Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
Stock code: 000963 Stock abbreviation: Huadong Medicine Announcement No.: 2023-075
Huadong Medicine Co., Ltd.
Third Quarterly Report 2023
The Company and all members of the Board of Directors hereby guarantee that the informatio n
presented in this report is authentic, accurate and complete and free of any false records, mislead ing
statements or material omissions.
Important Declaration:
1. 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 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.
2. The Company’s legal representative, the officer in charge of accounting, and the head of accounting department
(accounting supervisor) hereby declare that the financial information in this quarterly report is authentic, accurate
and complete.
3. Has the Third Quarterly Report been audited?
□Yes □No
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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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
I. Key Financial Data
(I) Key accounting data and financial indicators
Whether the Company needs to perform a retroactive adjustment or restatement of previous accounting data
□Yes □No
Change from the
Change of the current
Beginning of the year beginning of the year
Current reporting reporting period over
to the end of the to the end of the
period the same period last
reporting period reporting period over
year (%)
the end of last year
Operating revenue
10,009,186,220.70 3.61% 30,394,530,509.51 9.10%
(yuan)
Net profit attributable
to shareholders of
755,222,215.06 17.84% 2,189,046,844.62 10.48%
listed companies
(yuan)
Net profit attributable
to shareholders of
listed companies after
732,567,027.72 16.43% 2,160,054,898.69 13.62%
deducting non-
recurring gains/losses
(yuan)
Net cash flow from
operating activities - - 2,249,277,883.81 70.37%
(yuan)
Basic earnings per
0.4316 17.83% 1.2510 10.47%
share (yuan/share)
Diluted earnings per
0.4313 17.73% 1.2503 10.41%
share (yuan/share)
Weighted average
3.79% 0.17% 11.21% -0.18%
return on equity (ROE)
End of the current Change of the end of the current reporting period
End of last year
reporting period over the end of last year (%)
Total assets (yuan) 33,992,685,509.48 31,192,203,406.84 8.98%
Owners’ equity
attributable to the listed 20,298,210,883.66 18,577,919,237.39 9.26%
company (yuan)
The Company's total share capital as of the trading day prior to disclosure:
The Company's total share capital as of the trading day prior to
1,754,425,348.00
disclosure (share)
Fully diluted earnings per share based on the latest share capital:
Paid preference dividends (yuan) 0.00
Paid perpetual bond interest (yuan) 0.00
Fully diluted earnings per share based on the latest share capital
1.2477
(yuan/share)
(II) Items and amounts of non-recurring gains/losses
□ Applicable □ N/A
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
Unit: yuan
Amount from the beginning
Amount during the reporting
Item of the year to the end of the Explanation
period
reporting period
Gains/losses on disposal of
non-current assets (including
the written-off part of the -132,485.80 -1,535,664.50
accrued assets impairment
reserve)
Government grants included
in current gains/losses
(excluding those closely
M ainly due to the
related to daily business
confirmation of government
operation and distributed 35,815,661.30 68,060,746.87
grants for subsidiaries in the
constantly in accordance with
current period
certain standard quota or
quantity in line with national
policies and regulations)
Gains/losses caused by fair
value changes for holding
financial assets for trading
and financial liabilities for
trading, and investment
income for handling financial 138,601.36 -4,962,097.02
assets for trading, financial
liabilities for trading and AFS
securities, excluding hedging
business related to operating
activities
Other non-operating revenue
or expenditure expect above- -6,855,407.81 -26,420,236.87
mentioned items
Other profit and loss items
satisfying the definition of -1,316,601.56 2,121,729.06
non-recurring gain/loss
M inus: Amount affected by
4,831,298.52 7,901,962.26
income tax
Amount affected by
163,281.63 370,569.35
minority interest (after tax)
Total 22,655,187.34 28,991,945.93 --
Details of other items of gains/losses meet the definition of non-recurring gains/losses:
□ Applicable □ N/A
Details of other items of gains/losses meet the definition of non-recurring gains/losses.
Explanation for recognizing an item listed as a non-recurring gain/loss in the Interpretative Announcement No. 1 on Information
Disclosure Criteria for Public Companies - Non-Recurring Profit/Loss as a recurring gain/loss
□ Applicable □ N/A
Explanation for recognizing an item listed as a non-recurring gain/loss in the Interpretative Announcement No. 1 on Information
Disclosure Criteria for Public Companies - Non-Recurring Profit/Loss as a recurring gain/loss.
(III) Details and reasons for changes in key accounting data and financial indicators
□ Applicable □ N/A
Unit: ten thousand yuan
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
Amount
Amount at at the
Percentag
Balance sheet accounts the end of beginning Reasons for changes
e change
the period of the
period
Mainly due to the increase in trade
Notes receivable 3,000.00 842.50 256.08%
acceptance in the current period
Mainly due the increase in receivable
Other receivables 51,113.44 28,371.10 80.16%
suspense payment
Mainly due to the decrease in VAT to be
Other current assets 2,800.90 5,269.26 -46.84%
deducted
103,727.9 Mainly due to the increase in prepaid
Other non-current assets 153,297.34 47.79%
9 technology transfer payment
Mainly due to the impact of hedging
Trading financial liabilities 897.03 1,484.19 -39.56% exchange rate of net investment in foreign
operations
102,940.9
Notes payable 200,246.46 94.53% Mainly due to the increase in bill settlement
7
Mainly due to the payment of dividends
Dividend payable 22.42 1,492.42 -98.50% minority shareholders of the subsidiaries in
the current period
Other non-current liabilities Mainly due to the unpaid acquisition funds
29,935.42 14,783.55 102.49%
due within one year transferred from long-term payables
105,145.7 Mainly due to the debt repayment in the
Long-term borrowings 72,850.61 -30.71%
7 current period
Mainly due to the transfer of unpaid
Long-term payables 8,726.61 28,749.72 -69.65% acquisition funds to non-current liabilities
due within one year
Mainly due to the increase in asset-related
Deferred income 17,594.18 12,612.35 39.50%
governmental subsidy
Amount
Amount in
Income statement in the Percentag
the current Reasons for changes
accounts previous e change
period
period
Mainly due to the increase in net interest
Financial expenses 6,403.32 1,937.15 230.55%
expenses
Mainly due to the decrease in income -
Other income 7,061.76 11,608.89 -39.17%
related governmental subsidy
Mainly due to the decrease in investment
Investment gains -16,884.29 -9,917.35 -70.25% income confirmed by joint ventures in the
current period
Mainly due to the decrease in bad-debt
Credit impairment loss -4,202.25 -7,196.56 41.61%
reserve for account receivables
Mainly due to the decrease in income fro m
Gains on asset disposal 358.76 557.80 -35.68%
the disposal of fixed assets
Mainly due to the increase in profits in the
Income tax expenses 49,456.08 35,822.27 38.06%
current period
Amount
Amount in
Cash flow statement in the Percentag
the current Reasons for changes
accounts previous e change
period
period
Net cash flow from 132,025.2 Mainly due to the increase in cash received
224,927.79 70.37%
operating activities 9 from the sale of goods
-
Net cash flow from Mainly due to the decrease in investment in
-94,792.15 218,383.1 56.59%
investing activities the current period
6
Net cash flow from Mainly due to the year-on-year increase in
-121,831.50 -11,486.52 -960.65%
financing activities debt repayment in the current period
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
II. Shareholder Information
(I) Total number of common shareholders, number of preferred shareholders with restored voting rights
and shareholdings of top 10 shareholders
Unit: Share
Total number of common shareholders at Total number of preference shareholders with restored
81,155 0
the end of the reporting period voting rights at the end of the reporting period (if any)
Shareholdings of top 10 shareholders
Number of Pledged, marked or locked-up
Shareh
Nature of Number of shares with status
Name of shareholder olding
shareholder shares held trading
ratio Status of shares Quantity
restrictions held
Domestic
China Grand Enterprises, non-state-
41.66% 730,938,157 0 Pledged 121,130,000
Inc. owned
corporation
Hangzhou Huadong State-owned
16.42% 288,000,000 0
M edicine Group Co., Ltd. corporation
Hong Kong Securities Overseas
2.60% 45,538,784 0
Clearing Company Ltd. corporation
Industrial and
Commercial Bank of
China Limited - China-
Others 2.15% 37,694,848 0
Europe Healthcare Hybrid
Securities Investment
Fund
Domestic
China Securities Finance non-state-
1.26% 22,186,818 0
Co., Ltd. owned
corporation
China Construction Bank
Co., Ltd. - ICBC Credit
Others 1.14% 20,000,021 0
Suisse Frontier M edical
Equity Fund
China Construction Bank
Corporation - E Fund CSI
Others 0.79% 13,857,532 0
300 Healthcare Exchange
Traded Fund
National Social Security
Others 0.65% 11,377,042 0
Fund - Profile 0
National Social Security
Others 0.46% 8,000,000 0
Fund - Profile 503
Bank of Shanghai Co.,
Ltd. - Yinhua CSI
Others 0.42% 7,290,613 0
Innovative M edicine
Exchange Traded Fund
Shareholdings of top 10 shareholders without trading restrictions
Type of shares and quantity
Number of shares without trading restrictions
Name of Shareholder Number of
held Type of shares
shares
RM B common
China Grand Enterprises, Inc. 730,938,157 730,938,157
shares
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
Hangzhou Huadong M edicine Group Co., RM B common
288,000,000 288,000,000
Ltd. shares
Hong Kong Securities Clearing Company RM B common
45,538,784 45,538,784
Ltd. shares
Industrial and Commercial Bank of China
RM B common
Limited - China-Europe Healthcare Hybrid 37,694,848 37,694,848
shares
Securities Investment Fund
RM B common
China Securities Finance Co., Ltd. 22,186,818 22,186,818
shares
China Construction Bank Co., Ltd. - ICBC
RM B common
Credit Suisse Frontier M edical Equity 20,000,021 20,000,021
shares
Fund
China Construction Bank Corporation - E
RM B common
Fund CSI 300 Healthcare Exchange 13,857,532 13,857,532
shares
Traded Fund
RM B common
National Social Security Fund - Profile 0 11,377,042 11,377,042
shares
RM B common
National Social Security Fund - Profile 503 8,000,000 8,000,000
shares
Bank of Shanghai Co., Ltd. - Yinhua CSI
RM B common
Innovative M edicine Exchange Traded 7,290,613 7,290,613
shares
Fund
The Company does not know whether the above-mentioned shareholders
Explanation on associated relationships or concerted
are related parties or whether they are acting-in-concert parties with one
actions among the above-mentioned shareholders
another.
At the end of the reporting period, the Company had no shareholders
Description of the participation in margin trading
holding its shares through margin trading and securities lending accounts
business of the top 10 shareholders (if any)
among the top 10 common shareholders.
(II) Total number of preferred shareholders of the Company and shareholdings of top 10 shareholders
□ Applicable □ N/A
III. Other Important Matters
□ Applicable □ N/A
(I) Overview of the Company’s operations
1. Overview of the Company’s overall operations during the reporting period
During the reporting period, the Company continued to overcome pressures and challenges from
various aspects, vigorously deepened its transformation and innovation, actively facilitated the
management of various businesses, and continuously spurred its vitality for operation and growth,
witnessing stable and robust growth in main operational indicators.
From January to September 2023, the Company achieved the operating revenue of 30.395 billio n
yuan, up 9.10% year on year (up 13.23% year on year in the first quarter and 12.02% year on year in
the first half of 2023), and the net profit attributable to shareholders of listed companies after
deducting non-recurring gains/losses of 2.160 billion yuan, up 13.62% year on year (up 8.45% year
on year in the first quarter and 12.24% year on year in the first half of 2023). During the reporting
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
period, after deducting the equity incentive expenses and the profits and losses of participating and
holding R&D institutions, the Company achieved the net profit attributable to shareholders of listed
companies after deducting non-recurring gains/losses of 2.462 billion yuan, up 19.36% year on year.
In Q3 2023, the Company achieved the operating revenue of 10.009 billion yuan, up 3.61% year
on year. The net profit after deducting non-recurring profit and loss attributable to shareholders of
listed companies was 733 million yuan, up 16.43% year on year.
In face of complicated and fierce market competitions and uncertainties, the Company continued
to seek improvement in stability and achieved robust business resilience and favorable development
prospect, laying a solid foundation for the attainment of its annual goals.
During the reporting period, the pharmaceutical industry segment actively improved its
operation and management levels and continued to facilitate the cost reduction and expense control,
seeing steady improvement in operational quality and efficiency. From January to September 2023,
the pharmaceutical industry segment achieved the operating revenue of 8.994 billion yuan (includ ing
that of CSO business), up 9.48% year on year, and the net profit attributable to the parent company
after deducting non-recurring gains/losses of 1.835 billion yuan, up 13.41% year on year. Among
them, in Q3 2023, the pharmaceutical industry segment achieved the operating revenue of 2.940
billion yuan (including that of CSO business), up 8.34% year on year, and the net profit attributab le
to the parent company after deducting non-recurring gains/losses of 609 million yuan, up 10.13%
year on year.
The Company continued to implement the industrial microbiology development strategy, kept
improving its industrial distribution, endeavored to improve the overall operation capabilities, and
put more efforts in fostering its marketing capacity. During the reporting period, the industr ia l
microbiology segment of the Company achieved positive progress in expanding the markets of ADC
raw materials and featured APIs, reached strategic and business cooperation agreements with multip le
overseas clients, and facilitated its product pipeline layout and market promotion in the field of anima l
health. The overall sales revenue of the Company’s industrial microbiology segment deducting that
of specific commercial products businesses achieved a year-on-year increase of 36.22%. In August
2023, the Company established its holding subsidiary Zhejiang Shengji Material Technology Co.,
Ltd., in a bid to build a R&D technology platform that is capable of undertaking global aesthetic
medicine CMC businesses of Huadong Medicine, practice and improve its capabilities in R&D of
systematic products and industrial chain control, create three major technology platforms for the
polymerization of biodegradable materials, microsphere formulations, as well as innovative carrier
raw materials for Nano-sunscreen and skin care products, enable the commercialization of pipelines,
and incubate global innovative products. In October 2023, the Company’s holding subsidiary Jiangsu
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
NAU Animal Pharmaceutical Co., Ltd. obtained the exclusive distribution, market promotion and
sales rights of Butorphanol Tartrate Injection (trade name: 保适宁) in China. Butorphanol Tartrate
Injection is a kind of central analgesia drug for pets of Beijing Saiersi Medicine Technology Co., Ltd.
that has been approved for marketing and also the first opiates new animal drug approved in China.
This cooperation will further improve the Company’s layout in professional products for pet health
care.
During the reporting period, the Company’s pharmaceutical business segment witnessed
continuous and stable growth as a whole. From January to September 2023, the segment achieved the
operating revenue of 20.291 billion yuan, up 6.99% year on year, and the net profit of 316 millio n
yuan, up 6.03% year on year.
During the reporting period, the Company’s aesthetic medicine segment witnessed rapid growth
as a whole and achieved the total operating revenue of 1.874 billion yuan (excluding interna l
offsetting factors), up 36.99% year on year.
Its wholly-owned subsidiary Sinclair actively overcame the negative impact of the slowing
global economic growth and kept expanding the global aesthetic medicine market. During the
reporting period, Sinclair achieved the sales revenue of 110 million pounds (about 973 million yuan,
up 23.27% year on year), and the EBITDA of 17.29 million pounds (about 148 million yuan),
attaining continuous operating profits. It is expected that Sinclair will maintain a relatively fast growth
as a whole throughout 2023, making increasingly more contribution to the Company’s profits.
In the field of domestic aesthetic medicine, the Company’s wholly-owned subsidiary Sinclair
(Shanghai) continued to expand its Chinese market and continuously developed and improved Ellansé,
its core star product, playing a leading role in the regenerative aesthetic medicine market in China. In
the meantime, Sinclair (Shanghai) created its “one-stop” facial rejuvenation and shaping solution to
satisfy the growing demands of Chinese consumers for anti-aging in combination with its two newly-
launched products of Reaction, a kind of RF product that features dual effects of “anti-aging and
skin tightening” on fine parts, and Glacial Spa , a functional skin color management device
developed on the basis of cryomodulation. From January to September 2023, Sinclair (Shanghai)
achieved the operating revenue of 824 million yuan, up 88.79% year on year, and made more
contribution to the Company’s overall profits while achieving favorable profitability. It is expected
that Sinclair (Shanghai) will maintain its excellent performance and satisfactorily attain its annual
business goals.
2. R&D progress of the Company
(1) Pharmaceutical industry
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
1) Overall R&D situation
During the reporting period, being “Scientific Research-based and Patient-centered”, the
Company continuously increased the R&D input, kept enriching the layout of innovative medicine
R&D, enhanced the construction of Global innovative R&D ecology and technological platform, and
actively advanced the progress of clinical trials, with multiple major staged achievements made. As
of the date of the Report, the Company has formed 60 innovative product lines, with 50% of the
products researched and developed independently. During the reporting period, the Company input
1.65 billion yuan in R&D in the pharmaceutical industry segment. Among them, 1.022 billion yuan
were used as direct R&D expenditures, up 17.29% year on year.
2) Innovative R&D strategy
As for innovative medicines, the Company insisted on its differentiated R&D strategy with the
focus placed on unsatisfied clinical needs of global patients, gaving priority to the layout of three key
fields of endocrinology, autoimmunity and oncology, and is committed to becoming a leading
company in the field of comprehensive metabolic diseases. As its product lines are continuous ly
enriched, the Company has expanded its innovative medicine field to multiple types of medicine
products including small molecule medicines, polypeptides, ADCs, bispecific or multispecific
antibody medicines, as well as the exploration towards innovative therapies for diseases in the fields
of endocrinology, autoimmunity and oncology.
The Company’s early R&D team actively followed up the latest progress of researches on
medicines/targets and conducted deep investigations from such aspects as target mechanis m,
medicine screening, druggable potential and selection of indications, in a bid to facilitate the
implementation of the Company’s innovation and internationalization strategies, and to follow up the
industrial development trend featuring anterior target shift. Since 2023, the Company has
implemented the early exploratory project mechanism, accelerated its innovation, placed its focus on
three key fields of endocrinology, autoimmunity and oncology. The Company has launched 11 early
exploratory and prospective projects to date since 2023, expecting to developing the first-in-class or
best-in-class innovative medicines.
The Company’s clinical R&D team has always dedicated to breaking through the differentia ted
bottleneck in innovation in accordance with the orientation of high efficiency and high quality,
endeavoring to achieve the leap-forward development of diversified innovation in clinical R&D. The
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
clinical R&D team has charged and supported clinical projects from such dimensions as clinical study,
operation, registration and pharmaco-vigilance from multiple dimensions.
3) Progress of R&D of innovative medicines, innovative medical devices and biosimilar
medicines
Oncology
The Company developed more than 30 innovative antineoplastic medicines covering targeted
small molecule medicines, ADCs, antibodies, PROTAC, etc. through discovery, screening and
verification of new targets in preliminary R&D of medicines.
The BLA in China of mirvetuximab soravtansine injection (ELAHERE, R&D code:
IMGN853, HDM2002), the world’s first-in-class ADC drug introduced by the Company from
ImmunoGen in the U.S., is expected to be accepted in Q4 2023. It was included in the priority review
by CDE in July 2023 and is expected to be approved for marketing in 2024. In July 2023,
ELAHERE was approved to be introduced in Hainan province thanks to the “Pioneering in Pilot
Zone” licensed medical devices policies in Hainan Bo’ao Lecheng International Medical Tourism
Pilot Zone, which is expected to help Chinese PROC patients with platinum-resistant ovarian
epithelial cancer, fallopian tube cancer or primary peritoneal cancer who are folate receptor α (FRα)
positive in time. In the future, the Company plans to participate in the international multi-center PSOC
clinical research to advance its application in front-line treatment of ovarian cancer and support to
use ELAHERE as the medicine combination for treatment of ovarian cancer.
Mefatinib Tablet, the Company’s innovative medicine, was included as the variety for
breakthrough treatment in May 2023, which is used for treating advanced non-small cell lung cancer
with rare EGFR mutations. The phase III clinical trial for advanced non-small cell lung cancer with
EGFR-sensitive mutation has successfully reached the main end point.
HDM2005, an ADC product independently developed by the Company, has completed PCC
confirmation in Q1 2023 and IND development is now in progress. It is planned to apply for clinica l
trial within 2024.
HDM2006, a PROTAC product independently developed by the Company, has been confir med
as PCC in September 2023 and entered the IND development.
In Q4 2023, one independent innovative product for tumors is expected to receive PCC
confirmation.
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
Endocrinology
With GLP-1 target as the core, the Company has established eight products of GLP-1 and related
targets that cover oral medicines, and injections, including long-acting and multi-target global
innovative and biosimilar medicines. In the future, the Company will keep exploring innovative
projects related to GLP-1 targets, expanding its coverage to such indications as weight manageme nt,
dyslipidemia, non-alcoholic steatohepatitis (NASH), cardiovascular disease, chronic kidney disease
(CKD), and constantly develop innovative medicines with higher iterability and more clinica l
advantages.
HDM1002 (oral small molecule GLP-1 receptor agonist), an innovative medicine for diabetic
mellitus that is developed by the Company independently, has obtained IND approvals in the U.S.
and China, with the administration of the first subject achieved in the beginning of June 2023. The
IND application for obesity in China was approved in September 2023. To date, there is no oral small
molecule GLP-1 receptor agonist approved for marketing in the world. HDM1002 will further enrich
the Company’s product lines in the field of endocrine therapy, accelerate the Company’s integratio n
into the global innovative pharmaceutical industry, and further enhance its comprehens ive
competitiveness.
HDM1005, a GLP-1R and GIPR long-acting polypeptide dual-target agonist independently
developed by the Company, has entered the research stage of IND. To date, the project is smoothly
advanced and clinical batch of medicines is manufactured as scheduled. It is expected to submit the
IND application in early 2024.
DR10624, a GLP-1R/GCGR/FGF21R multi-target agonist developed by the Company’s holding
subsidiary Doer Biologics, completed its first subject administration in phase I Multiple Ascending
Dose (MAD) clinical trial for the treatment of obesity in New Zealand in July 2023. DR10624’s IND
application for weight management of overweight or obese people in China was approved in July
2023. The first cohort (12 subjects) administration in phase I Single Ascending Dose (SAD) clinica l
trial in China was completed in October 2023. The IND application for diabetes mellitus in China
was approved in September 2023. The IND for severe hypertriglyceridemia in China was submitted
in August 2023.
Semaglutide Injection has now launched the phase III clinical trial, with the enrollment of the
first subject completed in September 2023.
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
Insulin Degludec Injection has now launched the phase III clinical trial, with the enrollment of
the first subject completed in September 2023.
Autoimmunity
The Company has had over 10 varieties of biomedicines and small molecule innovative products
in the field of autoimmunity.
The marketing authorization application of HDM3001 (QX001S), a biological similar of
Ustekinumab (Stelara) for plaque psoriasis has been submitted and accepted by NMPA in August
2023.
HDM3002 (PRV-3279), an innovative medicine used for the treatment of systemic lupus
erythematosus (SLE), has been formally included in IIa phase MRCT (PREVAIL-2).
Being listed as Overseas New Medicine in Urgent Need for Clinical Purpose (First Batch) by
CDE, ARCALYST, a global innovative product introduced from Kiniksa in the U.S., is used for the
treatment of Cryo-Pyrin-Associated Periodic Syndromes (CAPS). Moreover, the Company has
submitted the Pre-BLA for recurrent pericarditis (RP) in China at the end of June 2023. In September
2023, recurrent pericarditis was included in the Second Batch of Rare Diseases Catalogue jointly
issued by the National Health Commission and other miniseries. In the future, the Company will
facilitate the registration and launching of this product in China relying on relevant evaluatio n
procedures for rare diseases, thus solving the problem of drug accessibility of patients as soon as
possible.
The Company developed multiple new target and biological mechanism immune disease early
projects, which are all smoothly advanced. In Q4 2023, a type of independently-developed innovative
product for autoimmunity will receive PCC confirmation.
Innovative pharmaceutical devices
HD-NP-102 (Dynamic Monitoring System of Glomerular Filtration Rate and MB-102
Injection): The Dynamic Monitoring System of Glomerular Filtration Rate and MB-102 Injection
jointly developed by the Company and MediBeacon, Inc of the U.S. can continuously measure the
glomerular filtration rate (GFR) of patients with normal or impaired renal functions by non-invas ive
monitoring of the fluorescence emitted by MB-102 through intravenous injection. In July 2022,
NMPA formally accepted the pharmaceutical device registration application for the system and is
now reviewing the application. The MB-102 injection (Relmapirazin) used in conjunction with this
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
system is a global innovative medicine that completed the enrollment of all subjects for internatio na l
multi-center phase III clinical trial in February 2023. The pre-NDA has submitted in China in April
2023. The PMA has been submitted in the U.S. in June 2023, which has been accepted by FDA in
July 2023.
4) Approval of generic medicines
S/N Field Item Specification Time of Approval
Pioglitazone Hydrochloride
Approved by NMPA in September
1 Endocrine and Metformin 15/850mg
2023
Hydrochloride Tablets
Approved by NMPA in August
2 Immunity Tacrolimus Ointment 0.03%, 0.1%
2023
Approved by NMPA in October
3 Angiocarpy Macitentan Tablets 10mg
2023
2. Aesthetic medicine business
1) R&D and registration of aesthetic medicine products in China
S/N Type Product Name Purpose Latest Progress
Collection of efficacy measures of all
MaiLi Extreme
1 Injections Facial filling subjects for clinical trial in China
Hyaluronic acid
completed in August 2023.
Registration testing in China completed
MaiLi Precise
2 Injections Facial filling and preparatory work for launching of
Hyaluronic acid
clinical trial in China in progress.
Enrollment of all subjects for clinical trial
3 Injections Ellansé-M Facial filling in China completed in March 2023 and
follow-up in progress.
Testing for registration formally launched
LanlumaV
4 Injections Facial filling in August 2023 and preparatory work for
Poly-l-lactic Acid
clinical trial in progress.
Removing benign
Energy based Registration testing in China and
5 Glacial Rx (F1) pigmented lesions
devices preparation of technical data in progress.
of skin, etc.
Application for registration of V20
Skin tightening,
submitted and accepted by the Center for
body and facial
Energy based V series products Medical Device Evaluation, NMPA in
6 shaping, skin
devices (V20, V30) September 2023.
rejuvenation, hair
Registration testing of V30 and
removal, etc.
preparation of technical data in progress.
Notice of Classification and Definition of
Energy based Facial skin Non-medical Devices issued by Medical
7 Préime DermaFacial
devices management Equipment Standard Management Center,
NMPA received in September 2023.
2) R&D and registration of aesthetic medicine products out of China
KiOmed skinbooster, a global innovative chitosan aesthetic medicine introduced by the
Company from a Belgian company KiOmed Pharma SA (hereinafter referred to as “KiOmed”) is now
under clinical trial and its overseas registration application is expected to be submitted in Q4 2023.
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
Moreover, KiOmed is now developing multiple types of global innovative products for facial
(KiOmed Moderate lines, KiOmed Volumizer) and lip (KiOmed Lips) filling. In the meantime, the
Company is actively facilitating the R&D of Silhouette 16 cone short line, a thread lifting product,
and multiple types of new products.
3. Overseas investment and cooperation of the Company from Q3 to the date of the Report
1) On August 10, 2023, the Company’s wholly-owned subsidiary Zhongmei Huadong signed the
Exclusive Product License Agreement with the American listed company Arcutis. According to the
agreement, Zhongmei Huadong obtained the exclusive license of the globally innovative topical
roflumilast (including Roflumilast Cream ZORYVE and Roflumilast Foam ARQ-154) of Arcutis
in Greater China (including Chinese mainland, Hong Kong SAR, Macao SAR and Taiwan Province)
and Southeast Asia (Indonesia, Singapore, Philippines, Thailand, Myanmar, Brunei, Cambodia, Laos,
Malaysia and Vietnam), including rights for development, registration, production and
commercialization. (Please refer to relevant announcement (Announcement No.: 2023-061) disclosed
by the Company on Cninfo (http://www.cninfo.com.cn) for details).
2) On August 30, 2023, the Company’s wholly-owned subsidiary Zhongmei Huadong signed the
Exclusive Product License Agreement with MC2 Therapeutics Ltd., a wholly-owned subsidiary of a
Danish company MC2 Therapeutics A/S (hereinafter referred to as “MC2”). According to the
agreement, Zhongmei Huadong obtained the exclusive license of the globally innovative product
Wynzora in Greater China (including Chinese mainland, Hong Kong SAR, Macao SAR and Taiwan
Province), including rights for development, registration, production and commercialization.
Also, the introduction of Wynzora cream, ZORYVE cream and ARQ-154 (roflumilast foam)
will further supplement the Company’s product lines of external preparations. In the meantime, the
Company has established its featured topical preparation platform that is specialized in the
differentiated R&D of topical preparations for skin, built a professional R&D team, equipped with
laboratory research-type and pilot-scale production complicated preparation equipment, as well as
imported quality evaluation equipment, and fostered three topical preparation production lines in its
holding company Huadong Medicine (Xi’an) Bohua Pharmaceutical Co., Ltd. to facilitate the
launching of R&D products. With multiple years of experience in R&D and platform development,
the team has gotten the key points for development of ointments, creams, gels and other external
preparations and established professional quality evaluation systems for topical preparations, which
14
Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
cannot only guarantee the fast and efficient research, production conversion and registratio n
application of products, but also satisfy the development of the industrial development chain that
integrates R&D, production and sales. (Please refers to relevant announcement (Announcement No.:
2023-067) disclosed by the Company on Cninfo (http://www.cninfo.com.cn) for details).
3) On October 17, 2023, the Company’s wholly-owned subsidiary Huadong Medicine Aesthetics
Investment (Hong Kong) Limited (hereinafter referred to as “Aesthetics Investment”) signed the
Exclusive Product License Agreement with ATGC Co., Ltd. (hereinafter referred to as “ATGC”) in
the Republic of Korea. According to the agreement, Aesthetics Investment obtained the global
exclusive license of ATCG-110, an injection containing botulinum toxin type A of ATGC, in China,
the U.S., Europe, etc. (excluding India), and the non-exclusive license in the Republic of Korea,
including the clinical development, registration and commercialization rights for aesthetic medicines
and all of its indications.
The agreement for ATGC-110 is a strategic supplement to the Company’s global aesthetic
medicine products, which is beneficial for the Company to build diversified aesthetic medicine brand
and product clusters. After this transaction, the Company will have 37 types of international high- end
“noninvasive and micro-invasive” aesthetic medicine products that cover improvement of frown
lines, facial and body filling, thread lifting, skin management, body shaping, hair removal, private
repair and other non-operative mainstream aesthetic medicine fields, including 14 types of injectio n
products, 22 types of energy based devices, and one type of thread lifting product. With
comprehensive product clusters formed, the Company has ranked in the forefront of the industry in
terms of product quantity and coverage. (Please refers to relevant announcement (Announceme nt
No.: 2023-072) disclosed by the Company on Cninfo (http://www.cninfo.com.cn) for details).
(II) Receptions, including research, communication and interview, during the reporting
period
Main content
of discussion Index of basic
Reception Reception Reception Type of Reception
and information of the
date address method visitor object
information research
provided
China 2023 Semi- Please refer to the
Conference Institution Securities, annual Record of Investor
August 16, Online
Room of the and CICC, Operating Relations Activities
2023 meeting
Company individual Industrial Results on August 16, 2023
Securities, Conference presented on the
15
Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
etc. of Huadong websites of
Medicine irm.cninfo.com.cn
and cninfo.com.cn
for details.
IV. Quarterly Financial Statements
(I) Financial statements
1. Consolidated balance sheet
Prepared by: Huadong M edicine Co., Ltd.
September 30, 2023
Unit: yuan
Item September 30, 2023 January 1, 2023
Current assets:
M onetary funds 3,930,055,822.33 3,996,302,178.41
Settlement reserve
Lending funds
Trading financial assets
Derivative financial assets 23,781,330.81 29,907,470.68
Notes receivable 30,000,000.00 8,424,980.99
Accounts receivable 8,603,990,884.53 7,198,746,788.59
Accounts receivable for financing 1,179,728,033.75 1,002,511,208.21
Prepayments 391,738,025.42 500,083,953.14
Premiums receivable
Reinsurance accounts receivable
Reinsurance contract reserve
receivable
Other receivables 511,134,375.07 283,710,955.63
Including: Interests receivable
Dividends receivable 223,747.65 223,747.65
Financial assets purchased for resale
Inventories 4,889,550,535.88 4,495,483,328.54
Contract assets
Assets held for sale
Other non-current assets expiring
within one year
Other current assets 28,009,025.30 52,692,618.78
Total current assets 19,587,988,033.09 17,567,863,482.97
Non-current assets:
Loans and prepayments issuance
Debt investments
Other debt investments
Long-term receivables
Long-term equity investment 1,547,325,882.94 1,659,076,538.78
Other equity instrument investments 409,199,420.17 360,910,876.41
Other non-current financial assets
Investment real estate 12,957,377.00 13,648,240.14
Fixed assets 3,752,658,948.42 3,981,653,265.52
Constructions in progress 1,106,218,018.42 873,159,427.47
Biological assets for production
Oil & gas assets
Right-of-use assets 141,069,398.00 166,505,297.17
Intangible assets 2,327,531,779.99 2,280,064,207.30
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
Development expenditures 784,251,157.61 641,354,586.80
Goodwill 2,577,647,986.71 2,441,387,413.59
Long-term unamortized expenses 20,477,284.51 16,457,278.57
Deferred tax assets 192,386,807.93 152,842,858.97
Other non-current assets 1,532,973,414.69 1,037,279,933.15
Total non-current assets 14,404,697,476.39 13,624,339,923.87
Total assets 33,992,685,509.48 31,192,203,406.84
Current liabilities:
Short-term borrowings 813,198,243.24 947,516,383.37
Borrowing from the central bank
Borrowing from other banks and other
financial institutions
Financial liabilities for trade 8,970,278.04 14,841,896.97
Derivative financial liabilities 490,500.00
Notes payable 2,002,464,644.87 1,029,409,686.81
Accounts payable 4,995,617,599.40 4,873,029,466.44
Receipts in advance 1,975,312.86 1,154,243.42
Contract liabilities 167,826,339.02 146,488,489.07
Financial assets sold for repurchase
Deposits from customers and due from
banks
Receipts for buying and selling
securities as proxy
Receipts for underwriting securities as
proxy
Employee benefits payable 236,487,492.70 256,883,423.68
Taxes payable 403,270,025.35 429,457,804.81
Other payables 2,693,327,807.81 2,290,407,022.05
Including: Interests payable
Dividend payable 224,219.60 14,924,219.60
Handling fees and commissions
payable
Reinsurance accounts payable
Liabilities held for sale
Other non-current liabilities due
299,354,234.55 147,835,514.81
within one year
Other current liabilities 20,429,422.29 15,788,164.30
Total current liabilities 11,643,411,900.13 10,152,812,095.73
Non-current liabilities:
Insurance policy reserve
Long-term borrowing 728,506,072.02 1,051,457,747.44
Bonds payable
Include: Preferred stock
Perpetual bond
Lease liabilities 105,896,905.64 84,610,324.98
Long-term payables 87,266,061.32 287,497,209.49
Long-term employee remuneration
payable
Provision 35,577,667.62 37,925,549.41
Deferred income 175,941,782.72 126,123,512.71
Deferred tax liabilities 198,336,858.91 202,084,083.93
Other non-current liabilities 78,564,150.00 73,251,500.00
Total non-current liabilities 1,410,089,498.23 1,862,949,927.96
Total liabilities 13,053,501,398.36 12,015,762,023.69
Owners' Equity:
Share capital 1,754,425,348.00 1,753,995,348.00
Other equity instrument investments
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
Including: Preferred shares
Perpetual bond
Capital reserves 2,429,588,311.61 2,377,887,246.39
Less: Treasury shares 115,270,300.00 104,645,000.00
Other comprehensive income -92,441,607.03 -88,552,636.42
Special reserve
Surplus reserve 1,151,441,705.28 1,151,213,039.48
General risk reserve
Undistributed profit 15,170,467,425.80 13,488,021,239.94
Total owners' equity attributable to
20,298,210,883.66 18,577,919,237.39
owner of the parent company
M inority interest 640,973,227.46 598,522,145.76
Total owners' equity 20,939,184,111.12 19,176,441,383.15
Total liabilities & owners' equity 33,992,685,509.48 31,192,203,406.84
Legal representative: Lv Liang Person in charge of accounting: Lv Liang Person in charge of the Accounting Department: Qiu
Renbo
2. Consolidated income statements from the beginning of the year to the end of the reporting period
Unit: yuan
Item Amount in the current period Amount in previous period
I. Total operating revenue 30,394,530,509.51 27,858,507,079.10
Including: Operating revenue 30,394,530,509.51 27,858,507,079.10
Interests income
Premiums earned
Handling fees and
commissions received
II. Total operating cost 27,539,505,233.90 25,422,451,966.57
Including: Operating cost 20,711,433,505.92 19,006,828,172.00
Interest expenses
Handling fees and
commissions paid
Surrender value
Net payment of insurance
claims
Net appropriation of policy
reserve
Policy dividends paid
Reinsurance expenses
Business taxes and surcharges 155,063,860.73 145,766,634.10
Sales expenses 4,662,350,509.65 4,503,511,492.02
Administrative expenses 1,105,836,120.39 958,816,065.06
R&D expenses 840,788,063.58 788,158,101.57
Financial expenses 64,033,173.63 19,371,501.82
Including: Interests expenses 84,321,926.54 55,731,896.99
Interests income 61,683,137.57 75,779,611.14
Add: Other income 70,617,560.34 116,088,889.07
Investment income (Losses are
-168,842,873.72 -99,173,464.90
indicated by “-”)
Including: Investment gains -145,314,249.10 -80,967,957.60
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
(losses) in associated enterprise and
joint-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 from changes in fair values
-6,616,639.87
(Losses are indicated by “-”)
Credit impairment losses (Losses
-42,022,538.00 -71,965,559.59
are indicated by “-”)
Impairment gains (losses) of
-3,175,583.57
assets (Losses are indicated by “-”)
Asset disposal income (Losses
3,587,637.81 5,578,009.76
are indicated by “-”)
III. Operating profit (Losses are
2,708,572,838.60 2,386,582,986.87
indicated by “-”)
Add: Non-operating revenue 3,536,981.13 5,034,409.21
Less: Non-operating expenses 24,000,149.00 27,069,853.11
IV Total profit (Total losses are indicated
2,688,109,670.73 2,364,547,542.97
by “-”)
Less: Income tax expenses 494,560,848.37 358,222,730.61
V Net profit (Net losses are indicated by
2,193,548,822.36 2,006,324,812.36
“-”)
(I) Classification by business
continuity
1. Net profit from continuing
operations (Net losses are indicated by 2,193,548,822.36 2,006,324,812.36
“-”)
2. Net profit at terminational
operation (Net losses are indicated by
“-”)
(II) Classification by attribution of
ownership
1. Net profit attributable to
shareholders of the parent company (Net 2,189,046,844.62 1,981,470,047.95
losses are indicated by “-”)
2. Profit or loss attributable to
minority shareholders (Net losses are 4,501,977.74 24,854,764.41
indicated by “-”)
VI. Other comprehensive income, net of
-3,888,970.61 -19,030,402.76
income tax
Other comprehensive income
attributable to owners of the parent -3,888,970.61 -19,030,402.76
company, net of tax
(I) Other comprehensive income
that cannot be reclassified into -1,453,894.59 -4,775,671.98
gains/losses
1. Changes in remeasurement on
the defined benefit plan
2. Other comprehensive income
that cannot be reclassified into
gains/losses under equity method
3. Changes in fair value of other -1,453,894.59 -4,775,671.98
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
equity instrument investments
4. Changes in fair value of credit
risk of the enterprise
5. Others
(II) Other comprehensive income to
-2,435,076.02 -14,254,730.78
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 5,871,618.93
6. Exchange differences from
translation of foreign currency financial -8,306,694.95 -14,254,730.78
statements
7. Others
Net amount after tax of other
comprehensive income attributable to
minority shareholders
VII. Total comprehensive income 2,189,659,851.75 1,987,294,409.60
(I) Total comprehensive income
attributable to owners of the parent 2,185,157,874.01 1,962,439,645.19
company
(II) Total comprehensive income
4,501,977.74 24,854,764.41
attributable to minority shareholders
VIII. Earnings per share (EPS):
(I) Basic EPS 1.2510 1.1324
(II) Diluted EPS 1.2503 1.1324
Legal representative: Lv Liang Person in charge of accounting: Lv Liang Person in charge of the Accounting Department: Qiu
Renbo
3. Consolidated cash flow statements from the beginning of the year to the end of the reporting period
Unit: yuan
Item Amount in the current period Amount in previous period
I. Cash flows from operating activities:
Cash received from the sale of goods
32,682,451,836.29 28,636,082,628.37
and the 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
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
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 refund 53,209,369.56 48,130,176.60
Other cash receipts in relation to
594,342,751.13 519,344,662.31
operating activities
Cash inflows from operating activities 33,330,003,956.98 29,203,557,467.28
Cash payments for goods purchased
21,403,392,127.90 19,098,109,891.25
and services received
Net increase in customer loans and
prepayments
Net increase in deposits of central
bank and due from banks
Cash payments for original insurance
claims
Net increase in lending funds 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
2,731,357,413.23 2,163,638,874.66
employees
Payments of various types of taxes 2,018,766,158.13 2,310,543,611.37
Other cash payments in relation to
4,927,210,373.91 4,311,012,164.01
operating activities
Cash outflows for operating activities 31,080,726,073.17 27,883,304,541.29
Net cash flow from operating activities 2,249,277,883.81 1,320,252,925.99
II. Cash flows from investing activities
Cash receipts from recovery of
investments
Cash receipts from investment income 76,500,000.00 900,000.00
Net cash receipts from disposal of
fixed assets, intangible assets and other 5,487,494.29 13,562,748.02
long-term assets
Net cash from disposal of subsidiaries
and other business units
Other cash receipts in relation to
143,241,408.53
investing activities
Cash inflows from investing activities 225,228,902.82 14,462,748.02
Cash payments for purchase and
construction of fixed assets, intangible 960,170,505.01 838,159,013.91
assets and other long-term assets
Cash payments for investment 71,474,250.00 855,517,746.06
Net increase in pledge loans
Net cash paid for acquisition of
137,922,688.09 404,617,574.25
subsidiaries and other business units
Other cash payments in relation to
3,582,952.58 100,000,000.00
investing activities
Sub-total of cash outflows of investment
1,173,150,395.68 2,198,294,334.22
activities
Net cash flow from investing activities -947,921,492.86 -2,183,831,586.20
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Third Quarterly Report 2023 of Huadong M edicine Co., Ltd.
III. Cash flows from financing activities:
Cash receipts from absorbing
10,800,300.00 30,000,000.00
investments
Including: Cash receipts from
capital contributions from minority 30,000,000.00
owners of subsidiaries
Cash receipts from borrowing 3,618,149,860.84 3,625,643,992.66
Other cash receipts in relation to
725,958,879.33 598,142,418.56
financing activities
Cash inflows from financing activities 4,354,909,040.17 4,253,786,411.22
Cash repayments of borrowings 4,202,280,794.93 3,141,986,846.06
Cash payments for distribution of
dividends or profits or settlement of 658,879,966.42 627,878,033.15
interest expenses
Including: Dividends and profits
paid by subsidiaries to minority 15,728,000.00 1,960,000.00
shareholders
Other cash payments in relation to
712,063,268.70 598,786,755.06
financing activities
Cash outflows for financing activities 5,573,224,030.05 4,368,651,634.27
Net cash flow from financing activities -1,218,314,989.88 -114,865,223.05
IV Effect of foreign exchange rate
-20,487,569.21 17,694,818.12
changes on Cash and Cash Equivalents
V Net increase in cash and cash
62,553,831.86 -960,749,065.14
equivalents
Add: Opening balance of cash and
3,416,910,702.33 3,580,140,638.17
cash equivalents
VI. Closing balance of cash and cash
3,479,464,534.19 2,619,391,573.03
equivalents
(II) Adjustments to financial statement items at the beginning of the year of the first
implementation of the new accounting standards implemented since 2023
□ Applicable □ N/A
(III) Audit report
Has the Third Quarterly Report been audited?
□Yes □No
The Company’s Third Quarterly Report has not been audited.
Board of Directors of Huadong Medicine Co., Ltd.
October 25, 2023
22
