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2016 Fosun Pharma Net Profit (after extraordinary gain or loss) Attributable to Shareholders Increased 26.36% Continued Efforts in Innovative R&D Strengthening the Strategic Layout of Healthcare Services

03-31 2017

[30 March 2017 Hong Kong] On March 28, 2017, China’s leading healthcare Group Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun Pharma” or the “Company”; stock code: 600196.SH, 02196.HK), announced its audited consolidated financial results of the Company for the year ended 31 December 2016 (the ‘‘Reporting Period’’). In 2016, Fosun Pharma has gained a revenue of RMB14,506 million, a total profit of RMB3,572 million, a net profit attributable to the shareholders of the Company of RMB2,806 million and a net profit (after extraordinary gain or loss) attributable to the shareholders of the Company of RMB2,093 million, representing an increase of 16.03%, 5.92%, 14.05% and 26.36%, respectively, as compared to 2015. In the past ten years, the net profit (after extraordinary gain or loss) attributable to the shareholders of Fosun Pharma realized a compound annual growth rate of around 36%.

 

The pharmaceutical manufacturing and R&D segment of Fosun Pharma realized a revenue of RMB10,150 million, representing an increase of 14.78% as compared to 2015. The healthcare services segment realized a total revenue of RMB1,676 million, representing an increase of 21.71% as compared to 2015.

 

During the Reporting Period, Fosun Pharma has achieved steady growth in its business, a further optimized sales structure, as well as the positive effects of marketing system construction and supply chain integration. Sinopharm Group, an associate of the Group, has also maintained rapid growth in its business.

 

Recognized R&D Investment Results

An Respective Over RMB100-million Revenue from 18 Formulation Products

 

Fosun Pharma focuses on innovation and R&D. It has continued to optimize its pharmaceutical R&D system that combined generic and innovator drugs, and had a Nationally Recognized Enterprise Technology Centre. In recent years, Fosun Pharma has been in a leading position in the industry for investment in R&D and innovation. In 2016, the investment in R&D made by Fosun Pharma amounted to RMB1,106 million, representing an increase of 33.23% as compared to 2015. Among which, the R&D investment of pharmaceutical manufacturing segment amounted to RMB963 million, representing an increase of 38.03% as compared to 2015. Expenses from pharmaceutical manufacturing and R&D amounted to RMB572 million, accounting for 5.6% of the revenue of the pharmaceutical manufacturing and R&D segment.

 

In order to leverage its competitive strengths, Fosun Pharma focused on its R&D projects on therapeutic areas including cardiovascular system, central nervous system, blood system, metabolism and alimentary system, anti-infection and anti-tumor. The major products gaining a leading position in their respective market segments. In 2016, the sales of the Fosun Pharma’s major products maintained rapid growth, of which the sales of 18 formulation products exceeded RMB100 million respectively. The sales of the products or series such as Ao De Jin, You Di Er, cefmetazole sodium series and Atomolan, constituting more than RMB500 million of total revenue.

 

In 2016, Fosun Pharma applied for 103 patents, including 21 U.S. patent applications, 3 European patent applications, 2 Japanese patent applications and 6 PCT applications, in the pharmaceutical manufacturing and R&D segment, and obtained 30 licensed patents, including 22 invention patents (including 2 U.S. patents).

 

Fosun Pharma has expanded its marketing arrangement for large-molecule biosimilars and small molecular innovative drugs. As a result, the research on monoclonal antibody products has been further accelerated. During the Reporting Period, Fosun Pharma had 173 pipeline drugs, generic drugs, biosimilars and vaccine projects, of which 6 projects were under clinical trial applications, 22 projects were under clinical trial, and 42 projects were awaiting official approval for public sale. For the year ended 2016, Fosun Pharma had obtained approval for clinical trials of 6 products dedicated to 10 indications, two of those were in phase III of clinical trials. Four types of 1.1 small molecular innovative drugs were also approved for clinical trials.

 

During the Reporting Period, Fosun Pharma obtained approval for clinical trials of 50 products. Recombinant murine/human chimeric anti-CD20 monoclonal antibody injection and recombinant humanized anti-HER2 monoclonal antibody injection were in phase III of the trial. Anti-EGFR humanized monoclonal antibody injection had been approved by the Mainland China, Taiwan and America, and had commenced clinical trials in Taiwan. Application for clinical trials have been approved for PA-824 type 1.1 innovative API and tablets, which helped with the treatment of multidrug-resistant tuberculosis. During the Reporting Period, the venlafaxine hydrochloride tablets of Yao Pharma had also obtained the launching approval from U.S. FDA.

 

Accelerating the Pace of Internationalization

 

In 2006, the Group continued to focus on innovation and international development, and strived to develop strategic products. Whilst actively seeking opportunities for mergers and acquisitions as well as consolidation in the industry, Fosun Pharma had also consolidated and integrated its current product lines and various resources and proactively expanded its international market.

 

In the pharmaceutical manufacturing and R&D segment, Fosun Pharma had established highly-efficient international R&D teams in Shanghai, Chongqing, San Francisco and Taiwan. It is also encouraged the companies in the pharmaceutical manufacturing segment to comply with international standards. All subsidiaries that engaged in pharmaceutical manufacturing business fulfilled national new GMP requirements. It is encouraged that the companies in the pharmaceutical manufacturing segment to comply with international standards and pushed them forward to put international GMP certifications such as the U.S., European Union and WHO into practice. As at the end of 2016, 13 APIs of the Group received cGMP certifications. 1 production line for oral solid dosage formulation and 5 APIs of Guilin South Pharma Company Limited also obtained PreQualification from the WHO-PQ, and 1 production line of oral solid dosage formulation of Yao Pharma was recognized by Canada Health and the U.S. FDA.

 

In the international market, multiple formulations products from Fosun Pharma achieved international sales, venlafaxine hydrochloride tablets and quetiapine fumarate tablets respectively achieved the United States and Canada sales. Moreover, injectable Artesunate has been recognized by the World Health Organization as the most preferred drug for treatment of severe malaria.

 

In the medical devices and medical diagnosis segment, Fosun Pharma accelerated the pace of international mergers, acquisitions and integration. Alma Lasers Ltd. (‘‘Alma Lasers’’) continued to accelerate the development of the global market and especially key emerging markets such as China and India. Fosun Pharma continued to enhance the expansion of the distribution business of high-end medical devices. Da Vinci surgical robotic system has been used extensively in urinary surgery, thoracic surgery and gynecology by virtue of its advantages including being more accurate, less traumatic and quick recovery. The volume of surgery by Da Vinci surgical robotic system maintained a significant increase in 2016. At the same time, Fosun Pharma kept extended its cooperation by making joint investment with Intuitive Surgical  (‘‘Intuitive Surgical’’, the owner of the technology and products of Da Vinci surgical robotic.) In September 2016, Fosun Pharma and Intuitive Surgical announced a joint venture to research, develop, manufacture and sell innovative for early-stage lung cancer diagnosis and treatment. By leveraging of the leading position of Intuitive Surgical in the field of minimally invasive surgical robots, the group intended to facilitate an enhancement and development at the medical devices segment.

 

Strengthening the strategic layout of Healthcare services

 

Healthcare services is one of the core strategic business of Fosun Pharma. In 2016, Fosun Pharma continued to reinforce the basically completed strategic layout of healthcare services segment with high-end healthcare institutions in more developed coastal cities and specialist and general hospitals in second-tier and third-tier cities in the PRC. It established regional medical centers and a supply chain spanning major health industries and explored models of cooperation with local large state-owned companies, public hospitals and university-affiliated hospitals to accelerate its Internet medical development strategy and enhance operating capabilities and profitability. 

 

By 2016, the total number of beds available for the public in Foshan Chancheng Hospital, Jimin Cancer Hospital, Guangji Hospital, Zhongwu Hospital and Wenzhou Geriatrics Hospital, etc. controlled by the Group was 3,018 in aggregate. In 2016, the Group took part of ‘‘Phase II project of Qingdao Qilu Hospital of Shandong University’’, the reconstruction and expansion of Zhongwu Hospital and Guangji Hospital, the commencement of Wenzhou Geriatric Hospital as well as Yulin Guanghai Medical Investment (which is responsible for the operation and management of Yulin Cardiovascular Specialty Hospital and Yulin Brain Hospital), laying a foundation for the new model of social enterprises’ participation in the healthcare services segment. Fosun Pharma participated in the reorganization of healthcare operations of relevant medical institutions previously in the Xuzhou Coal Mining Group and the establishment of Huaihai Medical Group, which was a breakthrough of the Group in reorganizing healthcare operations of state-owned companies as it facilitated the exploration of co-operating and managing medical institutions with such large local institutions and large insurers. Such a breakthrough was momentous towards the reformation of hospital with mixed ownership and integration of the healthcare supply chain. Furthermore, Fosun Pharma explored the potential of a new model by cooperating and establishing third party medical examination with public hospitals through its investment in Jinan Qilu Medical Examination Co., Ltd.

 

Fosun Pharma will continue to actively support and facilitate the development and layout of hospital and clinic network under ‘‘United Family Hospital’’, a leading premium healthcare service brand. In 2016, the United Family Hospital maintained its brand awareness and prominent position in the high-end healthcare segment of major cities such as Beijing, Tianjin and Shanghai. Of them, Qingdao United Family Hospital has commenced operation. The constructions of Guangzhou United Family Hospital and Shanghai Pudong United Family Hospital were also running at full steam.

 

“Fosun Pharmaceutical will focus on innovative technologies and opportunities in areas like R&D of drugs, medical devices and medical diagnosis. Being based upon China, we will seek to enter major markets of generic drug in Europe and the U.S, in order to boost the construction of healthcare service network in China, as well as to strengthen our company’s core competitiveness,” said Mr Chen Qiyu, Chairman of Fosun Pharmaceutical. Meanwhile, Chen also emphasized the importance of innovation with regards to sustainable development of pharmaceutical enterprises. Having been rapidly growing for years, the Group made great progresses in various aspects such as company management, economics, products and services, and environmental health and safety. Its employees have continued make contributions to society and take responsibilities as a corporate citizen, thereby gaining recognition from all sectors across society. During the Reporting Period, Fosun Pharma was awarded the “Golden Bee 2016 Excellent Corporate Social Responsibility Report‧Leadership Enterprise Award”, the“Corporate Social Responsibility of Listed Companies”selected“Excellent Enterprise Award”and others.

 

In the future, Fosun Pharma will adhere to its brand concept of ‘‘Innovation for Good Health’’ following its development strategies in terms of organic growth, external expansion and integrated development, and seek to become a top-level healthcare Group in global mainstream medical and health markets.

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