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Shanghai Pharmaceuticals Registered Growth of Over 30%

In the evening in 27 April, Shanghai Pharmaceuticals Holding Co., Ltd. (hereinafter referred to as “Shanghai Pharmaceuticals”, 601607.SH; 2607.HK), a leading integrated pharmaceutical company in the China’s pharmaceutical industry published the 2018 First Quarterly Report. According to the announcement, during the reporting period, the Company recorded an operating revenue of RMB36.386 billion, representing a YOY growth of 9.83%; net profit attributable to the listed company’s shareholders of RMB1.02 billion, representing a YOY growth of 2.07%; the net profit attributable to the listed company’s shareholders after deducting the non-recurring profit & loss of RMB996 million, representing a YOY growth of 6.08%; the operational net cash inflows of RMB96 million. Meanwhile, to comply with the industry trend and seize the opportunitycoming along , Shanghai Pharmaceuticals has established the working plan of 2018 with the main purposes of “Complying with industrial reform, accelerating business transformation and striving for industry leader”. Focusing on the four major strategic initiatives of intensive development, innovation, internationalization and integration between business & finance, Shanghai Pharmaceuticals will continue to implement multiple key tasks to further enhance its own core competitiveness as a leading pharmaceutical player in the industry.

In respect of the pharmaceutical products segment, Shanghai Pharmaceuticals recorded sales revenue of RMB4.963 billion in the first quarter, representing a YOY growth of 30.82%; profit from pharmaceutical industry business of RMB422 million, representing a YOY growth of 21.02%. The consistency evaluation on the quality and efficacy of generic drugs which was of particular concern of the external market was making good progress. In the first quarter, the Company completes the evaluation of the an additional drug, which is metformin hydrochloride sustained-release tablets and submits to the State Drug Administration. So far the  Company has altogether filed the application of 3 drugs  and has put nearly 1/2 products into the stage of clinical research.

Meanwhile, Shanghai Pharmaceuticals will continue to accelerate the progress of the R&D innovation and cooperation with other institutions. In respect of novel  drugs, the Company has obtained 3 clinical test approvals for the hydroxyl triptolide table and the injection recombinant anti-Her2 humanized monoclonal antibody- MCC-DM1 coupling agent. The Company has deepened R&D openness & corporation and has already initiated the operation of the American San Diego R&D Center. In addition, Shanghai Pharmaceuticals adheres to the integrated development of bulk drugs and preparation, strengthens the extension &supporting of industry chains. The Company purchases 51% stock rights of the Zhejiang Jiuxu Pharmaceuticals Co., Ltd. via RMB280 million, pushing the extension of the exclusive bulk drug, namely, the Ginkgo biloba extract, into a high-end preparation.

While the pharmaceutical industry business was maintaining rapid growth, the services segment of Shanghai Pharmaceuticals also continued quality development. According to the first quarterly report, Shanghai Pharmaceuticals achieved RMB31.423 billion of revenue in pharmaceutical business, representing a YOY growth of 7.12%; the main business of pharmaceutical business contributes RMB456 million of net profit, representing a YOY growth of 10.61%.

Within the report period, Shanghai Pharmaceuticals positively grasped the industry opportunity to lead industry integration & upgrading and toexpand the national network layout further through multiple M& purchasing 51% stock rights of the Anhui (Hefei) Jingcheng Pharmaceutical Co., Ltd., 10% stock rights of the Sichuan Guojia Pharmaceuticals Science & Technology Co., Ltd. and 60% stock rights of Huizhou Tongtai Pharmaceutical Co., Ltd. and investing RMB21 million to newly establish SPH Keyuan Xinhai (Hohhot) Pharmaceutical Co., Ltd.. The implementation of the above key equity investment projects deepens the coverage rate of the Company’s major prefecture-level businesses in Sichuan, Anhui, Inner Mongolia, Guangdong and other provinces. As the domestic largest agent and distributor of imported drugs, the Company agents 223 specifications of the imported drugs. Recently, the Company has signed a strategic cooperation agreement with Shanghai Roche Pharmaceuticals Holding Co., Ltd. Both parties will preferably cooperate with each other in the fields of expanding new products market and providing value-added services for patients, etc.

During the report period, Shanghai Pharmaceuticals maintained steady growth in the retail segment, which achieves RMB1.444 billion of sales revenue in pharmacy retail business, representing a YOY growth of 12.78%. As a new retail “Internet +” business platform for  prescription drugs, Shanghai Pharma Cloud Health has signed a comprehensive strategic partnership agreement with Zhongan Insurance within the first quarter. By means of Zhongan Insurance’s resources in the fields of financial aging, health insurance, big data risk control, etc., Shanghai Pharma Cloud Health has carried out the thorough strategic cooperation with it in the aspects of medical-financial innovation payment and massive health management, so as to co-build a medical-financial innovation mode in China. Meanwhile, after the acquisition of the Cardinal Health business in China, Shanghai Pharma Cloud Health officially launches the integration with the Cardinal Health China DTP pharmacies. With the joining of the Cardinal Health China DTP stores, the Company will further establish its leading position in DTP business specialized for the new & specialty drugs at home.

Looking forward to the full year, challenges and opportunities coexist in the domestic pharmaceutical industry. The Company will seize the industry transformation and upgrading opportunities to continuously optimize the construction of the three major researches, production and marketing management centers in industrial aspect, greatly promote the consistency evaluation on the quality and efficacy of generic drugs, and to strengthen the overseas cooperation and business development ability of the R&D business. And the Company will accelerate the resource adjustment of production bases, promote the construction project of intelligent plants and constantly build the perfect & first-class marketing systems. In commercial aspect, the Company will seize market opportunities to quicken network layout and innovation transformation. One is to quicken the improvement of the national distribution network layout and provincial platform construction, strengthen the coverage rate in Jiangsu, Zhejiang, Anhui, Sichuan and other key prefecture level, and to deepen the expansion of grass-root market. Two is to deepen service innovation, promote transformation & upgrading, and to develop the construction of the smart supply chain, new pharmaceutical retail, global resource allocation, professional distribution of medical apparatus & instruments, third-party logistics and other professional platforms.


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