the seventh “Three-Year Plan”, implement it in a
pragmatic and unswervingly manner, and strive to get its overall operation performance back to
growth trajectory.
1. Pharmaceutical manufacturing and quality
In 2022, the Company will vigorously innovate production and operation model, improve
technology with priority given to increasing the preparation yield, constantly promote lean production,
reduce costs and optimize process, and bolster production efficiency, further reducing production
costs.
It will continue to increase investment in fixed assets in a coordinated manner and pay attention
to major projects such as the construct of Life Science Industrial Park and the industrialization of
semaglutide API. It will strengthen the management of project schedule, cost, quality and safety, and
ensure the advances in technology while meeting the target of investment income.
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Quality system shall be updated to keep pace with transformation. The Company will further
consolidate its quality management system and collectivize management capability, and reform its
management in terms of compliance, risk control, and cost and benefit, ensuring the realization of
international development. It will continue to implement international standards in production, take
FDA standard as the goal of quality control, enhance its capability of international registration,
shorten registration period, and improve the efficiency of submit for approval.
2. Pharmaceutical R&D and BD
Adhering to clinical value, the Company will improve assessment system of innovation and
R&D projects, and develop a dynamic system of R&D resource allocation. It will comprehensively
implement the establishment of R&D security systems and institutions of innovation center, make
innovation and R&D more professional, international and standardized, and build science-based
sound IT systems in all R&D centers in a comprehensive manner, so as to effectively protect core
data and information. It will set up a Science and Technology Expert Committee, and strengthen the
management prior to project implementation with the help of internal and external experts, to
maximize clinical value, pharmacoeconomic value and commerce value.
Relying on its R&D capability and commercialization capability, and focusing on anti-tumor,
endocrinology and immunity, the Company will strengthen the cooperation with leading enterprises
at home and abroad on all fronts such as R&D, production and commercialization. With the help of
its brand advantages and BD capability, it will realize innovative products license out and
continuously improve the brand influence.
3. Pharmaceutical care
Sticking to the “scientific research-based, patient-centered” philosophy, it will promote
academic transformation, upgrade training system, and enrich training content, significantly
enhancing academic promotion capabilities. It will further deepen the reform of marketing
organization, continue to push forward the layout outside hospital and in primary-level, and
implement refined marketing of products, so as to comprehensively bolster the marketing capability
inside and outside hospital, at primary-level and online. It will further strengthen the establishment
of outside-hospital organizational structure, optimize the system of outside hospital promotion and
primary-level promotion, foster a sales team owning expertise, and explore and create academic
promotion model suitable for outside-hospital market based on Internet data. Through a good
enterprise image and brand exposure, it will actively respond to the adjustment of Catalogue of Drugs
for Basic National Medical Insurance and Catalogue of National Basic Drugs, as well as centralized
drug procurement policies at all levels, creating a sound academic promotion ecosystem.
4. Pharmaceutical commerce
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The Company will continue to develop traditional commerce distribution in Zhejiang province,
and maintain the growth of sales and profitability. At the same time, it will provide a full range of
quality services to meet the demands of upstream and downstream customers, explore the market
outside Zhejiang with innovative businesses, and reshape it core competitiveness. It will expand its
share in national agency or regional agency business, and enhance profitability by making more
efforts in building e-commerce platform and its own brand. While consolidate traditional business,
stabilize in-hospital market and plan outside-hospital market, it will constantly pursue value creation
by realizing innovation-driven transformation and expanding e-commerce and new platform. It will
integrate procurement and sales, jointly promote innovation drug introduction, focus on increasing
the share of high-margin products in the hospital, and gradually adjust the product structure. In terms
of pharmaceutical retail business, it will focus on designated pharmaceutical stores, hospital
associated drugstores and chain drugstores, and expand its coverage and shares, maintaining high
growth rate. In terms of self-operate retail business, it will focus on drugstores inside and nearby
hospitals, DTP stores, and upgrade community drugstores. It will expand the share of medical devices,
ginseng antler and other high value products in all parts of the province, strive to cultivate innovative
business, and intensified efforts in expanding specialty product pipeline agency from Zhejiang to the
whole country. Ginseng antler under private label will be the key product of self-operate e-commerce
platform, and more efforts will be put in product R&D and upgrade. It Supply Chain Company will
improve provincial logistics system featured by cold chain, continue to expand third-party logistics
business, consolidating its position as the leading pharmaceutical cols chain in Zhejiang.
5. Aesthetic medicine
Sinclair (Shanghai) will formulate a clear brand building plan, strengthen the education of beauty
seekers and doctors, train more registered doctors that meet the requirements, and strive to train more
than 1000 certified doctors in 2022. It will constantly expand the number of institutions, striving to
cooperate with more than 500 aesthetic medicine institutions in 2022. At the same time, it will give
priority to the feedback from beauty-seekers, and continue to pay attention to AE dynamics. On the
basis of the good start in 2021, it will continue to deepen market expansion and brand building, and
establish a sound return visit mechanism. It will establish and improve a professional registration
system, accelerate the domestic registration progress of foreign products under development and
products launched in overseas markets. Sinclair will continue to enrich the product pipeline in the
field of aesthetic medicine, and at the same time firmly implement the business philosophy of double
circulation of domestic and international development, and strengthen the communication, exchange
and learning among employees at home and abroad.
6. Industrial microbiology
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The Company will stabilize quality, optimize costs, and build leading scale production capability
of microbiology through technical advantages, operation control and scale effect. At the same time,
it will accelerate product R&D speed and improve product profile, so as to gain competitive
advantage.
7. Management work
Focusing on the Company’s overall interests, it will build an efficient management system in a
scientific way, and systematically improve the Company’s operation efficiency through system
building. It will value details and key links, establish a sound and united work style, and identify job
responsibilities, further enhancing management efficiency. It will underscore vision and the overall
plan, and build a talent team values science, innovation, responsibility and mission. It will promote
integrity, adhere to principle and build a clean working environment. It will further enrich corporate
culture and lead the healthy development of the company.
It will introduce and train talents, strengthen a tiered talent team, build a professional,
international and younger organizational team, establish a diversified and multi-level talent training
system, and facilitate innovation-driven transformation by emphasizing on talents building. It will
accelerate the layout of international talents and capacity building of international talents, and foster
s talent team with global thinking and overseas operation capacity, ensuring that the Company’s
international operation goes smoothly. It will constantly improve the establishment of HR system,
carry out talent review and training, and pay more attention to the development of core talents. It will
establish and improve performance and feedback mechanisms centering on organization and projects,
boost its own development capability, and form the core competitiveness of the organization.
The overall work plan of financial management system in 2022 is as follows. It will adhere to
long-term development and closely follow the Company’s strategy. It will implement the guiding
principle of economic work, and intensify efforts in system building. It will keep pushing the overall
financial planning objectives that is collectivized, compliance, information-based and oriented to
international market. It will focus on reducing cost and improving efficiency and operation, support
innovation-driven transformation and compliance bottom line, and build a refined and efficient
financial talent team, so as to constantly create financial value.
v. Potential risks and responses
1. Industry policies and market operation risks
The pharmaceutical industry is one of the most important industries related to the national
economy and people's livelihood, and also significantly influenced by national policies. In recent
years, the reform of healthcare sectors has been deepened, and various policies were strengthened to
become more standardized, normal and systematic. The national supervision of pharmaceutical
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
industry has a profound impact on the development of the domestic pharmaceutical industry, which
has become even more uncertain as the COVID-19 pandemic kept resurging and pandemic response
became more severe. With the further promotion of the policies such as volume-based procurement
and health insurance negotiation, the production costs and profitability in the pharmaceutical industry
are also facing challenges, and the price of new drug products could be lowered.
Responses:
The Company will pay close attention to and study the national pharmaceutical policies and
industrial development trends, increase the investment in R&D, and integrate independent R&D and
license in. It will speed up the layout of innovative varieties centering on core treatment areas, enrich
the product pipelines, and enhance core competitiveness. At the same time, it will lower production
and operation risks through lean production management and cost reduction and efficiency
improvement. Besides, it will make great efforts to expand the primary-level and self-funded market
to increase the market coverage. It will also focus on dominant aesthetic medicine and industrial
microbiology sectors, improve brand competitiveness, and create new profit points.
2. New drug R&D risk
The R&D of new drugs requires high investment, takes long term and may cause high risks.
Before a new product is launched, it needs to engage in a long process including nonclinical studies,
clinical trials, submission and registration, and approval for launch, which will consume a lot of time.
Besides, it is subject to the influence of national policies, market, supervision and approval, and so
on. In addition, the R&D of new medicine has extremely high requirements of personnel quality. The
HR and R&D expenses at the early stage will lead to some pressure on the Company for the current
operation goal, and new drugs will be examined by market demands when goes on the market, which
will result in consequences such as the return of R&D investment lower than expectation.
Responses:
The Company will continue to increase investment in the R&D of new drugs, optimize the
innovation mechanism, constantly improve the research and evaluation and decision-making system
of new drugs in a scientific way, and strengthen relationship with well-known R&D institutions at
home and abroad. Focusing on core treatment areas, it will enrich and improve product pipelines
through independent project initiation and license in, enhance independent R&D competence, and
build its own R&D ecosystem. It will continue to increase the introduction of high-level scientific
research talents, strengthen the training and incentives of internal core technical personnel, and build
a scientific research team covering the whole cycle of new drug development.
3. Risk of exchange rate fluctuation
In recent years, with the continuous promotion of the Company’s internationalization,
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
international cooperation and communication continue to increase. The aesthetic medicine marketing
network covers all around the world, and the proportion of business settled by foreign currencies is
increasing. The changes in exchange rate have a profound and long-lasting impact on companies,
which can not only bring good economic benefits but also cause serious economic risks. Exchange
rate fluctuations will affect the prices of the Company’s export products, and will also cause exchange
gains and losses to the company, directly affecting the Company’s assets, liabilities and earnings, and
further affecting the operation capacity, debt repayment capacity, and profitability
Responses:
The Company will pay attention to exchange rate fluctuations all the time, and adjust the
operation strategies and resolve negative impacts in a timely manner based on its own condition. It
will foster the awareness of exchange rate risk prevention, and improve management system of
foreign exchange risks. At the same time, it will strengthen the training of financial personnel in terms
of professional skills and risk awareness, enhance risk avoid awareness, and avoid exchange rate risks
by financial methods.
4. Goodwill impairment risk
In recent years, in order to realize the development strategy of innovation-driven transformation,
the Company has carried out several investment and merger activities in the field of innovative
medicine and aesthetic medicine, thus forming goodwill. As at the end of the reporting period, the
Company conducted an impairment test on goodwill, and found no sign of impairment of goodwill.
If the business condition of the acquired companies shows fluctuations, there may be a risk of
goodwill impairment, thus adversely affecting the current business performance of the Company.
Responses:
The company will strive to comprehensively improving its coordination capability of operation
planning, management structure and financial management, constantly strengthen resource sharing
and synergies with overseas subsidiaries such as Sinclair, a global aesthetic medicine operating
platform of the Company, and continuously enhance the Company's business integration capabilities
in overall operation and governance.
XII. Registration form of receptions, including research, communication and interview,
undertaken during the reporting period
√ Applicable □ N/A
Main content Index of basic
Reception Reception Type of Reception
Reception Method of discussion information of the
Date Address visitor object
and research
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
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conference Institution Securities, Report
2021 phone presented on the
room etc. performance
websites of
of Huadong
irm.cninfo.com.cn
Medicine
and cninfo.com.cn
for details.
Please refer to
“Huadong Medicine:
Special record of investor
communicatio relations activities:
Swissotel Huatai
December n on aesthetic December 23, 2021”
Grand Field research Institution Securities,
23,2021 medicine presented on the
Shanghai etc.
business of the websites of
Company irm.cninfo.com.cn
and cninfo.com.cn
for details.
75
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Section IV. Corporate Governance
I. Basic situation of corporate governance
During the reporting period, the Company strictly complied with the requirements of the regulatory documents on corporate
governance issued by the CSRC and the Shenzhen Stock Exchange, such as “Company Law”, “Securities Law”, “Governance
Guidelines for Listed Companies”, and “Rules for Stock Listing of Shenzhen Stock Exchange”. In order to realize its strategic
development goals and safeguard the interests of all shareholders, the Company carried out comprehensive internal control and
standardized management, strengthened system construction and internal management, standardized information disclosure and
improved the corporate governance structure. There is no difference between corporate governance and the requirements of “Company
Law” and the relevant provisions of the CSRC.
According to the regulatory documents on the governance of listed companies issued by the CSRC, the Company has formed a
system that is legally compliant and in line with the actual operation of the Company. By the end of the reporting period, the actual
corporate governance was basically consistent with the regulatory documents on corporate governance issued by the CSRC and the
Shenzhen Stock Exchange, and there were no outstanding governance issues.
Whether the actual corporate governance of the Company is significantly different from the normative documents on corporate
governance issued by the CSRC
□ Yes √ No
No such case during the reporting period.
II. The Company’s independence in Businesses, Management, Assets, Institutions and Finance
from Controlling Shareholders
During the reporting period, the Company continuously strengthened the corporate governance structure and implemented
standardized operation in accordance with the requirements of regulatory authorities. The Company and its controlling shareholder
realized the separation of management and independent operation in terms of personnel, assets, finance, institutions and business.
Category Independent Note
or not
Independence in Yes The Company is mainly engaged in the production and operation of pharmaceutical
business products, and has its own independent production and sales systems. The Company’s
business activities are completely independent from its controlling shareholder. Although
the subsidiaries of the Company and the controlling shareholder are engaged in
pharmaceutical business, they focus on different medical fields and different customer
groups. Therefore, there is no competition between the Company, controlling
shareholders and related parties.
Independence in Yes The company is completely independent in the management of labor, personnel and
personnel salaries, and has an independent human resources department and a sound personnel
management system.
Independence in assets Yes The Company has various independent assets, such as independent production
systems, auxiliary production systems and supporting facilities; independent purchasing
and sales systems; independent industrial property rights, trademarks, non-patented
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
technologies and other intangible assets.
Independence in Yes The Company has established an independent Board of Directors, management and
institutions other internal organizations, and each functional department is independent from
controlling shareholders in duty and personnel. There is no superior-subordinate relation
between functional departments of controlling shareholders and those of the Company,
which would have an impact on the Company’s independent operations.
Independence in finance Yes The Financial Management Head Office is responsible for the financial accounting
and budget management of the Company, and has established independent and sound
financial, accounting and budget management systems according to relevant laws and
regulations.
Note: The Company is independent in Businesses, Management, Assets, Institutions and Finance from controlling shareholders. The
Company does not have peer competition or related transactions caused by partial restructuring, industry characteristics, national
policies or mergers and acquisitions.
III. Horizontal competition
□ Applicable √ N/A
IV. Annual and extraordinary general meetings held during the reporting period
1. Shareholders’ meetings in the reporting period
Proportion of
Meeting Meeting type Convene date Disclosure date Meeting resolution
investors present
Announcement of
Resolutions of
2020 Annual
General Meeting
(Announcement
No.: 2021-045) on
2020 annual annual General
59.20% May 21, 2021 May 21, 2021 China Securities
General Meeting Meeting
Journal, Securities
Times, Shanghai
Securities News,
and cninfo
(www.cninfo.com.
cn)
2. Extraordinary general meetings convened at the request of preferred shareholders with resumed voting
rights:
□ Applicable √ N/A
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
V. Directors, Supervisors and Senior Managers
1. Brief Information
Shares Shares
Shares Shares
held at the held at
Commencemen Commencemen increased decreased Other Reasons of
Tenure beginning the end of
Name Title Gender Age t of term of t of term of during the during the changes(shares changes in
status of the the
duty duty Period(shares Period(shares ) shareholding
period Period
) )
(shares) (shares)
Lv Liang Chairman Incumbent Male 48 June 06, 2019 June 05, 2022 0 0 0 0 0 /
Li Bangliang Honorary Incumbent Male June 06, 2019 June 05, 2022
76 0 0 0 0 0 /
Chairman
Li Yuedong Director, Departing Male June 06, 2019 August 16,
General 2021
50 0 0 0 0 0 /
Manager(CE
O)
Niu Zhanqi Director Incumbent Male 55 June 03, 2016 June 05, 2022 0 0 0 0 0 /
Kang Wei Director Incumbent Female December 05, June 05, 2022
54 0 0 0 0 0 /
2016
Jin Xuhu Director Incumbent Male 59 June 06, 2019 June 05, 2022 0 0 0 0 0 /
Zhu Liang Director Incumbent Male 45 June 06, 2019 June 05, 2022 0 0 0 0 0 /
Zhong Independent Incumbent Male January 6, 2016 June 05, 2022
60 0 0 0 0 0 /
Xiaoming Director
Yang Lan Independent Incumbent Female April 27, 2017 June 05, 2022
53 0 0 0 0 0 /
Director
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Yang Jun Independent Incumbent June 06, 2019 June 05, 2022
Female 50 0 0 0 0 0 /
Director
Bai Xinhua Supervisor Incumbent Female January 20, June 05, 2022
56 0 0 0 0 0 /
1998
Liu Supervisor Incumbent Male January 6, 2016 June 05, 2022
49 0 0 0 0 0 /
Chengwei
Qin Yun Supervisor Incumbent Female 52 May 19, 2006 June 05, 2022 0 0 0 0 0 /
Hu Baozhen Supervisor Incumbent Female 49 June 06, 2019 June 05, 2022 0 0 0 0 0 /
He Rufen Supervisor Incumbent Female 54 June 06, 2019 June 05, 2022 33,660 0 0 0 33,660 /
Xu Zhifeng Supervisor Incumbent Male 47 June 06, 2019 June 05, 2022 0 0 0 0 0 /
Zhou Deputy Incumbent Male June 30, 2009 June 05, 2022
Shunhua General 62 0 0 0 0 0 /
Manager
Wu Hui Deputy Incumbent Male June 06, 2019 June 05, 2022
General 53 0 0 0 0 0 /
Manager
Deputy
October 12,
Zhu li General Incumbent Male 47 June 5, 2022 30,000 0 0 0 30,000 /
2020
Manager
Chen Bo Board Incumbent Male June 30, 2009 June 05, 2022
50 0 0 0 0 0 /
Secretary
Qiu Renbo Person in Incumbent Male November 28, June 05, 2022
Charge of 40 2019 0 0 0 0 0 /
Finance
Total -- -- -- -- -- -- 63,660 0 0 0 63,660 --
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Whether directors and supervisors left office or senior management members were dismissed during their terms of office during the
reporting period
√ Yes 口 No
The Board of Directors of the Company received the written resignation from Mr. Li Yuedong, Director of the 9th Board of Directors
and General Manager of the Company, in August 2021. Mr. Li Yuedong applied for resigning from the positions of Director of the 9th
Board of Directors and General Manager of the Company due to personal health reasons, and ceased to hold any position in the
Company and its subsidiaries after leaving office.
Change of directors, supervisors and senior managers of the Company
√ Applicable □ N/A
Name Title Type Date Reason
Li Yuedong Director, Departing
General August 16,
Personal physical reasons
Manager(CEO 2021
)
2. Positions and Incumbency
Professional background, main working experiences and main responsibilities of the Company’s incumbent directors, supervisors and
senior managers
(1) Profile of directors
Chairman –Mr. Lv Liang: born in 1974, holds a master’s degree. He has served as Project Manager of Grand Asset Management Co.,
Ltd. from July 1997 to July 2001; Deputy General Manager and General Manager of Changshu Leiyunshang Pharmaceutical Co.,
Ltd. from July 2001 to March 2010; Director and Deputy General Manager of the Company from April 2010 to January 2016;
Director and General Manager of the Company from January 6, 2016 to June 5, 2019; and Chairman of the Board of the Company
since June 6, 2019.
Director – Mr. Niu Zhanqi: born in 1967, Doctor of Pharmacy. He has served as technical researcher of Chengde Technical
Supervision Bureau; Deputy Director of Hebei Pharmaceutical Group Research Institute; Manager of Technical Development
Department of China Shijiazhuang Pharmaceutical Group; Manager of Medicine Department of CSPC Ouyi Pharmaceutical Co.
Ltd.; Deputy General Manager of CSPC NBP Pharmaceutical Co., Ltd.; senior R&D director of CSPC; Vice President of
Pharmaceutical Management Head Office and General Manager of R&D Management Department of China Grand Enterprises, Inc.
from March 2013 to June 2016; CEO of Pharmaceutical Management Head Office of China Grand Enterprises, Inc. from June 2016
to November 2018; President of Pharmaceutical Management Head Office of China Grand Enterprises, Inc. since November 2018;
and Director of the Company since June 2016.
Director – Ms. Kang Wei: born in 1968, holds a master’s degree. She has served as Manager of the Trade Division, Manager of the
Capital Division and Manager of Financial Management of the Financial Management Department of China Grand Enterprises, Inc.;
Chief Financial Officer and Deputy General Manager of Heilongjiang Grand Shopping Center; currently Chief Financial Officer of
China Grand Enterprises, Inc.; and Director of the Company since December 2016.
Director - Mr. Jin Xuhu: born in 1963, holds a bachelor’s degree. He has served as Chairman and General Manager of Hangzhou
Huadong Medicine Group Co., Ltd.; Party Secretary and Chairman of Hangzhou State-owned Capital Investment and Operation Co.,
Ltd., Executive Director & Manager of Hangzhou Huadong Medicine Group Co., Ltd., since January 2019; and Director of the
Company since June 2019.
Director - Mr. Zhu Liang: born in 1977, holds a bachelor’s degree. He has served as Director of the Labor Union of Hangzhou
Huadong Medicine Group Co., Ltd., Vice Chairman of the Labor Union of Hangzhou Huadong Medicine Group Co., Ltd., Chairman
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
of the Labor Union of Hangzhou Huadong Medicine Group Co., Ltd. and Huadong Medicine Co., Ltd.; Supervisor of the Company
from April 2017 to June 2019; and Director of the Company since June 2019.
Independent Director - Mr. Zhong Xiaoming: born in 1962, holds a master’s degree. He has been Deputy Director of the New Drugs
Office, professor, postgraduate student and doctoral supervisor of Zhejiang Chinese Medical University since 1985; chief scientist of
Zhejiang University since 2013; and Independent Director of the Company since January 2016.
Independent Director - Ms. Yang Lan: born in 1969, holds a master’s degree. She has served in Guiyang Audit Bureau, Zhuhai Lixin
Certified Public Accountants, Shanghai Lixin Changjiang Certified Public Accountants Zhuhai Branch, and Guangdong Lixin
Changjiang Certified Public Accountants. Senior Manager of Pan-China Certified Public Accountants Guangdong Branch;
Investment Director of Guangzhou Securities Innovation Investment Co., Ltd.; Deputy Director of Guangdong Pujin Xinghua
Certified Tax Agent Co., Ltd.; Deputy Director of Guangdong Lixin Jiazhou Certified Public Accountants; and Independent Director
of the Company since April 27, 2017.
Independent Director - Ms. Yang Jun: born in 1972, holds a bachelor’s degree, Canadian citizenship. She has served as Chief
Financial Officer of Freedom Foundation of Ontario, Canada; Chief Knowledge Officer and lecturer partner of Shanghai
EasyFinance Management Consulting Co., Ltd.; Chief Financial Officer of Dookbook Culture Co., Ltd.; founding partner and chief
consultant of Shanghai Yuecheng Information Technology Co., Ltd. since June 2018; and Independent Director of the Company
since June 2019.
(2) Profile of supervisors
The Chairman of Board of Supervisors - Ms. Bai Xinhua: born in 1966, holds a master’s degree. She has served as Assistant Auditor
of Beijing Municipal Bureau of Audit; Accounting Manager of the Financial Management Head Office and Audit Manager of the
Supervision and Audit Department of China Grand Enterprises, Inc.; now Deputy General Manager of the Financial Management
Head Office of China Grand Enterprises, Inc.; Supervisor of the Company since 2003;
Supervisor - Ms. Qin Yun: born in 1970, holds a bachelor’s degree. She has served as attending physician in the Internal Medicine
Department of Beijing Shougang Hospital; medical representative in the Beijing Office of Tianjin Takeda Pharmaceuticals Co., Ltd.,
senior medical representative in the Beijing Office of Lilly Asia; and head of product department in the sales branch of China
National Pharmaceutical Foreign Trade Corporation. She worked for China Grand Enterprises, Inc. in 2002 and has served as Project
Manager of Pharmaceutical Business Division, Business Director of Operation Department of Pharmaceutical Management Head
Office; now Business Director of Bidding and Procurement Management Center of China Grand Enterprises, Inc.; and Supervisor of
the Company since 2006;
Supervisor – Mr. Liu Chengwei: born in 1973, holds a master’s degree. He has served as Financial Services Manager and Chief
Financial Officer of GE Medical Systems China; Financial Manager of ECG monitoring of GE Healthcare Asia. In 2001, he joined
China Grand Enterprises, Inc., where he served as Director of Supervision and Audit, Deputy General Manager of the Investment and
Operation Head Office, Deputy General Manager and General Manager of the Pharmaceutical Business Division, and head of the
preparatory group of CGE Life & Health Insurance Company. He served as Deputy General Manager of Grandpharma (China) Co.,
Ltd. from August 2016 to September 2018; Assistant President of China Grand Enterprises, Inc. since September 2018; Director of
the Company from 2003 to January 2016; and Supervisor of the Company since January 2016.
Supervisor - Ms. Hu Baozhen: born in 1973, holds a bachelor’s degree. She served as Chief Financial Officer and dispatched full-time
supervisor of Hangzhou State-owned Assets Supervision and Administration Commission from March 2009 to March 2019; Head of
the Risk Control and Legal Department of Hangzhou State-owned Capital Investment and Operation Co., Ltd. since April 2019;
Supervisor of the Company from June 2012 to April 2014; Supervisor of the Company since June 2019.
Employee Supervisor – Ms. He Rufen: born in 1968, holds a bachelor’s degree, senior certified public accountant. Assistant Manager
of the Financial Department of Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. from July 1990 to March 1998; Manager of
the Financial Department of the Company from April 1998 to December 1998; officer in charge of financial affairs of the Company
from January 1999 to June 2010; Deputy General Manager of Business of the Company since July 2010; Employee Supervisor of the
Company since June 2019.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Employee Supervisor - Mr. Xu Zhifeng: born in 1975, holds a bachelor’s degree, economist. Commissioner of the Business
Administration Office and Director Assistant of the General Manager Office of Hangzhou Zhongmei Huadong Pharmaceutical Co.,
Ltd. from August 1997 to July 2011; Manager of the Risk Management and Audit Department of the Company from August 2011 to
January 2018; Director of the Risk Management and Audit Department of the Company since February 2018; Employee Supervisor
of the Company since June 2019.
(3) Profile of senior managers
Deputy General Manager - Mr. Zhou Shunhua: born in 1960, holds a master’s degree, economist. He worked in the Company in
December 1978, and has served as Publicity Officer, Manager of the Operation Department, Director of Shanghai Office, and
Shanghai Regional Manager of the Company; Deputy General Manager of Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd.;
Deputy General Manager of the Company since 2009.
Deputy General Manager - Mr. Wu Hui: born in April 1969, holds a master’s degree, professor-level senior engineer. He worked in
the Company in July 1991, and has served as technician, workshop director and chief engineer of Hangzhou Zhongmei Huadong
Pharmaceutical Co., Ltd.; Deputy General Manager of Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. since 2015; Deputy
General Manager of the Company since June 2019.
Deputy General Manager – Ms. Zhu Li: born in 1975, has obtained a master’s degree, and serves as an accountant. She has served as
the accountant, deputy general manager, general manager, deputy director, and director of the Procurement and Management
Department for Chinese and Western Medicine in the Chinese patent medicine branch of Huadong Pharmaceutical Distribution
Company since August 1997. From September 2019 to September 2020, she served as the Deputy General Manager of Huadong
Pharmaceutical Distribution Company (responsible for the overall work), and from October 2020, she serves as the Deputy General
Manager (responsible for the commercial matters) of the Company and concurrently as the General Manager of Huadong
Pharmaceutical Distribution Company.。
Secretary of the Board of Directors - Mr. Chen Bo: born in 1972, holds a master’s degree, economist. He joined the Company in
2002, and has served as investment commissioner and Deputy Manager of the Financing Department; Secretary of the Board of
Directors since June 2009.
Officer in Charge of Financial Affairs - Mr. Qiu Renbo: born in 1982, holds a master’s degree. He has served as commissioner of the
Financial Management Head Office and Chief of the Finance Section of the Manufacturing Branch of the Company from August
2004 to July 2010; Manager of the Financial Department of Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. from August
2010 to April 2015; Chief Financial Officer of Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. since May 2015; Officer in
Charge of Financial Affairs of the Company since December 2019.
Positions in shareholders’ entities
√ Applicable □ N/A
Compensation and
Position in shareholders’ Commencement Termination of
Name Shareholders’ entity allowance from the
entities of the term the term
shareholders’ entity
President of the
Pharmaceutical
Niu Zhanqi China Grand Enterprises, Inc. Management Head Office of Yes
China Grand Enterprises,
Inc.
CFO of China Grand
Kang Wei China Grand Enterprises, Inc. Yes
Enterprises, Inc.
Deputy General Manager of
Bai Xinhua China Grand Enterprises, Inc. Yes
the Financial Management
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Head Office of China Grand
Enterprises, Inc.
Assistant President of China
Liu Chengwei China Grand Enterprises, Inc. Yes
Grand Enterprises, Inc.
Business Director of the
Pharmaceutical
Qin Yun China Grand Enterprises, Inc. Management Head Office Yes
China Grand Enterprises,
Inc.
Executive Director and
Hangzhou Huadong Medicine Manager of Hangzhou
Jin Xuhu No
Group Co., Ltd. Huadong Medicine Group
Co., Ltd.
Position in other entities
√ Applicable □ N/A
Compensation
and allowance
Position in Commencemen Termination of
Name Name of other entity from the
other entity t of the term the term
shareholders’
entity
Sichuan Yuanda Shuyang Pharmaceutical
Co., Ltd. and other wholly/partially owned
Niu Zhanqi Director No
subsidiaries of China Grand Enterprises,
Inc.
Kang Wei Western Securities Co., Ltd. Supervisor Yes
Leiyunshang Pharmaceutical Co., Ltd. and
Kang Wei other wholly/partially owned subsidiaries of Director No
China Grand Enterprises, Inc.
Grand Industrial Holding Co., Ltd. and
Bai Xinhua other wholly/partially owned subsidiaries of Director No
China Grand Enterprises, Inc.
Yunnan Leiyunshang Lixiang
Qin Yun Director No
Pharmaceutical Co., Ltd.
Sichuan Yuanda Shuyang Pharmaceutical
Co., Ltd. and other wholly/partially owned
Liu Chengwei Director No
subsidiaries of China Grand Enterprises,
Inc.
Hangzhou State-owned Capital Investment
Jin Xuhu Chairman Yes
and Operation Co., Ltd.
Jin Xuhu Hangzhou Oxygen Plant Group Co., Ltd. Executive No
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Director
Incumbent and off-office directors, supervisors and senior management personnel during the reporting period that have been imposed
administrative penalties by the SCRC during the last three years.
□ Applicable √ N/A
3. Remuneration of directors, supervisors and senior managers
The decision-making procedure, determination basis and actual remuneration for directors, supervisors and senior managers
The remuneration plan of independent directors on the ninth Board of Directors of the Company was preliminarily approved by
the Board of Directors. The final decision would be made by the general meeting of shareholders.
In 2021, the annual allowance for the independent directors of the Company was 80,000 yuan (before tax), paid in a lump sum at
the end of the year. The directors and supervisor appointed by shareholders will receive allowance of 30,000yuan (before tax), paid in
a lump sum at the end of the year. Other directors, supervisors and senior managers of the Company will receive benefits in accordance
with the Company’s current Salary System and Performance Appraisal Schemes.
Remuneration of directors, supervisors and senior managers of the Company during the reporting period
Unit: RMB ten thousand yuan
Receive
Total pretax remuneration
Holding of remuneration from related
Name Title Gender Age
positions received from parties of the
the Company Company or
not
Chairman of Incumbent
Lv Liang Male 48 240 No
the Board
Director, Departing
Li Yuedong General Male 50 126 No
Manager
Niu Zhanqi Director Male 55 Incumbent 3 Yes
Kang Wei Director Female 54 Incumbent 3 Yes
Jin Xuhu Director Male 59 Incumbent 3 Yes
Zhu Liang Director Male 45 Incumbent 65 No
Zhong Independent Incumbent
Male 60 8 No
Xiaoming Director
Independent Incumbent
Yang Lan Female 53 8 No
Director
Independent Incumbent
Yang Jun Female 50 8 No
Director
Bai Xinhua Supervisor Female 56 Incumbent 3 Yes
Qin Yun Supervisor Female 52 Incumbent 3 Yes
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Liu Chengwei Supervisor Male 49 Incumbent 3 Yes
Hu Baozhen Supervisor Female 49 Incumbent 3 Yes
He Rufen Supervisor Female 54 Incumbent 100 No
Xu Zhifeng Supervisor Male 47 Incumbent 65 No
Deputy General Incumbent
Zhou Shunhua Male 62 130 No
Manager
Deputy General Incumbent
Wu Hui Male 53 120 No
Manager
Deputy General Incumbent
Zhu Li Male 47 120 No
Manager
Secretary of the Incumbent
Chen Bo Board of Male 50 120 No
Directors
Officer in Incumbent
Charge of
Qiu Renbo Male 40 120 No
Financial
Affairs
Total -- -- -- -- 1251 --
VI. Performance of duties of directors during the reporting period
1. Board meetings during the reporting period
Sessions Convene date Disclosure date Meeting resolution
Announcement of the
Resolutions of the 9th interim
meeting of the Board of
The interim session of the 9th Directors (announcement No.:
January 7, 2021 January 7, 2021
Board meeting 2021-001) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
Announcement of the
Resolutions of the 9th interim
meeting of the Board of
The interim session of the 9th Directors (announcement No.:
February 10, 2021 February 17, 2021
Board meeting 2021-007) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Announcement of the
Resolutions of the 9th interim
meeting of the Board of
The interim session of the 9th Directors (announcement No.:
February 17, 2021 February 18, 2021
Board meeting 2021-009) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
Announcement of the
Resolutions of the 9th interim
meeting of the Board of
th Directors (announcement No.:
The interim session of the 9
March 12, 2021 March 15, 2021
Board meeting 2021-013) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
Announcement of the
Resolutions of the 9th interim
meeting of the Board of
The interim session of the 9th Directors (announcement No.:
April 19, 2021 April 19, 2021
Board meeting 2021-019) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
Announcement of the
Resolutions of the 9th interim
meeting of the Board of
The 10th session of the 9th Directors (announcement No.:
April 19, 2021 April 21, 2021
Board meeting 2021-021) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
Announcement of the
Resolutions of the 9th interim
meeting of the Board of
The 11th session of the 9th Board Directors (announcement No.:
April 26, 2021 April 28, 2021
meeting 2021-033) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
Announcement of the
The interim session of the 9th
April 29, 2021 April 29, 2021 Resolutions of the 9th interim
Board meeting
meeting of the Board of
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Directors (announcement No.:
2021-037) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
Announcement of the
Resolutions of the 9th interim
meeting of the Board of
The interim session of the 9th Directors (announcement No.:
May 31, 2021 June 1, 2021
Board meeting 2021-049) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
Announcement of the
Resolutions of the 9th interim
meeting of the Board of
The 12th session of the 9th Directors (announcement No.:
July 14, 2021 July 15, 2021
Board meeting 2021-057) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
The 13th session of the 9th The Half Year Report 2021 of
August 9, 2021 August 9, 2021
Board meeting Huadong Medicine Co., Ltd
Announcement of the
Resolutions of the 9th interim
meeting of the Board of
The 14th session of the 9th Directors (announcement No.:
October 26, 2021 October 27, 2021
Board meeting 2021-075) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
Announcement of the
Resolutions of the 9th interim
meeting of the Board of
The interim session of the 9th Directors (announcement No.:
December 20, 2021 December 20, 2021
Board meeting 2021-086) on China Securities
Journal, Securities Times,
Shanghai Securities News, and
cninfo (www.cninfo.com.cn)
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
2. Attendance of directors at Board meetings and general meetings
Attendance of directors at Board meetings and general meetings
Number of
Whether or not
Board Number of Number of Number of
Times of attend Board Times of
meetings to be Board Board Board
absent from meetings in attendance of
Name of directors attended meetings meetings meetings
Board person for two general
during the attended on attended attended by
meetings consecutive meeting
reporting site virtually proxy
times
period
Lv Liang 13 13 0 0 0 No 1
Li Yuedong 11 11 0 0 0 No 1
Niu Zhanqi 13 1 12 0 0 No 1
Kang Wei 13 1 12 0 0 No 1
Jin Xuhu 13 1 12 0 0 No 1
Zhu Liang 13 13 0 0 0 No 1
Zhong Xiaoming 13 1 12 0 0 No 1
Yang Lan 13 1 12 0 0 No 1
Yang Jun 13 0 13 0 0 No 1
3. Objections from directors on relevant issues of the Company
Whether the directors have raised any objection to relevant issues of the Company
□ Yes √ No
No such case during the reporting period.
4. Other details about the performance of duties by directors
Whether the directors’ suggestions were adopted or not
√ Yes □ No
Note on the adoption or non-adoption of the directors’ suggestions
During the reporting period, in strict accordance with the relevant laws and regulations,
normative documents, the Articles of Association, Rules of Procedure of the Board of Directors, and
other relevant provisions, all directors of the Company preformed duties and exercise their functions
and power earnestly, strictly implemented the resolution of the general meeting of shareholders, and
actively carries out all works of the Board of Directors. They also conscientiously reviewed and
approved various proposals of the Board of Directors, exercised right to vote according to law,
actively participated in corporate governance and decision-making activities, and constantly
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
standardized corporate governance. With a responsible attitude towards the Company and all
shareholders, the independent directors performed their duties and obligations diligently and
faithfully, and carefully deliberated various proposals of the Board of Directors. In addition, they
expressed objective opinions on relevant matters under deliberation based on independent position,
actively promoted the standardized operation of the Board of Directors and improved corporate
governance, safeguarding the interests of the Company and all investors. All suggestions above have
been adopted by the Company.
VII. Performance of special committees under the Board of Directors during the reporting
period
Important Other Details of
Committee Number of Meeting
Members Convene day comments and performance of objection (if
name meetings content
suggestions duties any)
1. It believes
that the
Company’s
2021 annual
financial
statements
(unaudited)
1. Publish
reflect the
review opinion
Company’s
on 2020
financial
Annual
position as at
Yang Lan Financial
December 31,
Audit (Chairman of Report of
2020 and the
Committee of Committee), March 23, Huadong
6 operating No No
the 9th Board of Zhong 2021 Medicine
results and cash
Directors Xiaoming, Jin (unaudited); 2.
flows of the
Xuhu Review the
year 2020, and
2021 work plan
agrees to carry
of Internal
out the
Audit
financial audit
Department.
of the year
2020 on the
basis of the
financial
statements;
2. Agree to the
2021 annual
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
audit plan.
1. Review the 1. The
work report of Company’s
the Internal internal audit
Audit work was
Department for carried out in
the first quarter an orderly
of 2021; manner
2. according to
Communicated the plan, and
and discussed no major
with Pan-China problems were
Certified found;
Public 2.No dispute
Accounts about with the
the major contents of the
issues Company’s
concerned in annual
the audit of the financial report
Company’s and annual
2020 annual audit
report, and accountant, that
April 19, 2021 issued review (1) the basis, No No
opinions on the ground,
2020 Annual principle and
Financial methods of the
Report of preparation of
Huadong financial
Medicine statements
(audited); comply with
3. Deliberated new
on the 2020 Accounting
Corporate Standard for
Social Business
Responsibility Enterprises,
Report; Accounting
4. Reviewed System for
the Motion on Business
Reappointing Enterprises,
Pan-China relevant laws
Certified and regulations
Public and the
Accounts as the company’s
Audit internal
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Institution for management
the Company’s system; (2) The
2021 Annual content and
Financial format of the
Report and financial
Internal statements
Control Report. comply with
the relevant
provisions of
China
Securities
Regulatory
Commission,
Shenzhen
Stock
Exchange and
Accounting
Standards for
Business
Enterprises,
and fairly
reflect the
Company’s
financial
position as at
December 31,
2020, and
operating
results and cash
flow in 2020;
3. Reviewed
and approved
the 2020
Corporate
Social
Responsibility
Report;
4. Reviewed
and approved
the Motion on
Reappointing
Pan-China
Certified
Public
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Accounts as the
Audit
Institution for
the Company’s
2021 Annual
Financial
Report and
Internal
Control Report.
The Audit
Committee
carried out its
work in strict
accordance
with the
Company Law,
Deliberated the CSRC
Company’s regulatory
April 26, 2021 Report for the rules, Articles No No
First Quarter of Association
of 2021. and Rules of
Procedure of
the Audit
Committee, and
approved the
proposal with
diligence and
responsibility.
1. The Audit
Committee
carried out its
1. Deliberated work in strict
the Company’s accordance
2021 Semi- with the
Annual Report; Company Law,
2. Review the CSRC
August 9, 2021 No No
Second Quarter regulatory
of 2021 work rules, Articles
report of the of Association
Internal Audit and Rules of
Department. Procedure of
the Audit
Committee, and
approved the
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
proposal with
diligence and
responsibility;
2. The internal
audit was
carried out in
accordance
with the plan
and no major
problems were
found.
1. The Audit
Committee
carried out its
work in strict
accordance
with the
Company Law,
CSRC
1. Review the regulatory
Company’s rules, Articles
Third Quarter of Association
2021 Report; and Rules of
2. Review the Procedure of
October 26,
work report of the Audit No No
2021
Internal Audit Committee, and
Department for approved the
the third proposal with
quarter of diligence and
2021. responsibility;
2. The internal
audit was
carried out in
accordance
with the plan
and no major
problems were
found.
1. 1. Discussed
Communicated the major
December 9, and discussed issues
No No
2021 the major concerned by
issues accountants
concerned in and put
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
the pre-audit of forward
the company’s suggestions;
annual report; 2. Agreed to
2. Review the the annual
2022 work plan audit plan for
of the Internal 2022
Audit
Department.
The
Nomination
Committee
verified and
deliberated the
Published the matters under
Zhong
review review, agree
Nomination Xiaoming
opinions on the to the
Committee of (Chairman of October 26,
1 Appointment of nomination of No No
the 9th Board of Committee), 2021
Chairman and the Chairman
Directors Kang Wei,
General and General
Yang Lan
Manager Manager, and
submit the
proposal to the
Board of
Directors for
deliberation.
Remuneration
and Approval
Review the Committee
Yang Jun
Remuneration 2021 Annual verified and
(Chairman of
and Approval Compensation deliberated the
Committee),
Committee of 1 April 19, 2021 Assessment matters under No No
Lv Liang,
the 9th Board of Plan for Senior review, and
Zhong
Directors Executives of unanimously
Xiaoming
the Company agreed on the
relevant
proposals.
VIII. Performance of duties by the Board of Supervisors
Whether the Board of Supervisors found any risks of the Company in the supervision activities during the reporting period
□ Yes √ No
No such case during the reporting period.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
IX. Employees of the Company
1. Number of employees, profession composition and education level
Number of incumbent employees in the parent company
915
(person)
Number of incumbent employees in major subsidiaries
11,512
(person)
Total number of incumbent employees (person) 12,427
Total number of employees receiving salaries in the current
12,389
period (person)
Number of retired employees requiring the parent Company
18
and its subsidiaries to bear costs (person)
Professional structure
Category Number (person)
Category 1,207
Production staff 6,608
Sales staff 2,196
Technical staff 219
Financial staff 1,599
Administrative staff 598
Total 12,427
Educational background
Category Number (person)
Master’s degree or above 845
Bachelor’s degree 5,010
Junior college (professional training) 5,663
Other 909
Total 12,427
Note: (1) Sales staff include those engaged in academic promotion, retail promotion, pharmaceutical service,
marketing, aesthetic medicine business development, etc.
(2) Technical staff include those directly engaged in R&D and other R&D support personnel
2. Staff remuneration policy
Based on strategic development planning and talent strategy, the Company builds a market-
oriented differentiating remuneration system, establishes a flexible and diversified incentive
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
mechanism, and makes its talent teem younger, professional and international. It upgrades and
optimizes employee structure, encourages employees to stick to innovation and value creation, and
enables employees themselves and as a whole to achieve sustainable development and strategic goals.
3. Training program
In order to meet the requirements of the sustainable development and international strategies of
the Company, speed up the talent transformation, further improve the cultivation and development
system for various talents, the Company’s Learning and Development Department formulated the
relevant training program for 2022 following collecting the extensive training demands of the
Company’s middle and senior management and employees. The Department divided various talent
cultivation projects into professional talent training programs and management talent training
programs with the guiding concept of “cost control, project refinement, effectiveness-oriented, and
resource sharing”. At the same time, it will constantly carry out the establishment of training system.
In terms for professional talent training programs, considering that the Company is on the crucial
period of strategic transformation and scientific research and innovation, the training of scientific
personnel is of great urgency. The Company will place higher requirements on this new kind of
training to better meet the demands of business department, and give priority to R&D personnel
review and IDP training, as well as R&D project manager training program. As for other mature
professional talent training programs, including the business strengthen and leadership improvement
programs related to production, quality, marking and other sectors, it will aim at the 2025
development strategic plan, strictly control costs, refine projects, and ensure that the costs and
expenses of all programs only reduce, and not increase.
As for management talent training programs, the Company will carry out internal cultivation
such as management case study, on-duty development and cultivation, and rotation and assignment,
combined with certain advanced management concepts of external industries, so as to guide the
officials to innovate their management and concept, and assist in the establishment of reserve teams
for middle-and high-level officials. The programs will mainly include enterpriser reserve training
program, high potentials training program and management trainee training program.
In the system building, in order to better connect all project resources of various companies, the
Company will consider the system building and the implementation of various cultivation programs
from the perspective of the entire joint-stock company, continuously improve internal trainer and
tutor teams and various courses, make overall planning for the demands of the subsidiaries, and
provide branches and subsidiaries with courses and teaching resources to create the sharing culture
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
and promote the establishment of collectivized and learning-oriented organizations. At the same time,
online course resources will be open to all employee platforms of branches and subsidiaries.
4. Labor outsourcing
□ Applicable √ N/A
X. The Company’s profit distribution and increase of capital stock by capital reserve
conversion
Formulation, implementation or adjustment of the profit distribution policy, especially the cash dividend policy, during the reporting
period
□ Applicable √ N/A
During the reporting period, the Company made profits and the profit available to shareholders of the parent company was positive,
but no cash dividend plan for common shares was proposed
□ Applicable √ N/A
Profit distribution and capital stock increase by capital reserve conversion during the current reporting period
√ Applicable □ N/A
Number of bonus shares every 10 shares (share) 0
Dividends paid every 10 shares (tax included) 2.90
Number of shares added for every 10 shares by
0
capital reserve conversion
Capital stock base of the distribution plan (share) 1,749,809,548
Cash dividends (yuan) (tax included) 507,444,768.92
Cash dividends by other means (such as share
0.00
repurchase) (yuan)
Total cash dividends (yuan) 507,444,768.92
Distributable profit (yuan) 5,340,988,582.88
Proportion of total cash dividends (including those
100%
by other means) in the total profit distributed
Current cash dividends
If the Company is in a mature stage of development and has no significant capital expenditure arrangement, the proportion of cash
dividends in the current profit distribution should be at least 80%.
Details of the profit distribution plan or the plan for capital stock increase by capital reserve conversion
On the basis of 1,749,809,548 ordinary shares of the total share capital of the Company on December 31, 2021, RMB2.90 (before
tax) of cash dividends per ten ordinary shares will be distributed to all shareholders; no bonus share will be issued; and no capital
reserve will be converted to increase the capital stock. A Total of RMB507,444,768.92 (before tax) cash bonus will be distributed,
and the remaining undistributed profit will be distributed in future years. In case the Company’s total share capital changes before
the profit distribution scheme is put in place, the proportion of distribution per share will be adjusted with the shares base unchanged.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
The aforesaid profit distribution scheme is subject to the approval at the annual General Meeting.
XI. Implementation of the Company’s equity incentive plan, employee stock ownership plan or
other employee incentive measures
□ Applicable √N/A
There is no equity incentive plan, employee stock ownership plan or other employee incentive measures and the implementation
situation during the reporting period.
XII. The establishment and implementation of internal control during the reporting period
1. The establishment and implementation of internal control
In accordance with the Basic Norms for Enterprise Internal Control, Self-Regulatory Guidelines
for Listed Companies on the Shenzhen Stock Exchange No.1 - Standardized Operation of Listed
Companies on the Main Board, and other relevant laws, regulations and normative documents, the
Company constantly promoted the establishment of internal control, improved internal control
institutions, and normalized the implementation of internal control institutions. It strengthened the
supervision and inspection of internal control, improve the corporate governance structure, and ensure
that the Company’s operation and management level was constantly improved. During the reporting
period, the Company’s internal control system design is sound and reasonable. It maintained effective
internal control in all major aspects in accordance with the requirements of internal control standard
system and relevant regulations, and there is no major omission. Please refer to the Self-Evaluation
Report on Internal Control published on http://www.cninfo.com.cn/ on April 28, 2022.
2. Details of major internal control deficiencies found during the reporting period
□ Yes √ No
XIII. The Company’s management control over subsidiaries during the reporting period
In strict accordance with relevant laws and regulations of CSRC and SZSE, and the provisions
of the Articles of Association, the Company provided guidance on the standardized operation of the
subsidiaries in terms of organizational setup, personnel adjustment, internal control and financial
system and other aspects, and timely tracked various major issues of the subsidiaries to exercise
management control over the subsidiaries.
During the reporting period, the Company exerted effective supervision on its subsidiaries.
Huadong Ningbo Medicine Co., Ltd. (“Huadong Ningbo Company”), the Company’s controlled
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
subsidiary, reached the expiration of the operation term (December 31, 2021). After the deliberation
and approval by the Board of Directors of the Company, the Company decided not to extend its
operation period, and liquidate and cancel it according to the law. In accordance with relevant
regulations of the Company Law of the People's Republic of China and Accounting Standard for
Business Enterprises, and confirmed by Pan-China Certified Public Accountants (special general
partnership), the Company’s audit services and internal control audit services institution, Huadong
Ningbo Company will no longer be included in the consolidated financial statements of the Company
since December 31, 2021. As at the date of disclosure of the Company’s 2021 annual report, Huadong
Ningbo Company is still in the liquidation phase under the court. The Company will continue to
participate in and cooperate with the subsequent liquidation work of Huadong Ningbo Company.
XIV Self-evaluation report on internal control or Audit report on internal control
1. Self-evaluation report on internal control
Disclosure date of the full text of self-
April 28, 2022
evaluation report on internal control
Disclosure index of the full text of self-
www.cninfo.com.cn
evaluation report on internal control
Proportion of assets evaluated in total
95.00%
assets
Proportion of revenue evaluated in total
revenue per consolidated financial 90.00%
statement
Recognition standard of deficiencies
Category Category Category
The Company stipulates that internal The Company stipulates that internal
control deficiencies involving the control deficiencies involving the
following fields shall be identified as at following fields shall be considered as
least “important deficiencies”: anti-fraud “material deficiencies”: serious
procedure and control; internal control violation of laws and regulations; in
over unconventional or unsystematic addition to policy reasons, the
Qualitative criteria transactions; internal control over the Company has been losing money for
selection and application of accounting years, and its continuous operation has
policies in relation to GAAP; internal been challenged; lack of system
control over the end-of-period financial control or systematic failure in
reporting process. important business; M&A and
The Company stipulates that internal restructuring failure; the operation of
control deficiencies involving the newly expanded subordinate units is
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
following fields shall be identified as at unsustainable; lack of internal control
least “important deficiencies”, and has construction and disorderly
strong indications of “material management in subsidiaries; middle
deficiencies”: restatement of previously and senior managers have left their
published financial statements to reflect posts, or serious staff turnover in key
correction of misstatements resulting from positions; frequent exposure of
error or fraud; the auditor found material negative news in the media; internal
misstatement in the Company’s financial control evaluation results, especially
statements for the current period that was major or significant deficiencies have
not initially detected by the Company’s not been corrected.
internal control over financial reporting. The Company stipulates that internal
The Audit Committee’s failed to supervise control deficiencies involving the
the Company’s external financial reports following fields shall be considered as
and internal control over financial reports; “important deficiencies”: there were a
Compliance supervision function is few negative news in the major media
invalid, and the violation of laws and at provincial level and above; the
regulations may have a significant impact general defects identified last year
on the reliability of financial reports; have not been rectified and there is no
finding any level of malpractice involving reasonable explanation; middle
senior management; Management failed to management or operating personnel
correct important defects in a reasonable are not competent enough.
period of time after reporting to
management.
Potential misstatement of total profit; Impact on total assets; significant
Quantitative criteria
potential misstatement of total assets negative impact
Number of material deficiencies in
0
financial reporting
Number of material deficiencies in non-
0
financial reporting
Number of important deficiencies in
0
financial reporting
Number of important deficiencies in
0
non-financial reporting
2. Audit report on internal control
√ Applicable □ N/A
Comments of Internal Control Audit Report
On December 31, 2021, Huadong Medicine has maintained effective internal control over financial reporting in all major respects
in accordance with the “Basic Norms for Enterprise Internal Control” and relevant regulations.
Disclosure of internal control
Disclosure
audit report
100
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Disclosure date of the full audit
April 28, 2022
report on internal control
Disclosure index of the full audit
cninfo (www.cninfo.com.cn)
report on internal control
Type of opinions in the internal
Unmodified unqualified opinions
control audit report
Whether there are material
deficiencies in non-financial None
reporting
Whether the accounting firm has issued the auditor’s report on internal control with non-standard opinions
□ Yes √ No
Whether the auditor’s report on internal control issued by the accounting firm is consistent with the self-evaluation report of the
Board of Directors
√ Yes □ No
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
XV.Rectification of Self-Detected Problems through the Special Campaign to Improve
Governance of Listed Companies
N/A
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Section V. Environment and Social Responsibility
I. Major environmental issues
Whether the Company and its subsidiaries are the key pollutant discharging units announced by the environmental protection
authorities
√ Yes □ No
Name of
Number Distributi Discharge
the Name of Concentra Approved
Discharge of on of standard Total Excessive
company major tion of total
type discharg discharge of discharge discharge
or pollutants discharge discharge
e outlets outlets pollutants
subsidiary
Hangzhou
Zhongmei Front
Water
Huadong Intermitten gate, 866
pollutant:: 1 7.65 6-9 / / None
Pharmace t discharge Mogansh
PH value
utical an Road
Co., Ltd.
Hangzhou
Zhongmei Front
Water
Huadong Intermitten gate, 866 33.3tons/
pollutant:: 1 54.35mg/l 500mg/l 9.003tons None
Pharmace t discharge Mogansh year
COD
utical an Road
Co., Ltd.
Hangzhou
Zhongmei Water Front
Huadong pollutant: Intermitten gate, 866 2.38tons/
1 0.96mg/l 35mg/l 0.074tons None
Pharmace ammonia t discharge Mogansh year
utical nitrogen an Road
Co., Ltd.
Hangzhou
Solid Legal In the
Zhongmei
pollutant: disposal by factory at
Huadong 2243.14to
hazardous entrusted / 866 / / / None
Pharmace ns
solid qualified Mogansh
utical
waste units an Road
Co., Ltd.
Hangzhou Solid Legal In the
1701.6ton
Zhongmei pollutant: disposal by / factory at / / / None
s
Huadong general entrusted 866
103
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Pharmace solid qualified Mogansh
utical waste units an Road
Co., Ltd.
Hangzhou
Roof of
Zhongmei Air
the boiler
Huadong pollutant: Organized 22.75 mg/ 17.7tons/
2 room in 60mg/ m3 1.909tons None
Pharmace nitrogen emission m3 year
Building
utical oxide
No. 25
Co., Ltd.
Hangzhou
Roof of
Zhongmei Air
the boiler
Huadong pollutant: Organized
2 room in 3 mg/ m3 50mg/ m3 0.245tons / None
Pharmace sulfur emission
Building
utical dioxide
No. 25
Co., Ltd.
Hangzhou
Roof of
Zhongmei Air
the boiler
Huadong pollutant: Organized 4.65mg/
2 room in 20mg/ m3 0.34tons / None
Pharmace dust and emission m3
Building
utical fume
No. 25
Co., Ltd.
Along
Huadong
National
Medicine
Highway
(Xi’an) Water
Intermitten 310,
Bohua pollutant: 1 8.1 6-9 / / None
t discharge Liuye
Pharmace PH value
River,
utical
Huayin
Co., Ltd.
City
Along
Huadong
National
Medicine
Highway
(Xi’an) Water
Intermitten 310,
Bohua pollutant: 1 11.41mg/l 50mg/l 0.188tons 3tons None
t discharge Liuye
Pharmace COD
River,
utical
Huayin
Co., Ltd.
City
Huadong Along
Water
Medicine National
pollutant: Intermitten
(Xi’an) 1 Highway 0.23mg/l 8mg/l 0.004tons 0.48tons None
ammonia t discharge
Bohua 310,
nitrogen
Pharmace Liuye
104
The 2021 Annual Report of Huadong Medicine Co., Ltd.
utical River,
Co., Ltd. Huayin
City
Along
Huadong
National
Medicine
Water Highway
(Xi’an)
pollutant: Intermitten 310,
Bohua 1 6.04mg/l 15mg/l 0.103tons / None
total t discharge Liuye
Pharmace
nitrogen River,
utical
Huayin
Co., Ltd.
City
Huadong
Medicine Compliant
Solid
(Xi’an) disposal by
pollutant: In the 218.41ton
Bohua entrusted 3 / / / None
hazardous company s
Pharmace qualified
waste
utical units
Co., Ltd.
Huadong
Air
Medicine
pollutant: Raw
(Xi’an)
volatile Organized medicine 20.8mg/
Bohua 1 60mg/ m3 / / None
organic emission No.1 m3
Pharmace
compoun workshop
utical
d
Co., Ltd.
Huadong
Medicine
Air Raw
(Xi’an)
pollutant: Organized medicine 3.55mg/
Bohua 1 30mg/ m3 / / None
hydrogen emission No.1 m3
Pharmace
chloride workshop
utical
Co., Ltd.
Huadong
Medicine
Air Raw
(Xi’an)
pollutant: Organized medicine 1.03mg/
Bohua 1 20mg/ m3 / / None
particulat emission No.1 m3
Pharmace
e matter workshop
utical
Co., Ltd.
Huadong Air Raw
Organized
Medicine pollutant: 1 medicine / 45mg/ m3 / / None
emission
(Xi’an) sulfuric No.2
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Bohua acid mist workshop
Pharmace
utical
Co., Ltd.
Huadong
Medicine
Air Raw
(Xi’an)
pollutant: Organized medicine
Bohua 1 / 30mg/ m3 / / None
hydrogen emission No.2
Pharmace
chloride workshop
utical
Co., Ltd.
Huadong
Medicine
Air Raw
(Xi’an)
pollutant: Organized medicine 2.8mg/
Bohua 1 20mg/ m3 / / None
particulat emission No.2 m3
Pharmace
e matter workshop
utical
Co., Ltd.
Jiangsu
Joyang Water
Intermitten Haidubei
Laborator pollutant: 1 8.29 6-9 / / None
t discharge Road
ies Co., PH value
Ltd.
Jiangsu
Joyang Water
Intermitten Haidubei 51.4173to
Laborator pollutant: 1 221mg/l 500mg/l 8.394tons None
t discharge Road ns/year
ies Co., COD
Ltd.
Jiangsu
Water
Joyang
pollutant: Intermitten Haidubei 3.6819ton
Laborator 1 3.65mg/l 35mg/l 0.139tons None
ammonia t discharge Road s/year
ies Co.,
nitrogen
Ltd.
Jiangsu
Joyang Water
Intermitten Haidubei 24.968ton
Laborator pollutant: 1 98mg/l 120mg/l 3.722tons None
t discharge Road s/year
ies Co., SS
Ltd.
Jiangsu Solid Legal In the
Joyang pollutant: disposal by factory at 1516.985t 3148.7ton
/ / / None
Laborator hazardous entrusted Haidubei ons s/year
ies Co., solid qualified Road
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Ltd. waste units
Dosing
section of
workshop
101,
fermentati
on section
of
workshop
101,
dosing
section of
workshop
104
(shared
Jiangsu
Air by 107
Joyang
pollutant: Organized and 108), 0.473tons 0.797tons
Laborator 5 2.4mg/m3 10mg/m3 None
particulat emission fermentati /year /year
ies Co.,
e matter on section
Ltd.
of
workshop
104
(shared
by 107
and 108),
and
drying
section of
workshop
104
(shared
by 107
and 108)
Extractio
n of
workshop
Jiangsu
Air 101,
Joyang
pollutant: Organized Extractio 0.029mg/ 0.0008ton 1.074tons
Laborator 3 50mg/m3 None
ethyl emission n of m3 s/year /year
ies Co.,
acetate workshop
Ltd.
104, and
workshop
303
107
The 2021 Annual Report of Huadong Medicine Co., Ltd.
West side of
East factory
Hangzhou the south
intermittent
Zhongmei Water gate of east
emission,
Huadong pollutant: 2 factory, 8.39 6-9 / / None
west factory
Pharmaceuti pH southeast
continuous
cal Co., Ltd. corner of
emission
west factory
East factory West side of
Hangzhou intermittent the south
Zhongmei Water emission, gate of east
Huadong pollutant: west factory 2 factory, 235 mg/l 500mg/l 141.455tons 25.897tons None
Pharmaceuti COD continuous southeast
cal Co., Ltd. emission corner of
west factory
East factory West side of
Hangzhou intermittent the south
Water
Zhongmei emission, gate of east
pollutant:
Huadong west factory 2 factory, 7.08 mg/l 35mg/l 12.5tons 2.59tons None
ammonia
Pharmaceuti continuous southeast
nitrogen
cal Co., Ltd. emission corner of
west factory
East factory West side of
Hangzhou intermittent the south
Water
Zhongmei emission, gate of east
pollutant:
Huadong west factory 2 factory, 2.74 mg/l 8mg/l / / None
total
Pharmaceuti continuous southeast
phosphorus
cal Co., Ltd. emission corner of
west factory
Hangzhou The project
Air
Zhongmei East factory involved
pollutant: Continuous
Huadong 1 RTO waste / 100mg/m3 0.38tons / was not in
sulfur emission
Pharmaceuti gas outlet production,
dioxide
cal Co., Ltd. no emission
Hangzhou Continuous The project
Air
Zhongmei emission East factory involved
pollutant:
Huadong 1 RTO waste / 200mg/m3 7.545tons / was not in
nitrogen
Pharmaceuti gas outlet production,
oxide
cal Co., Ltd. no emission
Hangzhou Air Continuous West
Zhongmei pollutant: emission factory
6 / 60mg/m3 5.14tons 0.40404tons None
Huadong non- quality
Pharmaceuti methane inspection
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
cal Co., Ltd. hydrocarbo building,
n east factory
quality
inspection
building,
Daptomycin
refining
building,
Acarbose
refining
building,
tank area,
RTO waste
gas outlet
Construction and operation of pollution prevention and control facilities
1. Construction and operation of pollution prevention and control facilities of Hangzhou Zhongmei Huadong Pharmaceutical Co.,
Ltd.:
(1) Waste water
Name of pollution Treatment process Processing capacity Time of operation Status of operation
prevention and control
facilities
Waste water treatment Facultative + fluidized Original 600 tons/day; 800 November 1993; technical Normal
system of the old sewage bed tons/day after technical transformation in 2007
station transformation
Waste water treatment Anaerobic (IC tower)+ 2,200 tons/day December 2001; technical Normal
system of the new sewage facultative +CASS+ air transformation in 2014 (IC
station flotation and air flotation added)
(2) Waste gas
Name of pollution Treatment process Processing Time of operation Status of
prevention and control capacity operation
facilities
DA010（35#-1） Level 2 water spray + surface cooler + activated 15000 2017 Normal
carbon adsorption and desorption
DA011（35#-2） Level 2 water spray 22000 2013 Normal
DA012（40#-2） Activated carbon + horizontal spray 6000 2019 Dismantled
DA013（32#-1） Level 2 alkaline water spray 22000 2013 Dismantled
DA014（36#-1) Level 2 clean water spray + surface cooler + 27000 2017 Normal
low-temperature plasma + level 1 water spray
DA015（40#-1） Level 2 clean water spray 24200 / Dismantled
109
The 2021 Annual Report of Huadong Medicine Co., Ltd.
DA016（18#-1） Level 2 alkaline water spray + all-in-one 16000 2019 Normal
machine（photocatalytic oxidation + plasma +
activated carbon）+ inorganic nano catalytic
deodorization device + level 1 water spray
DA017（19#-1） Burner / 2018 Dismantled
DA018（19#-2） Burner / 2018 Dismantled
DA019（3#-1） Level 1 water spray + photoxide 20000+52000 2019 Normal
DA020（36#-2） Level 2 water spray + condensation + 10000 2019 Normal
photocatalytic oxidation + activated carbon +
inorganic nano catalysis + water spray
DA021（16#-1） Level 1 water spray + level 1 alkali spray 12000 2012 Shutdown
DA022（16#-2） Level 1 water spray + level 1 plant oil 30000 2014 Shutdown
and water spray
DA023（27#-1） Condensation + level 1 alkali spray+ all-in-one 15000 2009 Shutdown
machine + level 1 alkali spray
DA024（33#-1） Level 2 alkaline water spray + condensation 48000 2019 Dismantled
water tank +common 1evel 1 alkaline water
spray
DA025（32#-2） Bag dust removal + / 2017 Dismantled
high efficiency
filtration
DA026（34#-1） Level 2 alkaline water spray 54000 2008 Dismantled
DA027（7#-1） Level 2 alkaline water spray 26000 2015 Normal
DA028（6#-1） Level 1 clean water spray 12200 2016 Normal
DA029（18#-2） Level 2 alkaline water spray + photocatalytic 16000 2018 Normal
oxidation + Activated carbon + Level 1 alkaline
water spray
DA030（18#-3） Level 1 clean water spray + Level 1 alkaline 5000 2017 Normal
water spray
DA031（25#-2） Low nitrogen 8000 2009 (The low Normal
combustion + high nitrogen
altitude emission transformation
completed in
December 2019.)
DA032（25#-1） Low nitrogen 8000 2009 (The low Normal
combustion + high nitrogen
altitude emission transformation
completed in
110
The 2021 Annual Report of Huadong Medicine Co., Ltd.
December 2019.)
DA033（1#-1） Oil fume purifier / / Normal
DA034（27#-2） Level 2 water spray + activated carbon 15000 2011 Shutdown
adsorption and desorption
DA035（27#-3） Photocatalytic oxidation + Level 1 alkaline 22300 2016 Shutdown
water spray
DA036（8#-1） Level 1 water spray 25000 2017 Normal
DA037（13#-1） Level 2 water spray +surface cooler+ activated 25000 2017 Normal
carbon adsorption and desorption
DA038（28#-1） Level 1 water spray + photocatalytic oxidation 22000 2011 Shutdown
DA039（28#-2） Level 2 water spray + common photocatalytic 48000 2011 Shutdown
oxidation
DA040（29#-1） Level 1 water spray + Level 1 alkaline water 22000 2011 Shutdown
spray
DA041（33#-2） Level 1 water spray 18600 2012 Dismantled
DA042（10#-1） Level 1 clean water spray 20000 2016 Normal
DA043（15#-1） Level 1 alkaline water spray + photocatalytic 25000 2018 Normal
oxidation
DA044（43#-1） Level 1 alkaline water spray + level 1 water 45000 2014 Normal
spray
DA045（46#-1） Level 1 clean water spray 3000 2015 Normal
DA046（46#-2） Level 1 clean water spray 25000 2015 Normal
DA047（46#-3） Level 1 clean water spray 30000 2015 Normal
DA048（23#-1） Level 2 water spray 7000 2019 Normal
(3) Solid waste
Name of pollution Treatment process Processing capacity Time of operation Status of operation
prevention and control
facilities
Hazardous waste warehouse Standardized storage 160 tons March 2012 Standardized storage; legal
disposal by qualified units
Standardized storage 240 tons March 2010
General solid waste yard Standardized storage 7 tons March 2010 Standardized storage; legal
disposal by qualified units
Standardized storage 30 tons June 2004
2. Construction and operation of pollution prevention and control facilities of Huadong Medicine (Xi’an) Bohua Pharmaceutical Co.,
Ltd.:
(1) Waste water
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Name of pollution Treatment process Processing capacity Time of operation Status of operation
prevention and control
facilities
Waste water treatment Ozone oxidation + 250 tons/day July 2012 Normal
system of the sewage station facultative + aerobic +
MBR
(2) Waste gas
Name of pollution prevention and control facilities Treatment process Time of operation Status of operation
Waste gas treatment unit of raw medicine No. 1 workshop Alkali spray + dry filter October 2020 Normal
(filter cotton) +UV
photolysis + activated carbon
adsorption
Waste gas treatment unit of raw medicine No. 2 workshop Level 2 alkaline water spray November 2019 Normal
+ dry filter +UV photolysis +
activated carbon
(3) Solid waste
Name of pollution Treatment process Storage capacity Time of operation Status of operation
prevention and control
facilities
Hazardous waste warehouse Standardized 60 tons January 2012 Standardize storage; legal disposal
storage by entrusted qualified units
3. Construction and operation of pollution prevention and control facilities of Jiangsu Joyang Laboratories Co., Ltd.:
(1) Waste water
Name of pollution Treatment process Processing capacity Time of operation Status of operation
prevention and control
facilities
Waste water treatment Air floatation tank + hydrolysis 300 tons/day December 2014 Normal
system of the sewage acidification + IC tower + UASB
station pool + A/O pool + O pool +
secondary sedimentation tank
(2) Waste gas
Name of pollution prevention and Treatment process Processing Time of operation Status of
control facilities capacity operation
CMH
Waste gas treatment unit of the extraction Level 1 water spray + moisture 10,000 2014 Normal
section of workshop 101 separator + photocatalytic
oxidation + level 2 activated
carbon adsorption + high-altitude
discharge via 25m exhaust pipe
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
Waste gas treatment unit of the Level 1 water spray + moisture 2,000 2019 Normal
fermentation section of workshop 101 separator + level 2 activated
carbon adsorption + high-altitude
discharge via 25m exhaust pipe
Waste gas treatment unit of the drying Level 1 water spray + moisture 22,000 2017 Normal
section of workshop 101 separator + level 2 activated
carbon adsorption + high-altitude
discharge via 25m exhaust pipe
Waste gas treatment unit of the dosing Cyclone separator + level 1 water 5,000 2014 Normal
section of workshop 101 spray + high-altitude discharge via
15m exhaust pipe
Waste gas treatment unit of the level 1 water spray + moisture 75000 2021 Normal
fermentation section of workshop separator + level 2 activated
104/107/108 carbon adsorption +high-altitude
discharge via 25m exhaust pipe
Waste gas treatment unit of the extraction Level 1 water spray + moisture 10,000 2015 Normal
section of workshop 104 separator + photocatalytic
oxidation + level 2 activated
carbon adsorption + high-altitude
discharge via 25m exhaust pipe
Waste gas treatment unit of the dosing Cyclone separator + level 1 water 5000 2015 Normal
section of workshop 104/107/108 spray +high-altitude discharge via
15m exhaust pipe
Waste gas treatment unit of the drying Level 1 water spray + moisture 20000 2015 Normal
section of workshop 104/107/108 separator + level 2 activated
carbon adsorption
Waste gas treatment unit of pretreatment Level 1 water spray + moisture 40000 2019 Normal
basin and domestic waste yard of separator + photocatalytic
workshop 103 and 303 oxidation + level 2 activated
carbon adsorption +high-altitude
discharge via 25m exhaust pipe
Waste gas treatment unit of workshop 106 Level 1 water spray + moisture 10,000 2015 Normal
separator + photocatalytic
oxidation + level 2 activated
carbon adsorption + high-altitude
discharge via 25m exhaust pipe
Waste gas treatment unit of the extraction Level 1 water spray + moisture 20,000 2019 Normal
section of workshop 107 separator +photocatalytic
oxidation+ level 2 activated carbon
adsorption + high-altitude
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
discharge via 25m exhaust pipe
Waste gas treatment unit of the extraction Level 1 water spray + moisture 40,000 2019 Normal
section of workshop 108 separator + photocatalytic
oxidation + level 2 activated
carbon adsorption + high-altitude
discharge via 25m exhaust pipe
Waste gas treatment unit of workshop 109 Level 1 water spray +high-altitude 20000 2019 Normal
discharge via 25m exhaust pipe
Waste gas treatment unit of sewage station Level 1 water spray + moisture 15000 2021 Normal
303 separator + photocatalytic +high-
altitude discharge via 25m exhaust
pipe
(3) Solid waste
Name of pollution Treatment process Processing capacity Time of operation Status of operation
prevention and control
facilities
Hazardous waste warehouse Standardized storage 300 tons October 2020 Standardized storage; legal
disposal by entrusted
qualified units
Domestic waste yard Standardized storage 3 tons March 2015 Chengdong Garbage Disposal
Station
4. Construction and operation of pollution prevention and control facilities of Hangzhou Zhongmei Huadong
Pharmaceutical Jiangdong Co., Ltd.
(1) Waste water
Name of pollution Treatment process Processing capacity Time of operation Status of operation
prevention and control
facilities
Waste water treatment unit Primary sedimentation + anaerobic 1500tons/day May 2016 Normal
in east factory EGSB+AO+ advanced treatment
Waste water treatment unit pretreatment+ anaerobic 8500tons/day November 2019 Normal
in west factory EGSB+AO+ advanced treatment
(2) Waste gas
Name of pollution prevention and Treatment process Processing Time of operation Status of
control facilities capacity operation
CMH
Waste gas system of the dosing Level 1 alkali spray 10000 May 2016 Normal
section in west factory
Other waste gas system of the dosing Level 1 alkali spray + 20000 May 2016 Normal
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
section in west factory photocatalytic oxidation + level 2
alkali spray
Waste gas system between plate and frame Level 1 alkali spray + 40000 June 2017 Normal
in west factory photocatalytic oxidation + level 2
alkali spray
Waste gas system of east fermentation Level 1 alkali spray + 45000 May 2016 Normal
section in west factory photocatalytic oxidation + level 2
alkali spray
Waste gas system of west fermentation Level 1 alkali spray + 40000 May 2016 Normal
section in west factory photocatalytic oxidation + level 2
alkali spray
Waste gas system of south refining section Level 2 alkali spray 80000 May 2016 Normal
in west factory
Waste gas system of north refining section Level 2 alkali spray 80000 May 2016 Normal
in west factory
Waste gas system of 7m interlayer in west Level 1 alkali spray 20000 May 2016 Normal
factory
Waste gas system of 18m interlayer in west Level 1 alkali spray 20000 May 2016 Normal
factory
Waste gas system of cooling bin in west Level 1 alkali spray + level 2 alkali 40000 June 2017 Normal
factory spray
Waste gas system of quality inspection Photocatalytic oxidation + level 1 20000 May 2016 Normal
building in west factory alkali spray
Waste gas system of sewage station 1# in Level 1 alkali spray + 30000 May 2016 Normal
west factory photocatalytic oxidation + level 2
alkali spray
Waste gas system of sewage station 2# in Level 2 alkali spray 20000 June 2017 Normal
west factory
Waste gas treatment system of north AK Level 1 alkali spray + 90000 September 2020 Suspend
fermentation in east factory photocatalytic oxidation + level 2
water spray
Waste gas treatment system of south AK Level 1 alkali spray + 90000 September 2020 Suspend
fermentation in east factory photocatalytic oxidation + level 2
water spray
Waste gas treatment system of super anti Level 1 alkali spray + 20000 March 2021 Suspend
fermentation in east factory photocatalytic oxidation +level 2
water spray
Waste gas treatment system of central Level 1 alkali spray + 8000 October 2020 Suspend
control laboratory in east factory photocatalytic oxidation + level 2
water spray
Waste gas treatment system of quality Level 1 alkali spray + 30000 August 2020 Normal
inspection building in east factory photocatalytic oxidation + level 2
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
water spray
Waste gas treatment system of AK refined Level 1 alkali spray + level 2 water 10000 November 2020 Suspend
hydrochloric acid in east factory spray
Waste gas treatment system of AK refined Level 1 alkali spray + level 2 water 1000 November 2020 Suspend
ethyl alcohol in east factory spray
Waste gas treatment system of X8 Level 1 alkali spray + level 2 water 6000 March 2021 Suspend
precipitation filtration in east factory spray
Waste gas treatment system of YT ethanol Level 1 alkali spray + level 2 water 4000 June 2021 Suspend
in east factory spray
Waste gas treatment system of MP space Photocatalytic oxidation 44000 May 2021 Suspend
ventilation in east factory
Waste gas treatment system of tank area in Active carbon+ alkali spray A small amount February 2021 Normal
east factory
Waste gas treatment system of preparation Condensation + level 2 water spray 20000 December 2021 Normal
1 department in east factory
Waste gas treatment system of sewage Level 1 alkali spray + level 2 water 36800 March 2021 Normal
station in east factory spray
Waste gas treatment system of RTO in east Water spray +RTO+ alkali spray 100000 / Suspend
factory
(3) Solid waste
Name of pollution Treatment process Processing capacity Time of operation Status of operation
prevention and control
facilities
General solid waste yard in Standardized storage 10tons October 2016 Standardized storage; legal
west factory disposal by entrusted
qualified units
Standardized storage 15tons May 2016 Standardized storage; legal
disposal by entrusted
qualified units
General solid waste yard in Standardized storage 80tons Not Running yet Standardized storage; legal
east factory disposal by entrusted
qualified units
Standardized storage 20tons May 2021 Standardized storage; legal
disposal by entrusted
qualified units
Hazardous waste warehouse Standardized storage 10tons May 2016 Standardized storage; legal
in west factory disposal by entrusted
qualified units
Hazardous waste warehouse Standardized storage 120tons June 2021 Standardized storage; legal
in east factory disposal by entrusted
qualified units
Environmental impact assessment of construction projects and other administrative permits for environmental protection
116
The 2021 Annual Report of Huadong Medicine Co., Ltd.
All construction projects of the above four subsidiaries of the Company have be declared, constructed and accepted in strict
accordance with the requirements of “three simultaneous” for environmental protection, have passed environmental impact assessment,
and met the requirements of environmental impact assessment for construction projects. The Company has obtained the pollutant
discharge permit and the discharge permit of urban sewage into the drainage pipe network according to the environmental protection
requirements. Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd. complete the filling of technical transformation project of Life
Science Industrial Park (Hedong Block) on July 14, 2021 (HZMEE Gongshu Branch filling (2021) No.2). Huadong Medicine (Xi’an)
Bohua Pharmaceutical Co., Ltd. received the approval by Weinan MEE about the environmental impact report of Olaparib pilot test
site renovation project on November 10, 2021 (Weinan MEE approval (2021) No.66).
Emergency plan for environmental emergencies
The company has established a comprehensive emergency response plan for environmental emergencies, standardizes the
emergency handling of environmental emergencies, and minimizes the impact on human health caused by the leakage of environmental
risk substances into the air, water or soil due to fire, explosion, leakage or other unexpected emergencies. And environmental hazards,
continue to improve the company's emergency response capabilities for sudden environmental pollution incidents.
The company has comprehensively established the emergency plan for environmental emergencies, standardized the emergency
treatment of environmental emergencies, minimized the harm to human health and environment caused by the leakage of environmental
risk substances to air, water or soil due to fire, explosion, leakage or other unexpected emergencies, and continuously improved the
emergency response capacity of the company for environmental pollution emergencies. The above four subsidiaries of the Company
have compiled and established the mechanism of “Emergency Plan for Environmental Emergencies”, revised and improved it regularly
according to the requirements. Jiangsu Jiuyang Biopharm Co., Ltd. organized a comprehensive environmental emergency plan drill in
July 2021.
Environmental self-monitoring scheme
The above four subsidiaries of the Company have all established the mechanism of “Self-monitoring Scheme for Pollution Sources”
which has been put on record in the environmental protection authorities, and all the monitoring data are reported according to the
regulations.
Administrative punishment caused by environmental problems during the reporting period
Impact on the
Company/subsidiary production and Rectification
Reasons Violation description Punishment
name operation of the measures
listed Company
Stopped discharging
sewage immediately
The ammonia and returned
nitrogen unqualified sewage
Discharged
concentration of to the front channel
industrial waste
discharge for retreatment;
Jiangsu Joyang water that did not
wastewater from A fine of sewage was sampled
Laboratories Co., meet the process No major impact
outlet header did not RMB100,000 and tested by the
Ltd requirements to the
meet the treatment environmental
centralized sewage
process requirements protection
treatment facilities
of Sheyang Sewage department after
Treatment Co., Ltd. reaching the
standard; sewage
was then discharged
117
The 2021 Annual Report of Huadong Medicine Co., Ltd.
according to
regulations after
passed the test.
Rainwater and
Carried out self-
sewage diversion
examination and
measures did not
self-rectification,
well implemented,
and initiated
Discharged of water and part of the
Jiangsu Joyang renovation project of
pollutants in a way surface flushing A fine of
Laboratories Co., No major impact rainwater and
that evaded water and process RMB320,000
Ltd sewage diversion
regulation cooling water are
according to the
discharged into the
requirements of
rainwater pipe
environmental
network without
regulators.
treatment
Other environmental information that should be made public
None
Carbon emissions reduction measures and effects during the reporting period
√ Applicable □ N/A
In 2021, Hangzhou Zhongmei Huadong Pharmaceutical Jiangdong Co., Ltd. a wholly-owned
subsidiary of the Company, constantly improved the efficiency of energy supply and consumption
system through lean project management, and reduced power consumption by more than 6.5 million
kWh, steam by more than 3,500 GJ, tap water consumption by about 130,000 tons, and carbon dioxide
emissions by more than 6,700 tons.
In 2021, Hangzhou Zhongmei Huadong Pharmaceutical Co., Ltd., a wholly-owned subsidiary
of the Company, carried out lean project management, and reduced boiler natural gas consumption
by using boiler flue gas to heat boiler water supply, saving about 500,000 cubic meters of natural gas
in the year. It also conducted the upgrade of sewage tank temperature automatic control, which can
save 1474 tons of steam annually. It conducted energy saving transformation of air pretreatment
device in fermentation workshop, which can reduce the consumption of chilled water and steam and
reduce air loss annually.
In 2021, Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd., a subsidiary of the
Company, implemented flow restriction measures of cooling water in preparation workshops, which
can save 1,000 tons of tap water annually. It recycled purified water secondary concentrated water,
which can save 500 tons of tap water annually. It added sprinklers to save steam and water, which
can save 100 tons of steam and 500 tons of water annually. It inspected and repaired steam traps for
steam equipment in preparation workshop, saving 100 tons of steam.
118
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Other information related to environmental protection
None
II. Social responsibilities
In 2021, the Company’s innovation-driven transformation came to a crucial moment. It faced
challenges directly, and strived forward despite difficulties, thus gaining remarkable fruits. All
members in Huadong Medicine innovated business management ideas, empowered the Company
with wisdom and hard work, and spared no efforts to ensure the stable improvement of the Company.
In the process of strategic transformation, the company strictly performed its social
responsibility as a corporate citizen and paid attention to the demands of stakeholders such as
shareholders, employees, customers, suppliers and communities. It undertook the social responsibility
of environmental protection, energy conservation and emission reduction, promoted the efficient and
stable operation of EHS system, actively engaged in public welfare, and gave back to society with
practical actions.
The Company’s fulfillment of social responsibility in 2021 can be found in the 2021 Social
Responsibility Report of Huadong Medicine.
III. Performance of consolidating and expanding the achievement of poverty alleviation, and
supporting rural revitalization
Actively responding to local government’s activities of “uniting townships and connecting
villages”, the Company paired up with Linqi Town, located in Chun’an County, Hangzhou city,
Zhejiang, and supported and promoted its economic and social development through targeted actions.
From 2017 to 2021, the Company donated a total of RMB1.5 million to this poverty alleviation
project.
Section VI. Important Matters
I. Fulfillment of commitments
1. Commitments made by interested parties such as the Company’s de facto controller, shareholders, related
parties, acquirer(s), and the Company that are fulfilled during the reporting period or unfulfilled by the end
of the reporting period
□ Applicable √ N/A
The Company does not have commitments made by interested parties such as the Company’s de facto controller, shareholders, related
119
The 2021 Annual Report of Huadong Medicine Co., Ltd.
parties, acquirer(s), and the Company that are fulfilled during the reporting period or unfulfilled by the end of the reporting period.
2. If there is a profit forecast for the Company’s assets or projects and the reporting period is in the profit
forecast period, the Company should state the assets or projects that meet the original profit forecast and the
reasons for that
□ Applicable √ N/A
II. Controlling shareholders’ and related parties’ occupation of non-operating funds of the
listed companies
□ Applicable √ N/A
No such case during the reporting period.
III. External guarantees in violation of provisions
□ Applicable √ N/A
No such case during the reporting period.
IV. Explanation by the Board of Directors on the latest “modified auditor report”
□ Applicable √ N/A
V. Explanation by the Board of Directors, the Board of Supervisors and the independent
directors (if any) on the “auditor’s nonstandard report” of the accounting firm during the
current reporting period
□ Applicable √ N/A
VI. Explanation of changes in accounting policies and estimation, or the correction of
significant accounting errors as compared with the previous financial report
□ Applicable √ N/A
The Company does not have changes in accounting policies and estimation, or the correction of significant accounting errors during
the reporting period.
VII. Changes in the scope of consolidated statements as compared to the previous financial
report
√ Applicable □ N/A
Refer to “VIII. Changes in the scope of consolidated statements” in “Section X. Financial Report” of this report for details.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
VIII. Employment and dismissal of accounting firms
Accounting firm employed by the Company for now
Pan-China Certified Public Accountants (special general
Name of the domestic accounting firm
partnership)
Continuous number of years of audit services provided by the
165
domestic accounting firm
Remuneration of the domestic accounting firm (ten thousand
24
yuan)
Certified public accountants of the domestic accounting firm Wang Fukang, Du Jinyu
Continuous number of years of audit services provided by
5
certified public accountants of the domestic accounting firm
Name of the overseas accounting firm (if any) None
Remuneration of the overseas accounting firm (ten thousand
0
yuan) (if any)
Continuous number of years of audit services provided by the None
overseas accounting firm (if any)
Certified public accountants of the overseas accounting firm (if None
any)
Continuous number of years of audit services provided by None
certified public accountants of the overseas accounting firm (if
any)
Whether the accounting firm employed was replaced in the current period
□ Yes √ No
Information about the internal control audit accounting firm, financial consultant or sponsor employed by the Company
√ Applicable □ N/A
During the reporting period, the Company employed Pan-China Certified Public Accountants (special general partnership) as the
audit institution of its annual financial report and internal control audit report; the annual financial report and internal control audit
report audit fee paid is 1.65 million yuan.
IX. Delisting after annual report disclosure
□ Applicable √ N/A
X. Bankruptcy reorganization
□ Applicable √ N/A
The Company does not have related matters of bankruptcy reorganization during the reporting period.
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
XI. Major litigation and arbitration
√ Applicable □ N/A
Amount Whether an Litigation Execution of
Litigation Litigation
involved (in estimated (arbitration) litigation Disclosure Disclosure
(arbitration) general (arbitration)
ten thousand liability is adjudication (arbitration) date index
information progress
yuan) formed result and impact judgments
Case of individual
Shareholders of
Huadong Ningbo Announceme
Medicine Co., Ltd. nt of civil
requesting complaint
On
dissolution of the received by
November
company: In August the Company
16, 2021, The first-instance
2021, a total of 20 and its
the People’s judgment rejected
individual controlled
Court of the plaintiff's
shareholders of subsidiaries(
Beilun claim, and the
Huadong Ningbo Announceme
District of costs of this case
Company filed a nt No: 2021-
Ningbo shall be borne by
lawsuit against Has not yet August 24, 065) on
0 No made a the plaintiff.
Huadong Ningbo executed 2021 China
first- The plaintiff
Company as the Securities
instance appealed against
defendant and Journal,
judgment the first verdict,
Huadong Medicine Securities
on this case and the second
as the third party to Times,
(2021) Zhe trial has yet to be
the People’s Court Shanghai
0206 held.
of Beilun District of Securities
Minchu
Ningbo city for News, and
No.5792.
requesting the cninfo
dissolution of the (www.cninfo.
company. The case com.cn)
was accepted by the
court.
Some of the
Some cases judgment have
Summary of matters are under come into force
The summary of Do not meet
that do not meet the filling, and are being
the litigation the disclosure
disclosure standards some are executed;
2,557.55 No matters has no standards for /
for major litigation under trials some have been
significant impact major
(arbitration) (within and some adjudicated but
on the Company litigation
China） have come have not yet
into force come into force;
some are not
122
The 2021 Annual Report of Huadong Medicine Co., Ltd.
adjudicated;
some are in
progress
Summary of matters
The summary of Do not meet
that do not meet the
the litigation Under trials and the disclosure
disclosure standards
117.6 No Under trials matters has no are not standards for /
for major litigation
significant impact adjudicated major
(arbitration)
on the Company litigation
(overseas）
XII. Punishment and rectification
□ Applicable √ N/A
No such case during the reporting period.
XIII. Integrity of the Company and its controlling shareholder and de facto controller
√ Applicable □ N/A
There is no case of the Company, its controlling shareholders and de facto controller failed to comply with the effective judgement of
the court, or failed to repay the due debts of a large amount during the reporting period.
XIV. Major related transactions
1. Transactions related to daily operations
√ Applicable □ N/A
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l Co. transact ptanc
share
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decision
r
-making
process
125
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Market
price
Subsi
Yunnan determi
diary
Leiyun ned by Cash
of the
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contr 15 %
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shang Comp ned by er’s
126
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Pharma any’s the acce
ceutica contr Compa ptanc
l Co., olling ny’s e bill
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r ion
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l Co., olling ny’s
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127
The 2021 Annual Report of Huadong Medicine Co., Ltd.
holde transact
r ion
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price
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the ,
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l Co., olling
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d 2 %
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128
The 2021 Annual Report of Huadong Medicine Co., Ltd.
process
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diary
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of the
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129
The 2021 Annual Report of Huadong Medicine Co., Ltd.
tical Comp ned by er’s
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qing) contr Compa ptanc
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the %
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130
The 2021 Annual Report of Huadong Medicine Co., Ltd.
share related
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131
The 2021 Annual Report of Huadong Medicine Co., Ltd.
-making
process
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determi
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related price acce price 2021 ninfo.com.cn)
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n Gene re of Drug Drug 1,15 0.03
ny’s et 600 Yes er’s et l 21, (http://www.c
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related price acce price 2021 ninfo.com.cn)
ering Comp
transact ptanc
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ned by Cash
hou Joint
the ,
Tangya ventu
Compa Mark bank Mark Apri cninfo
ngyuan re of Drug Drug 257. 0.01 1,20
ny’s et No er’s et l 21, (http://www.c
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related price acce price 2021 ninfo.com.cn)
ceutica Comp
transact ptanc
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decision
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Hangz Subsi Drug Drug Market Mark 87.3 0.00 Cash Mark Apri cninfo
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132
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Grand of the determi price bank price 2021 ninfo.com.cn)
Biologi Comp ned by er’s
c any’s the acce
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related price acce price 2021 ninfo.com.cn)
Co., olling
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-making
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diary
of the
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joint
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re
TCM Compa Mark bank Mark Apri cninfo
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ent related price acce price 2021 ninfo.com.cn)
Tangy
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133
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Holdin diary sales sales price et % , et l 21, (http://www.c
g Co., of the determi price bank price 2021 ninfo.com.cn)
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ng Real any’s e e 133. 0.01
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related price acce price 2021 ninfo.com.cn)
Co., olling ng ng
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ng ng
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134
The 2021 Annual Report of Huadong Medicine Co., Ltd.
ne any Compa ptanc
Group ny’s e bill
Co., related
Ltd. transact
ion
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-making
process
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price
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Hangz
ned by Cash
hou Joint
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n Gene re of e e 198. 0.01
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ering Comp ng ng
transact ptanc
Co., any
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-making
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price
Subsi
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diary
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of the
Nuoka Agen Agen the ,
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ng t t Compa Mark bank Mark Apri cninfo
any’s 1,65 0.07
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contr 5.01 %
ceutica ce ce related price acce price 2021 ninfo.com.cn)
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l Co. fee fee transact ptanc
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rm Co., fillin fillin the et Yes er’s et l 21, (http://www.c
the 75 %
Ltd. g g Compa price acce price 2021 ninfo.com.cn)
Comp
(Chong Servi Servi ny’s ptanc
any
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transact
135
The 2021 Annual Report of Huadong Medicine Co., Ltd.
ion
decision
-making
process
Market
price
Subsi
determi
Hangz diary
ned by Cash
hou of the
proc proc the ,
Grand Comp
essin essin Compa Mark bank Mark Apri cninfo
Biologi any’s 60.0 0.00
g g ny’s et Yes er’s et l 21, (http://www.c
c contr 8 %
char charg related price acce price 2021 ninfo.com.cn)
Pharma olling
ge e transact ptanc
ceutica share
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l Inc. holde
decision
r
-making
process
Market
price
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determi
Yuanda diary
ned by Cash
Chuan of the Prop Prop
the ,
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Compa Mark bank Mark Apri cninfo
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ny’s et Yes er’s et l 21, (http://www.c
y contr geme geme 8 %
related price acce price 2021 ninfo.com.cn)
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transact ptanc
ement share fee fee
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Co., holde
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-making
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price
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diary
Haiwa ned by Cash
of the
n the ,
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any’s 0.00
n Hotel erenc erenc ny’s et 9.08 Yes er’s et l 21, (http://www.c
contr %
Manag e fee e fee related price acce price 2021 ninfo.com.cn)
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ement transact ptanc
share
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Ltd. decision
r
-making
process
136
The 2021 Annual Report of Huadong Medicine Co., Ltd.
44,3
44,3
Total -- -- 11.4 -- -- -- -- -- --
79
3
Details of bulk sales returns N/A
Actual performance during the
reporting period where the total
amount of daily related
N/A
transactions is estimated by
category for the current period (if
any)
Reasons for the large difference
between the transaction price and
N/A
the market reference price (if
applicable)
2. Related transactions involving the acquisition or sale of assets and shares
□ Applicable √N/A
No such case during the reporting period.
3. Related transactions of joint external investment
√ Applicable □ N/A
Total assets
Registered Net assets of Net profits of
Joint Related Main business of investee
Name of investee capital of investee (unit: investee (unit:
investors relations of investee (unit:
investee RMB10,000) RMB10,000)
RMB10,000)
Shanghai Yuanda
Yuanda Investment
Investment Management
General
Management and Fuguang
projects:
Co., Ltd., Chengdu are
Equity
Fuguang subsidiaries Hangzhou
investment;
Chengdu of Beijing Fuguang
venture capital
Equity Yuanda Hongxin Equity 200 million yuan 7,754.14 7,754.14 -245.86
investment
Investment Huachuang Investment
(investment in
Management Investment Partnership (L.P.)
unlisted
Co., Ltd., Co., Ltd., the
companies
Hangzhou controlling
only)
High-Tech shareholder
Venture of China
Capital Grand
137
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Management Enterprises,
Co., Ltd., and Inc. (the
Hangzhou controlling
Heda shareholder
Industrial of the
Fund Company).
Investment According to
Co., Ltd. the provisions
of Rules
Governing
the Listing of
Shares on
Shenzhen
Stock
Exchange and
other relevant
laws and
regulations,
Yuanda
Investment
Management,
Fuguang
Chengdu and
the Company
constitute
related
parties.
Since Retail
Fuguang pharmaceutical
Chengdu, the s; biological
managing and
partner and pharmaceutical
Hangzhou fund manager technology
Fuguang of Fuguang Nuoling development,
Hongxin Hongxin, and Biomedical technology
5.197356 million
Equity Yuanda Technology transfer, 8,170.99 7,845.81 -1,582.21
yuan
Investment Investment (Beijing) Co., technical
Partnership Management, Ltd. consultation
(L.P.) one of and technical
Fuguang services; sales
Hongxin’s of biological
limited reagents
partner, are (excluding
subsidiaries drugs),
138
The 2021 Annual Report of Huadong Medicine Co., Ltd.
of Yuanda instruments
Huachuang, and meters,
the type I medical
controlling equipment;
shareholder conference
of China services;
Grand exhibitions and
Enterprises, shows; import
Inc. (the and export of
controlling goods and
shareholder technology.
of the
Company),
and the
Company is a
limited
partner of
Fuguang
Hongxin,
Fuguang
Hongxin and
the Company
constitute
related parties
in accordance
with the
provisions of
Rules
Governing
the Listing of
Shares on
Shenzhen
Stock
Exchange and
other relevant
laws and
regulations.
1. In order to further increase the integration of industry and finance and industrial innovation, build an
incubation and introduction platform for diversified high-quality R&D and innovation projects, and
Progress of major ongoing quickly enrich the Company’s core product pipelines, the Company signed the Partnership Agreement
projects (if any) of the of Hangzhou Fuguang Hongxin Equity Investment Partnership (L.P.) with Shanghai Yuanda Investment
investee Management Co., Ltd., Fuguang Chengdu Equity Investment Management Co., Ltd., Hangzhou High-
Tech Venture Capital Management Co., Ltd., and Hangzhou Heda Industrial Fund Investment Co., Ltd.,
jointly establishing “Hangzhou Fuguang Hongxin Equity Investment Partnership (L.P.)” on January 7,
139
The 2021 Annual Report of Huadong Medicine Co., Ltd.
2021. The Pharmaceutical Industry Fund was established with a total scale of RMB200 million, of
which RMB98 million is contributed by the Company with its own funds and the Company is a limited
partner of the Pharmaceutical Industry Fund. For details, please refer to No. 2021-002 Announcement
on Participation in Investment in the Establishment of Pharmaceutical Industry Investment Fund and
Related Party Transactions issued by the Company on January 7, 2021.
2. As of April 6, 2021, the Pharmaceutical Industry Fund completed the initial fund raising, finished the
industrial and commercial registration procedures, and it was successfully filed with AMAC on April
2, 2021. For details, please refer to No. 2021-016 Announcement on the Progress of Participation in
Investment in the Establishment of Pharmaceutical Industry Investment Fund issued by the Company
on April 6, 2021.
3. Zhongmei Huadong, a wholly-owned subsidiary of the Company, and Hangzhou Fuguang Hongxin
Equity Investment Partnership (L.P.) jointly contributed a total of RMB35 million to increase the capital
of Nuoling Biomedical Technology (Beijing) Co., Ltd. and subscribed for the newly increased
registered capital of RMB520,479 of Nuoling Biomedical Technology, which corresponds to 10.4478%
of its equity after the completion of the financing. Specifically, Zhongmei Huadong invested RMB15
million and subscribed for Nuoling Biomedical Technology’s newly registered capital of RMB223,062,
while Fuguang Hongxin invested RMB20 million and subscribed for RMB297,417. Upon completion
of the transaction, Zhongmei Huadong held 4.4776% of the equity of Nuoling Biomedical Technology,
while Fuguang Hongxin held 5.9702%. On April 19, 2021, all existing shareholders of Nuoling
Biomedical Technology signed a Capital Increase Agreement and a Shareholders Agreement with
Zhongmei Huadong and Fuguang Hongxin. For details, please refer to No. 2021-020 Announcement on
Joint External Investment and Related Party Transactions with the Pharmaceutical Industry Investment
Fund issued by the Company on April 19, 2021.
4. In August 2021, Nuoling Bio carried out a new round of capital increase. After this action,
Zhongmei Huadong holds 4.2918% equity of Nuoling Bio, and Fuguang Hongxin holds 5.7225%.
4. Associated claim and debt transactions
□ Applicable √N/A
No such case during the reporting period.
5. Transactions with financial companies who are related parties of the Company
□ Applicable √N/A
No deposit, loan, credit or other financial business between the Company and the related financial companies
6. Transactions between the financial companies controlled by the Company and the related parties
□ Applicable √N/A
No deposit, loan, credit or other financial business between the financial companies controlled by the Company and the related
parties.
140
The 2021 Annual Report of Huadong Medicine Co., Ltd.
7. Other major related transactions
□ Applicable √N/A
No such case during the reporting period.
XV. Major contracts and their fulfilment
1. Entrustment, contracting and leasing
(1) Entrustment
□ Applicable √N/A
No such case during the reporting period.
(2) Contracting
□ Applicable √N/A
No such case during the reporting period.
(3) Leasing
□ Applicable √N/A
No such case during the reporting period.
2. Important guarantees
√ Applicable □ N/A
Unit: RMB ten thousand yuan
External guarantees of the Company and its subsidiaries (excluding guarantees for subsidiaries)
Disclosure
Coll Counter Guarante
date of the Actual Type Period
Actual ater - e for a
guarantee announcemen Guarante date of of of Fulfille
guarantee al guarant related
d party t related to e Cap occurrenc guara guarante d or not
d amount (if y (if party or
the guarantee e ntee e
any) any) not
Cap
/ / / / / / / / / / /
Total actual
Total amount of external
amount of external
guarantees approved
/ guarantees during /
during the reporting period
the reporting
(A1)
period (A2)
Total amount of approved Total actual
/ /
external guarantees at the balance of external
141
The 2021 Annual Report of Huadong Medicine Co., Ltd.
end of the reporting period guarantees at the
(A3) end of the
reporting period
(A4)
The Company’s guarantees for its subsidiaries
Disclosure
Coll Counter Guarante
date of the Actual Type Period
Actual ater - e for a
guarantee announcemen Guarante date of of of Fulfille
guarantee al guarant related
d party t related to e Cap occurrenc guara guarante d or not
d amount (if y (if party or
the guarantee e ntee e
any) any) not
Cap
Hangzhou
Joint
Zhongmei
liabil
Huadong April 28, May 22,
80,000 58 ity One year No No
Pharmace 2020 2020
guara
utical
ntee
Co., Ltd.
Hangzhou
Joint
Zhongmei
liabil
Huadong April 28, June 9,
80,000 708 ity One year No No
Pharmace 2020 2020
guara
utical
ntee
Co., Ltd.
Hangzhou
Joint
Zhongmei
liabil
Huadong April 28, October
80,000 14 ity One year No No
Pharmace 2020 13, 2020
guara
utical
ntee
Co., Ltd.
Hangzhou
Joint
Zhongmei
liabil
Huadong April 28, April 9,
80,000 974 ity One year No No
Pharmace 2020 2021
guara
utical
ntee
Co., Ltd.
Hangzhou
Joint
Zhongmei
liabil
Huadong April 21, June 25,
80,000 25,488 ity One year No No
Pharmace 2021 2021
guara
utical
ntee
Co., Ltd.
Hangzhou April 21, 80,000 Novembe 10,000 Joint One year No No
142
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Zhongmei 2021 r 30, liabil
Huadong 2021 ity
Pharmace guara
utical ntee
Co., Ltd.
Hangzhou
Joint
Zhongmei
liabil
Huadong April 21, December
80,000 72 ity One year No No
Pharmace 2021 10, 2021
guara
utical
ntee
Co., Ltd.
Hangzhou
Joint
Zhongmei
liabil
Huadong June 1,
June 2, 2021 9,564 9,564 ity No No
Pharmace 2021
guara
utical
ntee
Co., Ltd.
Huadong
Ningbo April 21,
50,000 One year
Medicine 2021
Co., Ltd.
Huadong
Medicine
(Xi’an)
April 21,
Bohua 5,000 One year
2021
Pharmace
utical
Co., Ltd.
Huadong Joint
Medicine Novembe liabil
April 21,
Ningbo 15,000 r 26, 3,800 ity One year No No
2021
Sales Co., 2021 guara
Ltd. ntee
Huadong
Medicine
Huzhou
Co., Ltd.
Joint
Huadong
Novembe liabil
Medicine April 21,
18,000 r 26, 4,988 ity One year No No
Shaoxing 2021
2021 guara
Co., Ltd.
ntee
143
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Huadong
Medicine
Supply
Chain
April 21,
Managem 6,000 One year
2021
ent
(Hangzho
u) Co.,
Ltd.
Huadong
Medicine
Supply
Chain April 19, Ten
20,000
Managem 2019 years
ent
(JinHua)
Co., Ltd.
Huadong
Medicine
(Hangzho
April 21,
u) 3,200 One year
2021
Biologica
l Products
Co., Ltd.
Jiangsu
Jiuyang April 21,
7,000 One year
Biopharm 2021
Co., Ltd.
Joint
Huadong
liabil
Medicine April 21, December
24,000 990 ity One year No No
Wenzhou 2021 20, 2021
guara
Co., Ltd.
ntee
Joint
Huadong
liabil
Medicine April 21, December
24,000 990 ity One year No No
Wenzhou 2021 16, 2021
guara
Co., Ltd.
ntee
Huadong Joint
Medicine April 21, December liabil
24,000 990 One year No No
Wenzhou 2021 15, 2021 ity
Co., Ltd. guara
144
The 2021 Annual Report of Huadong Medicine Co., Ltd.
ntee
Joint
Huadong
liabil
Medicine April 21, December
24,000 990 ity One year No No
Wenzhou 2021 14, 2021
guara
Co., Ltd.
ntee
Joint
Huadong
liabil
Medicine April 21, October
24,000 1,980 ity One year No No
Wenzhou 2021 21, 2021
guara
Co., Ltd.
ntee
Joint
Huadong
Novembe liabil
Medicine April 21,
24,000 r 23, 990 ity One year No No
Wenzhou 2021
2021 guara
Co., Ltd.
ntee
Joint
Huadong
Novembe liabil
Medicine April 21,
24,000 r 22, 990 ity One year No No
Wenzhou 2021
2021 guara
Co., Ltd.
ntee
Joint
Huadong
Septembe liabil
Medicine April 21,
24,000 r 15, 2,000 ity One year No No
Wenzhou 2021
2021 guara
Co., Ltd.
ntee
Joint
Huadong
Septembe liabil
Medicine April 21,
24,000 r 9, 2,000 ity One year No No
Wenzhou 2021
2021 guara
Co., Ltd.
ntee
Joint
Huadong
liabil
Medicine April 21, May 31,
15,000 6,000 ity One year No No
Lishui 2021 2021
guara
Co., Ltd.
ntee
Joint
Huadong
Novembe liabil
Medicine April 21,
5,500 r 29, 370 ity One year No No
Daishan 2021
2021 guara
Co., Ltd.
ntee
145
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Huadong
Joint
Medicine
Novembe liabil
Cunde April 21,
12,000 r 26, 1,900 ity One year No No
(Zhousha 2021
2021 guara
n) Co.,
ntee
Ltd.
Hangzhou
Zhongmei Joint
Huadong liabil
April 21, July
Pharmace 70,000 1,874 ity One year No No
2021 27, 2021
utical guara
Jiangdong ntee
Co., Ltd.
Hangzhou Joint
Huadong liabil
April 21, May 31,
Pharmacy 5,000 2,300 ity One year No No
2021 2021
Chain guara
Co., Ltd. ntee
Joint
Huadong
Novembe liabil
Medicine April 21,
12,000 r 26, 1,140 ity One year No No
Jinhua 2021
2021 guara
Co., Ltd.
ntee
Huadong
Pharma
ceutical
Invest
ment
Three
Holdin July 16, 2021 60,569
years
g
(Hong
Kong)
Limite
d
Joint
Sinclair liabil
November May 21, Three
Pharma 40,000 10,328 ity No No
23, 2018 2020 years
Limited guara
ntee
Sinclair Joint
November July Three
Pharma 40,000 2,582 liabil No No
23, 2018 30, 2020 years
Limited ity
146
The 2021 Annual Report of Huadong Medicine Co., Ltd.
guara
ntee
Joint
Sinclair Novembe liabil
November Three
Pharma 40,000 r 16, 1,721 ity No No
23, 2018 years
Limited 2020 guara
ntee
Joint
Sinclair liabil
November February Three
Pharma 40,000 2,582 ity No No
23, 2018 4, 2021 years
Limited guara
ntee
Joint
Sinclair liabil
September March Three
Pharma 12,910 2,582 ity No No
17, 2020 30, 2021 years
Limited guara
ntee
Joint
Sinclair liabil
September April 19, Three
Pharma 12,910 3,443 ity No No
17, 2020 2021 years
Limited guara
ntee
Joint
Sinclair liabil
September May 26, Three
Pharma 12,910 3,443 ity No No
17, 2020 2021 years
Limited guara
ntee
Joint
Sinclair liabil
September August Three
Pharma 12,910 1,721 ity No No
17, 2020 11, 2021 years
Limited guara
ntee
Joint
Sinclair Septembe liabil
September Three
Pharma 12,910 r 14, 1,721 ity No No
17, 2020 years
Limited 2021 guara
ntee
Joint
Sinclair liabil
March 16, March 5, Three
Pharma 21,516 18,049 ity No No
2021 2021 years
Limited guara
ntee
147
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Joint
Sinclair liabil
March 16, April 8, Three
Pharma 14,439 14,439 ity No No
2021 2021 years
Limited guara
ntee
Joint
Until
Sinclair liabil
March 16, March Decemb
Pharma 14,439 14,439 ity No No
2021 17, 2021 er 31,
Limited guara
2024
ntee
Joint
Sinclair liabil
Three
Pharma July 16, 2021 35,066 ity
years
Limited guara
ntee
Total guarantee cap for Total actual guarantee
subsidiaries approved amount for subsidiaries
502,294 142,809
during the reporting period during the reporting
(B1) period (B2)
Total approved guarantee Total actual guarantee
cap for subsidiaries at the balance for subsidiaries
706,842 158,220
end of the reporting period at the end of the reporting
(B3) period (B4)
Subsidiaries guarantee for subsidiaries
Disclosure
Coll Counter Guarante
date of the Actual Type Period
Actual ater - e for a
guarantee announcemen Guarante date of of of Fulfille
guarantee al guarant related
d party t related to e Cap occurrenc guara guarante d or not
d amount (if y (if party or
the guarantee e ntee e
any) any) not
Cap
Hangzhou
Zhongmei Joint
Huadong Septembe liabil
April 21,
Pharmace 20,000 r 15, 4,015 ity One year No No
2021
utical 2021 guara
Jiangdong ntee
Co., Ltd.
Total guarantee cap for Total guarantee cap for
subsidiaries approved subsidiaries approved
20,000 4,015
during the reporting period during the reporting
(C1) period (C1)
148
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Total approved guarantee Total approved
cap for subsidiaries at the guarantee cap for
20,000 4,015
end of the reporting period subsidiaries at the end of
(C3) the reporting period (C3)
Total amount of the Company’s guarantees (i.e. the sum of the above-mentioned 3 kinds of guarantees)
Total guarantees cap Total actual guarantee
approved during the amount during the
522,294 146,824
reporting period reporting period
(A1+B1+C1) (A2+B2+C2)
Total approved guarantee Total actual guarantee
cap at the end of the balance at the end of the
726,842 162,235
reporting period reporting period
(A3+B3+C3) (A4+B4+C4)
Proportion of the actual guarantee amount (i.e.
9.79%
A4+B4+C4) in the Company’s net assets
Including:
Balance of guarantees for shareholders, de facto
/
controllers and their related parties (D)
Amount of debt guarantees provided directly or
indirectly for the entities with a liability-to asset ratio 26,290
over 70% (E)
The total amount of guarantees exceeds 50% of the
/
net assets (F)
Total guarantee amount of the above-mentioned
26,290
three kinds of guarantees (D+E+F)
For the unexpired guarantee, a guarantee liability has
occurred or there may be a joint liability for /
satisfaction during the reporting period (if any)
Note of external guarantees in violation of
/
prescribed procedures (if any)
3. Entrusted management of cash assets
(1) Entrusted finances
□ Applicable √ N/A
No such case during the reporting period.
(2) Entrusted loans
□ Applicable √ N/A
149
The 2021 Annual Report of Huadong Medicine Co., Ltd.
No such case during the reporting period.
4. Other significant contracts
□ Applicable √ N/A
No such case during the reporting period.
XVI. Other major events
□ Applicable √ N/A
No such case during the reporting period.
XVII. Major events of subsidiaries
□ Applicable √ N/A
150
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Section VII. Share Change and Shareholders
I. Changes in Share Capital
1. Table of Changes in share capital
Unit: share
Before the change Change in the period (+/-) After the change
Number Number
Proporti New Proporti New Number
of of
on shares on shares of shares
shares shares
I. Shares subject to
47,745 0.00% 0 0 0 0 0 47,745 0.00%
conditional restriction
1. Shares held by the state 0 0.00% 0 0 0 0 0 0 0.00%
2. Shares held by state-
0 0.00% 0 0 0 0 0 0 0.00%
owned corporations
3. Shares held by other
47,745 0.00% 0 0 0 0 0 47,745 0.00%
domestic investors
Including: held by
0 0.00% 0 0 0 0 0 0 0.00%
domestic corporations
held by domestic
47,745 0.00% 0 0 0 0 0 47,745 0.00%
natural persons
4. Shares held by overseas
0 0.00% 0 0 0 0 0 0 0.00%
investors
Including: held by overseas
0 0.00% 0 0 0 0 0 0 0.00%
corporations
held by overseas
0 0.00% 0 0 0 0 0 0 0.00%
natural persons
II. Shares without 1,749,7 100.00 1,749,7
0 0 0 0 0 100.00%
restriction 61,803 % 61,803
1,749,7 100.00 1,749,7
1. RMB ordinary shares 0 0 0 0 0 100.00%
61,803 % 61,803
2. Domestically listed
0 0.00% 0 0 0 0 0 0 0.00%
foreign shares
3. Foreign shares listed
0 0.00% 0 0 0 0 0 0 0.00%
overseas
4. Others 0 0.00% 0 0 0 0 0 0 0.00%
III. Total number of shares 1,749,8 100.00 0 0 0 0 0 1,749,8 100.00%
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
09,548 % 09,548
Reasons for the changes in share capital
□ Applicable √ N/A
Approval for changes in share capital
□ Applicable √ N/A
Transfer of shares
□ 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
1. Securities (excluding preferred shares) during the reporting period
□ Applicable √ N/A
2. Explanation on changes in share capital, the structure of shareholders and the structure of assets and
liabilities
□ Applicable √ N/A
3. Existent shares held by internal staff of the Company
□ Applicable √ N/A
III. Particulars about shareholders and the de facto controller
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
1. Total number of shareholders and their shareholdings
Unit: share
Total number
of preference
shareholders
with
Total Total number of
restoration of
number of common Total number of
the voting
common shareholders at preference shareholders
rights at the
shareholders the end of the with restoration of the
155,939 131,993 0 end of the 0
at the end of previous month voting rights at the end
previous
the before the of the reporting period
month before
reporting disclosure of the (if any) (see Note 8)
the disclosure
period annual report
of the annual
report (if
any) (see
Note 8)
Particulars about shareholders with a shareholding ratio over 5% or the Top 10 shareholders
The number Pledged or frozen
The number
Total shares of common
Changes in of shares
Share- held at the shares held
Name of Nature of the held
holding end of the with trading
shareholder shareholder reporting without Status Status
ratio reporting restrictions
period trading
period restricted
restriction
shares held
Domestic
China Grand non-state-
41.77% 730,938,157 0 0 730,938,157 Pledged 238,450,000
Enterprises, Inc. owned
corporation
Hangzhou State-
Huadong owned
16.46% 288,000,000 9,380,000 0 288,000,000
Medicine Group corporation
Co., Ltd.
Hong Kong Overseas
Securities corporation
1.86% 32,460,513 -5,839,102 0 32,460,513
Clearing
Company Ltd.
Domestic
China Securities non-state-
1.27% 22,186,818 0 0 22,186,818
Finance Co., owned
corporation
153
The 2021 Annual Report of Huadong Medicine Co., Ltd.
China
Construction
Bank Co., Ltd. -
ICBC Credit Others 0.57% 10,000,050 10,000,050 0 10,000,050
Suisse Frontier
Medical Equity
Fund
National Social Others
Security Fund 0.46% 7,999,959 1,000,186 0 7,999,959
Portfolio 503
China
Merchants Bank
Co., Ltd. –
Xingquan Others 0.33% 5,833,335 5,833,335 0 5,833,335
Heyuan Two-
Year Mixed
Fund
Taikang Life
Insurance Co.,
Ltd. - Equity
Others 0.31% 5,409,029 5,409,029 0 5,409,029
Linked -
Industry
allocation
domestic
Liu Li natural 0.30% 5,310,000 5,310,000 0 5,310,000
persons
Basic Others
Endowment
0.27% 4,682,950 -2,940,618 0 4,682,950
Insurance Fund
Portfolio 15041
Strategic investors or general corporations become the top 10
shareholders due to the placement of new shares (if any) (see None
Note 3)
The Company does not know whether the above-mentioned
Explanation on associated relationships or concerted actions
shareholders are related parties or whether they are acting-in-
among the above-mentioned shareholders
concert parties with one another.
Description about above-mentioned shareholders’
None
entrusting/being entrusted with and waiving voting rights t
Explanation of special account for repurchase among the top
None
10 shareholders (if any) (see Note 10)
Shareholding of the top 10 shareholders without trading restriction conditions
154
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Number of the trading unrestricted Type of stocks
Name of shareholder stocks held at the end of the Report Type of
Qty
Period stocks
RMB
China Grand Enterprises, Inc. 730,938,157 ordinary 730,938,157
stocks
RMB
Hangzhou Huadong Medicine Group Co., Ltd. 288,000,000 ordinary 288,000,000
stocks
RMB
Hong Kong Securities Clearing Company Ltd. 32,460,513 ordinary 32,460,513
stocks
RMB
China Securities Finance Co., 22,186,818 ordinary 22,186,818
stocks
RMB
China Construction Bank Co., Ltd. - ICBC Credit Suisse
10,000,050 ordinary 10,000,050
Frontier Medical Equity Fund
stocks
RMB
National Social Security Fund Portfolio 503 7,999,959 ordinary 7,999,959
stocks
RMB
China Merchants Bank Co., Ltd. – Xingquan Heyuan Two-
5,833,335 ordinary 5,833,335
Year Mixed Fund
stocks
RMB
Taikang Life Insurance Co., Ltd. - Equity Linked - Industry
5,409,029 ordinary 5,409,029
allocation
stocks
RMB
Liu Li 5,310,000 ordinary 5,310,000
stocks
RMB
Basic Endowment Insurance Fund Portfolio 15041 4,682,950 ordinary 4,682,950
stocks
Description for affiliated relationship or concerted action
among the top 10 shareholders holding tradable stocks The Company does not know whether the above-mentioned
without trading restriction conditions and between the top 10 shareholders are related parties or whether they are acting-in-
shareholders holding tradable stocks without trading concert parties with one another.
restriction conditions and
Description of the participation in margin trading business of At the end of the reporting period, Liu Li, the 9th shareholder
the top 10 common shareholders (if any) (see Note 4) among the top 10 ordinary shareholders of the Company, held
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The 2021 Annual Report of Huadong Medicine Co., Ltd.
5,310,000 shares of the company through margin account.
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.
2. Particulars about controlling shareholder of the Company
Nature of controlling shareholder: Natural individual holding
Type of controlling shareholder: Corporation
Legal
Name of controlling
representative/person Date of establishment Organization code Main business
shareholder
in charge
China Grand Enterprises, Inc. Hu Kaijun October 27, 1993 91110000101690952K Investment management
Shares held by the controlling
shareholder in other listed The other two listed companies controlled by China Grand Enterprises, Inc. are Grand Industrial
companies through Holding Co., Ltd. and Grand Pharmaceutical Group Limited.
controlling or holding during
the reporting period
Change of the controlling shareholder during the reporting period
□ Applicable √ N/A
No such case during the reporting period.
3. Particulars about the Company’s de facto controller & concerted parties
Nature of de facto controller: Domestic natural individual holding
Type of de facto controller: Natural individual
Relationship with the Whether the de facto controller has obtained
Name of de facto controller Nationality
de facto controller the right of abode in another country or region
Hu Kaijun Hu Kaijun China No
Chairman of the Board and General Manager of China Grand Enterprises, Inc.; Chairman of
Main occupation and position
the Board and General Manager of Beijing Yuanda Huachuang Investment Co., Ltd.
Share held by the de facto
controlling shareholder in domestic The three listed companies controlled by de facto controller are Huadong Medicine Co., Ltd.,
or overseas listed companies in the Grand Industrial Holding Co., Ltd., and China Grand Pharmaceutical and Grand
past the years Pharmaceutical Group Limited.
Change of the de facto controller during the reporting period
156
The 2021 Annual Report of Huadong Medicine Co., Ltd.
□ Applicable √ N/A
No such case during the reporting period.
The ownership and controlling relationship between the de facto controller of the Company and the Company is detailed as follows:
The de facto controller controls the Company through a trust or other way of assets management
□ Applicable √ N/A
4. The amount of shares pledged by the Company’s controlling shareholder or the largest shareholder and
its parties acting in concert accounts for 80% of the total shares of the Company held by them
□ Applicable √ N/A
5. Other corporate shareholders with a shareholding ratio over 10%
√ Applicable □ N/A
Legal
Name of corporate representativ Date of Registered
Main business or management activities
shareholders e/person in establishment capital
charge
The production and processing of compound wine, bagged
tea, and donkey-hide glue products (the branches can operate
only with licenses), and the state-owned asset operation
Hangzhou Huadong December 21, 60 million within the authorized scope of the municipal government;
Jin Xuhu
Medicine Group Co., Ltd. 1992 yuan industrial investment; wholesale and retail: chemical raw
materials and products (except dangerous chemicals and
precursor chemicals), package materials, medical
intermediates (except dangerous chemicals and precursor
157
The 2021 Annual Report of Huadong Medicine Co., Ltd.
chemicals); other legal items that need no submission for
approval.
6. Reduction of restricted shares held by controlling shareholder, de facto controller, restructuring parties
and other commitment subjects
□ Applicable √ N/A
IV. Progress of share repurchase during the reporting period
Progress of share repurchase
□ Applicable √ N/A
Progress of reducing repurchased shares through centralized bidding
□ Applicable √ N/A
158
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Section VIII. Information on Preferred Shares
□ Applicable √ N/A
No such case during the reporting period.
159
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Section IX. Information on Bonds
□ Applicable √ N/A
160
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Section X. Financial Report
I. Audit report
Audit Opinion Unmodified unqualified audit opinion
Audit Report sign-off Date April 19, 2021
Audit Institution Name Pan-China Certified Public Accountants
Audit Report Number T. J. S. (2022) No. 4078
Certified Public Accounts Name Wang Fukang, Du Jinyu
Main body of the audit report
Audit Report
T. J. S. (2022) No. 4078
Shareholders of Huadong Medicine Co., Ltd.:
I. Audit opinion
We audited the financial statements of Huadong Medicine Co., Ltd. (hereinafter referred to as
“Huadong Medicine”), including the consolidated and the parent company’s balance sheets as at
December 31, 2021, the consolidated and the parent company’s income statements for the year 2021,
the consolidated and the parent company’s cash flow statements, the consolidated and the parent
company’s statements of changes in ownership interest, and the notes to relevant financial statements.
In our opinion, the attached financial statements are prepared in accordance with the accounting
standards for business enterprises in all material aspects and fairly reflect the consolidated and the
parent company’s financial condition of Huadong Medicine as at December 31, 2021, as well as the
consolidated and the parent company’s operating results and cash flows in 2021.
II. Basis opinion
We conducted our audit in accordance with the auditing standards for certified public
accountants of China. Our responsibilities under these standards are further elaborated in the section
“CPA’s responsibility to audit the financial statements” of the auditor’s report. In accordance with
the code of professional ethics for certified public accountants in China, we are independent of
Huadong Medicine and have fulfilled other responsibilities in respect of professional ethics. We
believe that the audit evidence we have obtained is sufficient and appropriate, providing a basis for
auditor’s opinion.
III. Key audit matters
The key audit matters are those we consider most important to the audit of the financial
statements for the current period in our professional judgment. The response to these items is based
161
The 2021 Annual Report of Huadong Medicine Co., Ltd.
on an audit of the financial statements as a whole and the formation of auditor’s opinion. We do not
comment on these items separately.
(I) Revenue recognition
1. Description
The relevant information disclosure is detailed in Notes III (XXIV) and V (II) 1 to the financial
statements.
The operating revenue of Huadong Medicine mainly comes from the production and sales of
drugs. The operating revenue of Huadong Medicine in 2021 is RMB 345.63 hundred million yuan.
The medicine sales business of Huadong Medicine is a performance obligation to be performed
at a certain time. The recognition of revenue from domestic sales of products of Huadong Medicine
shall meet the following conditions: the products have been delivered to the buyer according to the
contract, and the amount of product sales revenue has been determined, the payment for goods has
been recovered or the receipt certificate has been obtained, and the relevant economic benefits are
likely to flow in, and the costs related to the products can be measured reliably. The recognition of
revenue from overseas sales of products shall meet the following conditions: the products have been
declared at the customs according to the contract, the bill of lading has been obtained, the amount of
product sales revenue has been determined, the payment for goods has been recovered or the receipt
certificate has been obtained, and the relevant economic benefits are likely to flow in, and the costs
related to the products can be measured reliably.
As the operating revenue is one of the key performance indicators of Huadong Medicine, there
may be inherent risks for the management of Huadong Medicine (hereinafter referred to as the
“Management”) to achieve specific goals or expectations through inappropriate revenue recognition.
Therefore, we identified revenue recognition as a key audit matter.
2. Audit response
For revenue recognition, the audit procedures we implemented mainly include:
(1) Understanding the key internal controls related to revenue recognition, evaluating the design
of these controls, determining whether they are implemented, and testing the operating effectiveness
of relevant internal controls;
(2) Reviewing the sales contract, understanding the main contract terms or conditions, and
evaluating whether the revenue recognition method is appropriate;
(3) Analyzing the operating revenue and gross profit rate by month, product, region, etc.,
identifying whether there are significant or abnormal fluctuations, and ascertaining the reasons for
the fluctuations;
(4) For domestic sales revenue, checking the supporting documents related to revenue
recognition by sampling, including sales contracts, orders, sales invoices, outbound delivery orders,
shipping orders, shipping documents and payment receipts. For overseas revenue, obtaining e-port
information and checking with the accounting records, and checking the sales contracts, export
declaration forms, bills of lading, sales invoices and other supporting documents by sampling;
(5) In combination with accounts receivable confirmation, confirming the current sales with
major customers by sampling;
(6) Carrying out a cut-off test for the operating revenue recognized before and after the balance
sheet date, and evaluating whether the operating revenue is recognized within an appropriate period;
and
(7)The medicine sales business of Huadong Medicine is a performance obligation to be
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performed at a certain time.
(8) Checking whether the information relating to operating revenue has been properly presented
in the financial statements.
(II) Impairment of accounts receivable
1. Description
The relevant information disclosure is detailed in Notes III (X) and V (I) 2 to the financial
statements.
As of December 31, 2021, the book balance of accounts receivable of Huadong Medicine was
RMB 67.98 hundred million yuan, the bad debt reserve was 3.67 hundred million yuan, and the book
value was 64.31 hundred million yuan.
Based on the credit risk characteristics of various accounts receivable and the individual account
receivable or the combination of accounts receivable, the Management measured its loss reserve
according to the expected credit loss equivalent to the entire duration. For the accounts receivable
with expected credit loss measured based on an individual item, the Management comprehensively
considered the reasonable and reliable information about the past items, current conditions and future
economic conditions, estimated the expected cash flow, and determined the bad debt reserve that
should be accrued. For the accounts receivable with expected credit loss measured based on the
combined items, the Management divided the accounts receivable based on age, made adjustments
according to historical credit loss and prospective estimates, compiled a comparison table of accounts
receivable ages and expected credit loss rates, and determined the bad debt reserve that should be
accrued.
Due to the significant amount of accounts receivable and significant management judgment
involved in the impairment of accounts receivable, we determined the impairment of accounts
receivable as a key audit matter.
2. Audit response
For the impairment of accounts receivable, the audit procedures we implemented mainly include:
(1) Understanding the key internal controls related to the impairment of accounts receivable,
evaluating the design of these controls, determining whether they are implemented, and testing the
operating effectiveness of relevant internal controls;
(2) Reviewing the follow-up actual write-off or reversal of accounts receivable for which the
bad debt reserve has been accrued in previous years, evaluating the accuracy of the Management’s
past forecasts;
(3) Reviewing the relevant considerations and objective evidence of the Management’s credit
risk assessment of accounts receivable, and evaluating whether the Management has properly
identified the credit risk characteristics of various accounts receivable;
(4) For the accounts receivable with expected credit loss measured based on an individual item,
obtaining and checking the Management’s forecast of the expected cash flow received, evaluating the
rationality of the key assumptions used in the forecast and the accuracy of data, and checking with
the external evidence obtained;
(5) For the accounts receivable with expected credit loss measured based on the combined items,
evaluating the rationality of the Management’s division of combinations according to the credit risk
characteristics; evaluating the rationality of the comparison table of accounts receivable ages and
expected credit loss rates determined by the Management based on historical credit loss experience
and prospective estimates; testing the accuracy and completeness of the Management’s data
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(including the age of accounts receivable, historical loss rate, migration rate, etc.) and whether the
calculation of bad debt reserve is accurate;
(6) Checking the subsequent collection of accounts receivable, and evaluating the reasonability
of the Management’s accrual of bad debt reserve for accounts receivable; and
(7) Checking whether the information relating to the impairment of accounts receivable has been
properly presented in the financial statements.
(III) Goodwill impairment
1. Description
The relevant information disclosure is detailed in Notes III (V), III (XIX) and V (I) 15 to the
financial statements.
As of December 31, 2021, the original book value of goodwill of Huadong Medicine was 21.44
hundred million yuan, the impairment reserve was 0.05 hundred million yuan, and the book value
was 21.39 hundred million yuan.
When there is any sign of impairment in the asset group or asset portfolio related to goodwill,
and at the end of each year, the Management shall conduct a goodwill impairment test. The
Management conducted the goodwill impairment test in combination with the relevant asset group or
asset portfolio, and the recoverable amount of the relevant asset group or asset portfolio was
determined by the present value of the expected future cash flow. The key assumptions used in the
impairment test include: revenue growth rate in the detailed forecast period, growth rate in the
perpetual forecast period, gross profit rate, related expenses and discount rate.
Due to the significant amount of goodwill and the significant management judgment involved
in the goodwill impairment test, we determined the goodwill impairment as a key audit matter.
2. Audit response
For the goodwill impairment, the audit procedures we implemented mainly include:
(1) Reviewing the Management’s forecast of the present value of future cash flows in previous
years and actual operating results, and evaluating the accuracy of the Management’s past forecasts;
(2) Understanding and evaluating the competence, professional quality and objectivity of
external valuation experts employed by the Management;
(3) Evaluating the rationality and consistency of the Management’s methods in the impairment
test;
(4) Evaluating the rationality of the key assumptions adopted by the Management in the
impairment test, and verifying whether the relevant assumptions are consistent with the overall
economic environment, industry conditions, operating conditions, historical experience, operating
plans, approved budgets, meeting minutes, and other assumptions used by the Management in relation
to the financial statements;
(5) Testing the accuracy, completeness and relevance of the data used by the Management in the
impairment test, and rechecking the internal consistency of the relevant information in the impairment
test;
(6) Testing whether the Management’s calculation of the present value of expected future cash
flows is accurate;
(7) Based on the methods and assumptions used by the Management, estimating the present
value range of future cash flows and evaluating whether it differs significantly from the range
estimated by the Management; and
(8) Checking whether the information relating to the goodwill impairment has been properly
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presented in the financial statements.
IV. Other information
The Management is responsible for other information, including information covered in the
annual report, but not the financial statements and the auditor’s report.
The auditor’s opinion on the financial statements does not cover other information, and we do
not publish any form of corroborating conclusions on other information.
In conjunction with our audit of the financial statements, it is our responsibility to read other
information and, in doing so, consider whether other information is materially inconsistent with the
financial statements or what we learned during the audit or appears to be materially misrepresented.
Based on the work we have performed, if we determine that other information is materially
misrepresented, we should report that fact. In this connection, we have nothing to report.
V. Responsibility of the Management and Governance for the Financial Statements
The Management is responsible for preparing the financial statements in accordance with the
accounting standards for business enterprises to achieve fair presentation and for designing,
implementing and maintaining the necessary internal controls so that the financial statements are free
from material misstatement due to fraud or error.
In preparing the financial statements, the Management is responsible for assessing Huadong
Medicine’s competence for continuing operations, disclosing matters relating to continuing
operations (if applicable) and applying the going concern assumption, unless liquidation and
termination are planned or there is no other realistic alternative.
Those charged with governance of Huadong Medicine is responsible for overseeing the
Company’s financial reporting process.
VI. Responsibility of Certified Public Accountants on the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a
whole are free from material misstatement due to fraud or error, and to issue an auditor’s report that
includes our opinions. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit performed in accordance with the audit standards will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material when it is
reasonably expected that misstatements, individually or collectively, may affect the economic
decisions made by users based on the financial statements.
As part of the audit in accordance with the audit standards, we exercise professional judgment
and maintain professional skepticism throughout the process. We also:
(I) Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than the risk of not detecting one resulting from
error, as fraud may involve collusion, forgery, omissions, misrepresentations, or the override of
internal control.
(II) Understand the internal control associated with the audit to design appropriate audit
procedures.
(III) Evaluate the appropriateness of accounting policies used and the rationality of accounting
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estimates and related disclosures made by the Management.
(IV) Conclude on the appropriateness of using the going concern assumption by the Management,
and conclude, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on Huadong Medicine’s ability to continue as a
going concern. If we conclude that a material uncertainty exists, we are required to draw the attention
of users to relevant disclosures in the financial statements in our auditor’s report; if such disclosures
are inadequate, we should offer qualified opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause
Huadong Medicine to cease to continue as a going concern.
(V) Evaluate the overall presentation, structure and content of the financial statements, including
whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
(VI) Obtain sufficient and appropriate audit evidence on the financial information of entities or
business activities of Huadong Medicine to express auditor’s opinions on the financial statements.
We are responsible for the guidance, supervision and implementation of group audits and take full
responsibility for the auditor’s opinions.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with
the professional ethical requirements associated with our independence, and communicate to those
charged with governance all relationships and other matters that may reasonably be deemed to affect
our independence, as well as relevant precautions (if applicable).
From the matters communicated to those charged with governance, we determine which matters
are most important to the current financial statement audit and thus constitute key audit matters. We
describe these matters in our auditor’s report, unless laws and regulations prohibit their public
disclosure or, in rare cases, if it is reasonably expected that the negative consequences of
communicating a matter in the auditor’s report outweigh the benefits in the public interest, we
determine that the matter should not be communicated in the auditor’s report.
Pan-China Certified Public Accountants Chinese Certified Public Accountant: Wang Fukang
(special general partnership) (Project partner)
Hangzhou, China Chinese Certified Public Accountant: Du Jinyu
April 26, 2022
II. Financial statements
The unit of statements in the financial notes is: RMB yuan.
1. Consolidated balance sheet
Prepared by: Huadong Medicine Co., Ltd.
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December 31, 2021
Unit: RMB yuan
Item December 31, 2021 December 31, 2020
Current assets:
Cash and bank balances 4,032,424,555.22 3,198,080,997.82
Settlement reserve
Lending to other banks and other
financial institutions
Financial assets for trade
Derivative financial assets
Notes receivable
Accounts receivable 6,430,482,175.97 6,137,675,568.82
Accounts receivable for financing 509,190,888.54 828,659,217.25
Prepayments 275,353,134.69 250,916,482.07
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserve
receivable
Other receivables 223,707,267.30 87,269,489.82
Including: Interests receivable
Dividends receivable 877,734.45 4,195,666.37
Financial assets purchased for
resale
Inventories 3,974,549,648.96 4,067,635,254.80
Contract assets
Assets held for sale
Non-current assets due within one
year
Other current assets 40,907,922.76 85,654,691.58
Total current assets 15,486,615,593.44 14,655,891,702.16
Non-current assets:
Loans and prepayments issuance
Debt investments
Other debt investments
Long-term receivables
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Long-term equity investments 984,927,398.68 850,072,053.02
Other equity instrument
257,815,844.68 225,453,120.05
investments
Other non-current financial assets
Real estate properties for
14,569,533.94 17,792,735.95
investment
Fixed assets 3,077,227,759.84 2,420,366,582.92
Constructions in progress 1,582,125,201.25 2,240,201,926.65
Biological assets for production
Oil & gas assets
Right-of-use assets 153,724,197.81
Intangible assets 2,233,450,369.34 1,463,242,463.99
Development expenditures
Goodwill 2,138,808,037.01 1,469,617,262.10
Long-term unamortized expenses 12,425,364.03 8,811,339.43
Deferred tax assets 143,651,186.84 137,829,774.40
Other non-current assets 911,062,879.83 712,069,194.08
Total non-current assets 11,509,787,773.25 9,545,456,452.59
Total assets 26,996,403,366.69 24,201,348,154.75
Current liabilities:
Short-term borrowing 1,237,843,228.13 1,416,932,884.87
Borrowing from the central bank
Borrowing from other banks and
other financial institutions
Financial liabilities for trade
Derivative financial liabilities
Notes payable 671,964,504.00 554,336,058.71
Accounts payable 3,847,719,574.86 3,947,044,331.68
Receipts in Advance 1,147,425.45 951,926.56
Contract liabilities 118,341,141.48 94,384,629.77
Financial assets sold for
repurchase
Absorbing deposits and due from
banks
Receipts for buying and selling
securities as proxy
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Receipts for underwriting
securities as proxy
Payroll payable 168,210,088.82 152,106,819.91
Taxes payable 1,029,610,563.41 571,792,475.80
Other payables 1,935,116,784.93 1,817,529,820.99
Including: Interests payable
Dividends payable 2,184,219.60 224,219.60
Handling fees and commissions
payable
Reinsurance accounts payable
Liabilities held for sale
Non-current liabilities due within
244,256,705.59 67,813,886.68
one year
Other current liabilities 11,386,267.11 10,786,034.37
Total current liabilities 9,265,596,283.78 8,633,678,869.34
Non-current liabilities:
Insurance policy reserve
Long-term borrowing 139,178,905.04 151,611,367.86
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 80,889,403.39
Long-term payables 261,903,489.09 26,812,354.90
Long-term employee benefits
payable
Provisions 39,086,238.25 39,467,829.23
Deferred income 83,521,649.96 81,628,032.54
Deferred tax liabilities 184,908,391.50 88,738,187.41
Other non-current liabilities
Total non-current liabilities 789,488,077.23 388,257,771.94
Total liabilities 10,055,084,361.01 9,021,936,641.28
Owners’ Equity:
Share capital 1,749,809,548.00 1,749,809,548.00
Other equity instruments
Including: Preferred shares
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Perpetual bonds
Capital reserves 2,229,868,312.11 2,158,080,661.07
Less: Treasury shares
Other comprehensive income -47,768,225.80 -2,191,069.45
Special reserve
Surplus reserves 1,021,670,687.31 861,680,578.42
General risk reserve
Retained earnings 11,625,794,001.46 9,852,441,590.56
Total owners’ equity attributable to
16,579,374,323.08 14,619,821,308.60
owner of the Company
Minority interest 361,944,682.60 559,590,204.87
Total owners’ equity 16,941,319,005.68 15,179,411,513.47
Total liabilities & owners’ equity 26,996,403,366.69 24,201,348,154.75
Legal representative: Lv Liang
Person in charge of accounting work: Lv Liang
Person in charge of the Accounting Department: Qiu Renbo
2. Balance sheet of the parent company
Unit: RMB yuan
Item December 31, 2021 December 31, 2020
Current assets:
Cash and bank balances 2,280,519,812.31 1,889,264,142.30
Financial assets for trade
Derivative financial assets
Notes receivable
Accounts receivable 3,369,254,003.85 3,287,882,027.51
Accounts receivable for financing 196,523,246.00 214,871,707.01
Prepayments 140,828,160.14 121,268,106.62
Other receivables 986,757,703.19 798,152,353.96
Including: Interests receivable
Dividends receivable 3,363,380.00
Inventories 1,946,036,027.82 1,845,977,070.46
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Contract assets
Assets held for sale
Non-current assets due within one
year
Other current assets 20,289.53
Total current assets 8,919,939,242.84 8,157,415,407.86
Non-current assets:
Debt investments
Other debt investments
Long-term receivables
Long-term equity investments 5,079,071,023.37 4,847,172,288.65
Other equity instrument
10,100,870.56 94,312,742.49
investments
Other non-current financial assets
Real estate properties for
7,659,343.90 8,125,576.54
investment
Fixed assets 160,678,584.54 159,486,234.04
Constructions in progress 211,760.72 342,161.41
Biological assets for production
Oil & gas assets
Right-of-use assets 11,020,708.66
Intangible assets 218,720,898.11 56,448,575.54
Development expenditures
Goodwill
Long-term unamortized expenses 321,067.34 645,902.07
Deferred tax assets 47,289,929.98 45,918,388.57
Other non-current assets 406,493,149.98 96,882,664.08
Total non-current assets 5,941,567,337.16 5,309,334,533.39
Total assets 14,861,506,580.00 13,466,749,941.25
Current liabilities:
Short-term borrowing 630,446,420.72 930,813,369.36
Financial liabilities for trade
Derivative financial liabilities
Notes payable 311,085,944.14 180,042,270.63
Accounts payable 2,416,471,973.20 2,421,476,904.57
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Receipts in advance
Contract liabilities 19,690,922.48 32,577,236.92
Payroll payable 9,353,991.58 8,530,961.48
Taxes payable 176,633,138.73 154,676,067.87
Other payables 877,397,177.28 518,390,330.44
Including: Interests payable
Dividends payable 224,219.60 224,219.60
Liabilities held for sale
Non-current liabilities due within
5,939,175.02
one year
Other current liabilities 2,494,822.02 4,273,258.99
Total current liabilities 4,449,513,565.17 4,250,780,400.26
Non-current liabilities:
Long-term borrowing
Bonds payable
Including: Preferred shares
Perpetual bonds
Lease liabilities 2,701,526.22
Long-term payables
Long-term employee benefits
payable
Provision
Deferred income 38,133,036.03 40,698,910.95
Deferred tax liabilities 12,511,476.38 10,888,106.00
Other non-current liabilities
Total non-current liabilities 53,346,038.63 51,587,016.95
Total liabilities 4,502,859,603.80 4,302,367,417.21
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 -129,129.44 3,051,311.29
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Special reserve
Surplus reserves 1,099,526,446.75 939,536,337.86
Retained earnings 5,340,988,582.88 4,303,533,798.88
Total owners’ equity 10,358,646,976.20 9,164,382,524.04
Total liabilities & owners’ equity 14,861,506,580.00 13,466,749,941.25
3. Consolidated income statement
Unit: RMB yuan
Item 2021 2020
I. Total operating income 34,563,301,233.67 33,683,058,759.75
Including: Operating revenue 34,563,301,233.67 33,683,058,759.75
Interests received
Premiums earned
Handling fees and
commissions received
II. Total operating cost 31,727,336,299.43 30,666,230,281.53
Including: Operating cost 23,957,370,728.98 22,550,481,690.73
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
177,253,313.55 185,461,334.65
surcharges
Selling expenses 5,424,051,895.28 5,970,614,819.26
Administrative expenses 1,166,941,288.41 998,746,330.35
Research and
979,644,017.93 926,725,468.93
Development(R&D) expenses
Financial expenses 22,075,055.28 34,200,637.61
Including: Interests
68,478,439.03 68,639,542.18
expenses
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Interests income 80,402,140.26 60,990,405.57
Add: Other income 174,690,581.52 191,999,829.91
Investment income (Losses are
-96,311,975.25 -27,525,224.08
indicated by “-”)
Including: Investment gains
(losses) in associated enterprise and joint- -53,433,345.46 -10,825,814.85
venture enterprise
Gains on the
derecognition of financial assets
measured at amortized cost
Gains on exchange (Losses are
indicated by “-”)
Gains on net exposure hedging
(Losses are indicated by “-”)
Gains on changes in fair value
(Losses are indicated by “-”)
Credit impairment losses
-41,689,977.06 -22,826,566.73
(Losses are indicated by “-”)
Impairment losses of assets
-16,908,408.55 -4,537,552.17
(Losses are indicated by “-”)
Gains on assets disposal
-31,626.51 322,636,323.26
(Losses are indicated by “-”)
III. Operating profit (Losses are indicated
2,855,713,528.39 3,476,575,288.41
by “-”)
Add: Non-operating income 2,682,255.28 12,497,148.79
Less: Non-operating expenses 30,860,834.95 35,681,896.22
IV. Total profit (Total losses are indicated
2,827,534,948.72 3,453,390,540.98
by “-”)
Less: Income tax expenses 488,907,390.69 543,673,981.58
V. Net profit (Net losses are indicated by
2,338,627,558.03 2,909,716,559.40
“-”)
(I) Classification by continuous
operations
1. Net profit from continued
operations (Net losses are indicated by 2,338,627,558.03 2,909,716,559.40
“-”)
2. Net profit from terminational
operations (Net losses are indicated by
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“-”)
(II) Classification by attribution of
ownership
1. Net profit attributable to owners
2,301,631,347.64 2,819,861,203.63
of the parent company
2. Profit or loss attributable to
36,996,210.39 89,855,355.77
minority shareholders
VI. Other comprehensive income, net of
-24,076,315.61 -19,570,529.59
income tax
Other comprehensive income
attributable to owners of the parent -24,076,315.61 -19,570,529.59
company, net of tax
(I) Other comprehensive income that
20,549,224.62 -7,557,508.15
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
20,549,224.62 -7,557,508.15
other equity instrument investments
4. Changes in fair value of
credit risk of the enterprise
5. Others
(II) Other comprehensive income to
-44,625,540.23 -12,013,021.44
be reclassified into gains/losses
1. Other comprehensive
income that can be reclassified into 13,371.08
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
6. Exchange differences
-44,638,911.31 -12,013,021.44
arising on conversion of financial
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statements denominated in foreign
currencies
7. Others
Net amount after tax of other
comprehensive income attributable to
minority shareholders
VII. Total comprehensive income 2,314,551,242.42 2,890,146,029.81
Total comprehensive income
attributable to owners of the parent 2,277,555,032.03 2,800,290,674.04
company
Total comprehensive income
36,996,210.39 89,855,355.77
attributable to minority shareholders
VIII. Earnings per share (EPS):
(I) Basic EPS 1.3154 1.6115
(II) Diluted EPS 1.3154 1.6115
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: Lv Liang
Person in charge of accounting work: Lv Liang
Person in charge of the Accounting Department: Qiu Renbo
4. Income statement of the parent company
Unit: RMB yuan
Item 2021 2020
I. Total operating income 18,244,390,942.29 16,872,181,187.37
Less: Total operating cost 17,251,703,368.39 15,944,922,632.47
Business taxes and surcharges 21,076,198.14 22,247,894.47
Selling expenses 377,727,331.87 376,745,334.88
Administrative expenses 179,218,304.43 149,533,857.93
Research and Development
(R&D) expenses
Financial expenses 8,473,695.73 16,997,550.09
Including: Interests 53,611,690.17 55,351,840.15
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expenses
Interests income 58,998,380.29 42,365,020.49
Add: Other income 11,127,440.65 12,869,243.56
Investment income (Losses
1,047,838,931.11 1,230,298,386.30
are indicated by “-”)
Including: Investment gains
(losses) in associated enterprise and -3,572,410.52
joint-venture enterprise
Gains on the
derecognition of financial assets
measured at amortized cost (Losses are
indicated by “-”)
Gains on net exposure
hedging (Losses are indicated by “-”)
Gains from changes in fair
values (Losses are indicated by “-”)
Credit impairment losses
-37,258,383.02 20,604,531.85
(Losses are indicated by “-”)
Impairment gains (losses) of
-2,923,308.83
assets (Losses are indicated by “-”)
Asset disposal income
10,369.02 -6,255.56
(Losses are indicated by “-”)
II. Operating profit (Losses are
1,424,987,092.66 1,625,499,823.68
indicated by “-”)
Add: Non-operating income 4,529.76 1,052,923.08
Less: Non-operating expenses 5,472,564.05 8,012,091.67
III. Total profit (Total losses are
1,419,519,058.37 1,618,540,655.09
indicated by “-”)
Less: Income tax expenses 120,747,280.50 105,334,546.00
IV. Net profit (Net losses are indicated
1,298,771,777.87 1,513,206,109.09
by “-”)
(I) Net profit from continuous
operations (Net losses are indicated by 1,298,771,777.87 1,513,206,109.09
“-”)
(II) Net profit from discontinued
operations (Net losses are indicated by
“-”)
V. Other comprehensive income, net of
65.17 2,203,785.23
income tax
177
The 2021 Annual Report of Huadong Medicine Co., Ltd.
(I) Other comprehensive income
that cannot be reclassified into 65.17 2,203,785.23
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
65.17 2,203,785.23
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. Amount of financial
assets reclassified into other
comprehensive income
4. Credit impairment
reserve of other debt investments
5. Cash flow hedging
reserve
6. Exchange differences
from translation of foreign currency
financial statements
7. Others
VI. Total comprehensive income 1,298,771,843.04 1,515,409,894.32
VII. Earnings per share (EPS):
(I) Basic EPS
(II) Diluted EPS
178
The 2021 Annual Report of Huadong Medicine Co., Ltd.
5. Consolidated cash flow statement
Unit: RMB yuan
Item 2021 2020
I. Cash flows from operating
activities：
Cash received from sale of goods
37,705,732,220.73 36,213,324,706.96
or rendering of services
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
Net cash received for buying and
selling securities as proxy
Receipts of tax refunds 56,001,263.57 21,366,495.17
Other cash receipts to operating
534,883,574.95 875,802,744.84
activities
Sub-total of Cash inflows from
38,296,617,059.25 37,110,493,946.97
operating activities
Cash payments for goods
25,581,019,339.56 23,428,048,137.78
purchased and services received
Net increase in customer loans and
prepayments
Net increase in deposits of central
bank and due from banks
179
The 2021 Annual Report of Huadong Medicine Co., Ltd.
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 payments to and on behalf of
2,642,677,316.23 2,292,509,541.65
employees
Payments of various types of taxes 1,595,252,332.08 2,186,582,342.29
Other cash payments in relation to
5,307,910,203.43 5,791,906,177.69
operating activities
Sub-total of cash outflows for operating
35,126,859,191.30 33,699,046,199.41
activities
Net cash flow from operating activities 3,169,757,867.95 3,411,447,747.56
II. Cash flows from investing activities
Cash receipts from recovery of
92,381,381.75 1.00
investments
Cash receipts from investment
43,721,334.71 900,000.00
income
Net cash from disposal of fixed
assets, intangible assets and other long- 79,161,948.94 373,808,641.84
term assets
Net cash from disposal of
subsidiaries and other business units
Other cash receipts in relation to
36,521,193.82 10,970,083.85
investing activities
Sub-total of cash inflows from investing
251,785,859.22 385,678,726.69
activities
Cash payments for purchase and
construction of fixed assets, intangible 819,095,124.00 1,472,983,747.79
assets and other long-term assets
Cash payments for investment 246,401,722.50 638,463,000.00
Net increase in pledge loans
Net cash paid for acquisition of
791,857,512.24
subsidiaries and other business units
Other cash payments in relation to 381,114,144.63 12,869,402.84
180
The 2021 Annual Report of Huadong Medicine Co., Ltd.
investing activities
Sub-total of cash outflows for investing
2,238,468,503.37 2,124,316,150.63
activities
Net cash flow from investing activities -1,986,682,644.15 -1,738,637,423.94
III. Cash flows from financing
activities:
Cash receipts from capital
5,000,000.00
contributions
Including: Cash receipts from
capital contributions from minority 5,000,000.00
owners of subsidiaries
Cash from borrowing 2,110,032,213.34 2,194,671,377.21
Other cash receipts in relation to
149,316,666.67 16,376,100.00
financing activities
Sub-total of cash inflows from
2,264,348,880.01 2,211,047,477.21
financing activities
Cash repayment of borrowings 2,296,363,034.67 2,258,202,628.26
Cash payments for distribution of
dividends or profits or settlement of 463,028,834.38 655,696,970.33
interet expenses
Including: Dividends and profits
paid by subsidiaries to minority 2,920,000.00 89,969,437.98
shareholders
Other cash payments in relation to
272,410,313.45 22,877,889.85
financing activities
Sub-total of cash outflows from
3,031,802,182.50 2,936,777,488.44
financing activities
Net cash flows from financing activities -767,453,302.49 -725,730,011.23
IV. Effect of foreign exchange rate
7,111,643.60 -21,444,785.63
changes on Cash and Cash Equivalents
V. Net increase in cash and cash
422,733,564.91 925,635,526.76
equivalents
Add: Opening balance of cash and
3,157,407,073.26 2,231,771,546.50
cash equivalents
VI. Closing balance of cash and cash
3,580,140,638.17 3,157,407,073.26
equivalents
181
The 2021 Annual Report of Huadong Medicine Co., Ltd.
6. Cash flow statement of the parent company
Unit: RMB yuan
Item 2021 2020
I. Cash flows from operating
activities：
Cash receipts from the sale of
19,578,902,300.31 18,468,734,907.54
goods and the rendering of services
Receipts of tax refund 2,136,711.19 62.38
Other cash receipts in relation to
194,135,943.58 75,204,158.10
operating activities
Sub-total of cash inflows from
19,775,174,955.08 18,543,939,128.02
operating activities
Cash payments for goods acquired
18,617,179,307.59 17,189,413,934.83
and services received
Cash payments to and on behalf of
251,434,357.34 221,958,975.19
employees
Payments of various types of
268,426,804.41 141,082,140.82
taxes
Other cash payments in relation to
320,447,047.23 305,941,397.18
operating activities
Sub-total of cash outflows for operating
19,457,487,516.57 17,858,396,448.02
activities
Net cash flow from operating activities 317,687,438.51 685,542,680.00
II. Cash flows from investing activities
Cash receipts from recovery of
81,031,431.20 4,277,665.48
investments
Cash receipts from investment
1,028,872,757.80 252,569,238.79
income
Net cash receipts from disposal of
fixed assets, intangible assets and other 423,127.11 51,043.55
long-term assets
Net cash from disposal of
subsidiaries and other business units
Other cash receipts in relation to
608,901,831.03 1,008,662,454.55
investing activities
Sub-total of cash inflows from investing
1,719,229,147.14 1,265,560,402.37
activities
182
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Cash payments for purchase and
construction of fixed assets, intangible 96,179,759.09 117,614,594.72
assets and other long-term assets
Cash payments for investment 238,516,032.77 45,563,072.00
Net cash paid for acquisition of
subsidiaries and other business units
Other cash payments in relation to
979,989,850.00 883,840,800.00
investing activities
Sub-total of cash outflows for investing
1,314,685,641.86 1,047,018,466.72
activities
Net cash flows from investing activities 404,543,505.28 218,541,935.65
III. Cash flows from financing
activities:
Cash receipts from absorbing
investments
Cash receipts from borrowing 960,000,000.00 1,290,651,754.99
Other cash receipts in relation to
3,883,416,666.67 8,284,000,000.00
financing activities
Sub-total of cash inflows from
4,843,416,666.67 9,574,651,754.99
financing activities
Cash repayments of borrowings 1,389,996,025.48 1,415,656,441.26
Cash payments for distribution of
dividends or profits or settlement of 423,529,087.27 555,848,349.12
interest expenses
Other cash payments in relation to
3,722,279,458.85 7,511,907,162.52
financing activities
Sub-total of cash outflows
5,535,804,571.60 9,483,411,952.90
fromfinancing activities
Net cash flow from financing activities -692,387,904.93 91,239,802.09
IV. Effect of foreign exchange rate
changes on Cahs and Cash Equivalents
V. Net increase in cash and cash
29,843,038.86 995,324,417.74
equivalents
Add: Opening balance of cash and
1,889,254,142.30 893,929,724.56
cash equivalents
VI. Closing balance of cash and cash
1,919,097,181.16 1,889,254,142.30
equivalents
183
The 2021 Annual Report of Huadong Medicine Co., Ltd.
7. Consolidated statement of changes in owners’ Equity
Amount in the current period
Unit: RMB yuan
2021
Ownership interest attributable to the parent company
Other equity Other Total
Minori
instruments Less: compr owners
Item ty
Share Specia Surplu Genera Undist
Capital Treasu ehensi hip
Prefe Perpe
capita l l risk ributed Others Total interes
s
rred tual Other reserve ry ve interes
l reserve reserve reserve profit t
share bond s shares incom t
s s e
I. Balance at the 1,749
2,158, - 861,68 9,852, 14,619 559,59 15,179
end of the ,809,
080,66 2,191, 0,578. 441,59 ,821,3 0,204. ,411,5
period of the 548.0
1.07 069.45 42 0.56 08.60 87 13.47
prior year 0
Add:
changes in
accounting
policies
Error
correction in the
prior periods
Merger of
enterprises
under the same
control
Others
II. Balance at 1,749
2,158, - 861,68 9,852, 14,619 559,59 15,179
the beginning of ,809,
080,66 2,191, 0,578. 441,59 ,821,3 0,204. ,411,5
the period of the 548.0
1.07 069.45 42 0.56 08.60 87 13.47
current year 0
III. Amount of
change in the - -
71,787 159,99 1,773, 1,959, 1,761,
current period 45,577 197,64
,651.0 0,108. 352,41 553,01 907,49
(Decreases are ,156.3 5,522.
4 89 0.90 4.48 2.21
indicated by 5 27
“-”)
(I) Total - 2,301, 2,277, 36,996 2,314,
184
The 2021 Annual Report of Huadong Medicine Co., Ltd.
comprehensive 24,076 631,34 555,03 ,210.3 551,24
income ,315.6 7.64 2.03 9 2.42
1
(II) Capital
contributed by
5,000, 5,000,
owners and
000.00 000.00
capital
decreases
1. Common
5,000, 5,000,
shares invested
000.00 000.00
by owners
2. Capital
invested by
holders of other
equity
instruments
3. Amount of
share-based
payment
included in
ownership
interest
4. Others
- - -
129,87 -
(III) Profit 532,33 402,45 407,33
7,177. 4,880,
distribution 3,373. 6,196. 6,196.
79 000.00
83 04 04
-
1. Withdrawal 129,87
129,87
of surplus 7,177.
7,177.
reserve 79
79
2. Withdrawal
of general risk
reserve
- - -
3. Distribution -
402,45 402,45 407,33
to owners (or 4,880,
6,196. 6,196. 6,196.
shareholders) 000.00
04 04 04
4. Others
(IV) Internal - 28,846 -
conversion of 21,500 ,278.3 7,345,
185
The 2021 Annual Report of Huadong Medicine Co., Ltd.
ownership ,840.7 6 437.62
interest 4
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
5. Retained
-
earnings from 21,182
21,500 318,05
transfer of other ,790.1
,840.7 0.59
comprehensive 5
4
income
-
28,528
28,528
6. Others ,227.7
,227.7
7
7
(V) Special
reserve
1. Withdrawal
in the current
period
2. Use in the
current period
- -
71,787 11,399 84,454
1,266, 234,76 150,30
(VI) Others ,651.0 ,874.7 ,178.4
652.74 1,732. 7,554.
4 1 9
66 17
186
The 2021 Annual Report of Huadong Medicine Co., Ltd.
1,749 -
IV. Balance at 2,229, 1,021, 11,625 16,579 361,94 16,941
,809, 47,768
the end of the 868,31 670,68 ,794,0 ,374,3 4,682. ,319,0
548.0 ,225.8
current period 2.11 7.31 01.46 23.08 60 05.68
0 0
Amount in the prior period
Unit: RMB yuan
2020
Ownership interest attributable to the parent company
Other equity Other
Total
instruments Less: compr Minorit
Items owners
Share Specia Surplu Genera Undist
Capital Treasu ehensi y
Prefe Perp hip
capita l s l risk ributed Others Total
rred etual Other reserve ry ve interest
l reserve reserve reserve profit interest
share bond s shares incom
s s e
I. Balance at 1,749
2,158, 22,792 710,35 7,668, 12,309 12,866,
the end of the ,809, 557,146
080,66 ,488.8 9,967. 434,64 ,477,3 624,239
period of the 548.0 ,931.87
1.07 0 51 2.62 08.00 .87
prior year 0
Add:
Changes in
accounting
policies
Error
correction in
the prior
periods
Merger of
enterprises
under the same
control
Others
II. Balance at 1,749
2,158, 22,792 710,35 7,668, 12,309 12,866,
the beginning ,809, 557,146
080,66 ,488.8 9,967. 434,64 ,477,3 624,239
of the period of 548.0 ,931.87
1.07 0 51 2.62 08.00 .87
the current year 0
III. Amount of - 151,32 2,184, 2,310, 2,443,2 2,312,7
187
The 2021 Annual Report of Huadong Medicine Co., Ltd.
change in the 24,983 0,610. 006,94 344,00 73.00 87,273.
current period ,558.2 91 7.94 0.60 60
(Decreases are 5
indicated by
“-”)
-
(I) Total 2,819, 2,800, 2,890,1
19,570 89,855,
comprehensive 861,20 290,67 46,029.
,529.5 355.77
income 3.63 4.04 81
9
(II) Capital
contributed by
4,900,0 4,900,0
owners and
00.00 00.00
capital
decreases
1. Common
4,900,0 4,900,0
shares invested
00.00 00.00
by owners
2. Capital
invested by
holders of other
equity
instruments
3. Amount of
share-based
payment
included in
ownership
interest
4. Others
- -
151,32 - -
(III) Profit 641,26 489,94
0,610. 89,969, 579,916
distribution 7,284. 6,673.
91 437.98 ,111.42
35 44
-
1. Withdrawal 151,32
151,32
of surplus 0,610.
0,610.
reserve 91
91
2. Withdrawal
of general risk
reserve
3. Distribution - - - -
188
The 2021 Annual Report of Huadong Medicine Co., Ltd.
to owners (or 489,94 489,94 89,969, 579,916
shareholders) 6,673. 6,673. 437.98 ,111.42
44 44
4. Others
(IV) Internal
-
conversion of 5,413,
5,413,
ownership 028.66
028.66
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
5. Retained
earnings from
-
transfer of 5,413,
5,413,
other 028.66
028.66
comprehensive
income
6. Others
(V) Special
reserve
1. Withdrawal
in the current
period
2. Use in the
current period
189
The 2021 Annual Report of Huadong Medicine Co., Ltd.
- -
(VI) Others 2,342,6 2,342,6
44.79 44.79
1,749
IV. Balance at 2,158, - 861,68 9,852, 14,619 15,179,
,809, 559,590
the end of the 080,66 2,191, 0,578. 441,59 ,821,3 411,513
548.0 ,204.87
current period 1.07 069.45 42 0.56 08.60 .47
0
8. Statement of changes in ownership interest of the parent company
Amount in the current period
Unit: RMB yuan
2021
Other equity
Other
instruments Less: Undistr Total
Item Share Capital compreh Special Surplus
Preferr Perpet Treasury ibuted Others ownership
capital reserve ensive reserve reserve
ed ual Others shares profit interest
income
shares bonds
I. Balance at the 1,749,8 4,303,5
2,168,45 3,051,31 939,536, 9,164,382,
end of the period 09,548. 33,798.
1,528.01 1.29 337.86 524.04
of the prior year 00 88
Add:
Changes in
accounting
policies
Error
correction in the
prior periods
Others
II. Balance at the
1,749,8 4,303,5
beginning of the 2,168,45 3,051,31 939,536, 9,164,382,
09,548. 33,798.
period of the 1,528.01 1.29 337.86 524.04
00 88
current year
III. Amount of
change in the - 1,037,4
159,990, 1,194,264,
current period 3,180,44 54,784.
108.89 452.16
(Decreases are 0.73 00
indicated by “-”)
(I) Total 1,298,7
1,298,771,
comprehensive 65.17 71,777.
843.04
income 87
190
The 2021 Annual Report of Huadong Medicine Co., Ltd.
(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 129,877, 532,33
402,456,1
distribution 177.79 3,373.8
96.04
3
-
1. Withdrawal of 129,877, 129,87
surplus reserve 177.79 7,177.7
9
-
2. Distribution to -
402,45
owners (or 402,456,1
6,196.0
shareholders) 96.04
4
3. Others
(IV) Internal
- -
conversion of 28,846,2
3,180,50 25,665,
ownership 78.36
5.90 772.46
interest
1. Capital (or
share capital)
increase from
capital reserve
conversion
191
The 2021 Annual Report of Huadong Medicine Co., Ltd.
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
5. Retained
earnings from -
318,050. 2,862,4
transfer of other 3,180,50
59 55.31
comprehensive 5.90
income
-
28,528,2
6. Others 28,528,
27.77
227.77
(V) Special
reserve
1. Withdrawal in
the current
period
2. Use in the
current period
296,68
1,266,65 297,948,8
(VI) Others 2,152.4
2.74 05.16
2
IV. Balance at 1,749,8 - 5,340,9
2,168,45 1,099,52 10,358,64
the end of the 09,548. 129,129. 88,582.
1,528.01 6,446.75 6,976.20
current period 00 44 88
Amount in the prior period
Unit: RMB yuan
2020
Item Share Other equity Capital Less: Other Special Surplus Undistrib Total
Others
capital instruments reserve Treasur compre reserve reserve uted ownership
192
The 2021 Annual Report of Huadong Medicine Co., Ltd.
Preferr Perpet y shares hensive profit interest
ed ual Others income
shares bonds
I. Balance at the
1,749, 2,168,4
end of the 847,526 788,215 3,431,594 8,138,919,3
809,54 51,528.
period of the .06 ,726.95 ,974.14 03.16
8.00 01
prior year
Add:
Changes in
accounting
policies
Error
correction in
the prior
periods
Others
II. Balance at
1,749, 2,168,4
the beginning 847,526 788,215 3,431,594 8,138,919,3
809,54 51,528.
of the period of .06 ,726.95 ,974.14 03.16
8.00 01
the current year
III. Amount of
change in the
current period 2,203,7 151,320 871,938,8 1,025,463,2
(Decreases are 85.23 ,610.91 24.74 20.88
indicated by
“-”)
(I) Total
2,203,7 1,513,206 1,515,409,8
comprehensive
85.23 ,109.09 94.32
income
(II) Capital
contributed by
owners and
capital
decreases
1. Common
shares invested
by owners
2. Capital
invested by
holders of other
193
The 2021 Annual Report of Huadong Medicine Co., Ltd.
equity
instruments
3. Amount of
share-based
payment
included in
ownership
interest
4. Others
- -
(III) Profit 151,320
641,267,2 489,946,67
distribution ,610.91
84.35 3.44
1. Withdrawal -
151,320
of surplus 151,320,6
,610.91
reserve 10.91
2. Distribution - -
to owners (or 489,946,6 489,946,67
shareholders) 73.44 3.44
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 reserve
conversion
3. Recovery of
losses by
surplus reserve
4. Retained
earnings from
transfer of
changes in the
defined benefit
194
The 2021 Annual Report of Huadong Medicine Co., Ltd.
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. Balance at 1,749, 2,168,4
3,051,3 939,536 4,303,533 9,164,382,5
the end of the 809,54 51,528.
11.29 ,337.86 ,798.88 24.04
current period 8.00 01
Huadong Medicine Co., Ltd.
Chairman of the Board: Lv Liang
April 28, 2022
195
