Investor Relations

1. What is the Company’s development strategy in the upcoming three years?

Three-year development goal: Business operation expands to over 100 billion; competitiveness continues to enhance; the company, shareholders and employees grow together.

Vision: A respectable leading branded pharmaceutical producer and health service provider with industry reputation

Mission: Persistent and committed to improving the quality of healthy life for the public.

Core Values: Innovation, integrity, cooperation, inclusiveness, responsibility.

2. Please outline the Company’s equity structure.

The Company is listed in both the A-and- H- share stock markets in both Shanghai and Hong Kong. So far, the Company has a total of 2,688,910,538 shares, including 1,923,016,618 A-shares, which account for 71.52% of the total capital stock, and 765,893,920 H-shares, which account for 28.48% of the total capital stock.

3. Please outline the Company’s business structure.

By the major assets reorganization accomplished in March 2010, the Company realized effective integration of such two major business sectors as pharmaceutical manufacturing and distribution. Hence the Company has become the only large pharmaceutical group holding a leading position in both manufacturing and distribution business in China. The Company’s pharmaceutical industrial sector comprises the R&D and manufacturing; and the pharmaceutical distribution sector comprises distribution and retail.

In 2013, the Company’s main business revenue amounts up to RMB 78.223 billion yuan, including RMB 10.709 billion yuan of pharmaceutical Manufacturing revenue, RMB 68.010 billion yuan of pharmaceutical distribution revenue and RMB 2.992 billion yuan of pharmaceutical retail revenue. (The data of sub-business sectors are those prior to the consolidation and offset)

4. Please outline the characteristics of the Company’s pharmaceutical business.

The Company’s pharmaceutical business mainly covers chemical and biological drugs, modern Chinese medicines and other healthcare products, and has many core subordinate companies such as Shanghai Sine Pharmaceutical Laboratories Co., Ltd., Shanghai No.1Biochemical and Pharmaceutical Co., Ltd., Shanghai New Asiatic Pharmaceutical Co., Ltd., Changzhou Pharmaceutical Co., Ltd., Shanghai Zhongxi Sunve Pharmaceutical Co., Ltd., Shanghai Traditional Chinese Medicine Co.,Ltd., Chiatai Qingchunbao Pharmaceutical Co., Ltd., Qingdao Growful Pharmaceutical Co., Ltd. The Company’s products focus on such five major therapeutic areas as cardiovascular system, digestive tract and metabolism, central nervous system, systemic infection as well as oncology and immunoregulation. In addition, the Company owns multiple famous trademarks of China, including Sine, Leishi, Longhu, Qingchunbao, Huqingyutang, Cangsong, Growful and Shenxiang.

The Company holds about 2,695 approval documents for drug production and has implemented the key product focus strategy and actively adjusted the product portfolio in recent years and at present, importance is attached to the development of 64 key drug products. Thanks to such efforts, the overall gross margin of the Company’s pharmaceutical business (48.07% in the Annual Report of 2013), the percentage held by the key products in the pharmaceutical business revenue (59.69% in the Annual Report of 2013) and the number of the products with the sales volume exceeding RMB 100 million yuan among the key products (21 in the Annual Report of 2013) grow up gradually.

5. Please outline the characteristics of the Company’s Distribution Business.

The Company provides distribution, warehousing, logistics and other value-added pharmaceutical supply chain solutions as well as relevant services to pharmaceutical manufacturers and dealers, including hospitals, distributors and retail pharmacies.

Setting the subordinate companies, including Shanghai Pharmaceutical Distribution Holding Co. ,Ltd., SPH Keyuan Xinhai Pharmaceutical Co., Ltd. and Guang Zhou Z.S.Y Pharmaceutical Co., Ltd., as a platform, efforts have been made to strategically cover such three key areas as East China, North China and South China (the sales volumes as of East China, North China and South China accounting for 67.67%, 23.73% and 6.00% respectively as per the Annual Report of 2013), with a nationwide distribution network having been built up.

Of the Company’s distribution business revenue, 53.03% come from high-end pharmaceutical products. In addition, the Company is dedicated to the direct distribution to hospitals as well as other medical institutions, including community medical centers and clinics, with the net sales accounting for 59.44%. The Company also actively promotes business model innovation, to attain strategic advantages by differentiated strategic positioning and enhance the profitability and terminal control capability of distribution business, with the new business, including vaccines, high-end consumables, DTP and SPD, appearing to enjoy rapid expansion.

 

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