GP (HK) Announces 2020 Interim Results Profit Attributable to Owners of the Company Rapidly Increases 31.4% to HK$718.5 million  With A Focus on Global Expansion and Self-Development Seven Investment, M&A and Cooperation Projects Progress Steadily

GP (HK) Announces 2020 Interim Results Profit Attributable to Owners of the Company Rapidly Increases 31.4% to HK$718.5 million With A Focus on Global Expansion and Self-Development Seven Investment, M&A and Cooperation Projects Progress Steadily

Results Highlights:

  • During the Period, the profit attributable to owners of the Company amounted to approximately HK$718.5 million, representing a significant increase of approximately 31.4% as compared with same period in 2019;
  • The Group’s core non-prescription eye drops of “Rui Zhu” have achieved rapid growth in both e-commerce platforms and retail pharmacy sales. Revenue for the Period was approximately RMB93.5 million, representing a significant increase of approximately 34.2% as compared with same period in 2019;
  • The Group highly emphasized on product research and innovation. At present, the Group has sufficient R&D pipelines comprised of approximately 74 projects under research, and achieved fruitful R&D progress during the Period, obtained 1 medical device registration certificate and obtained 3 consistency evaluation approvals;
  • The Group focused on “precise intervention and tumor immunology field” and “anti-viral and anti-infection field”, strengthening its strategic planning in fields with high entry barrier, strong competitiveness and sustainable growth;
  • During the Period, the Group continued to implement the development strategy of “self-development + global expansion”, and carried out seven investment, M&A and cooperation projects. In the future, the Group will further explore high-quality innovative projects around the world to expand the Group’s product pipeline and enhance the Group’s comprehensive strengths, and put vigorous efforts in transformation towards innovation and internationalization, so as to continuously solidify its leading position in the fields of comparative advantages.

(August 10, 2020, Hong Kong) China Grand Pharmaceutical and Healthcare Holdings Limited (“GP (HK)” or the “Company”, stock code: 00512) is pleased to announce the unaudited interim results for six months ended 30 June 2020 (the “Period” or the “First Half of 2020”) of the Company and its subsidiaries (collectively the “Group”).

During the Period, the Group recorded revenue of approximately HK$3,255.8 million (for the same period of 2019: HK$3,587.1 million). The Group has been hedging the pressure on sales income caused by the epidemic via continuous optimization of profit structure and focusing on high-margin products such as barrier products. During the Period, the Group’s gross profit margin was approximately 62.7%, which was comparable to the gross profit margin for the same period of 2019. The profit attributable to owners of the Company amounted to approximately HK$718.5 million, representing a significant increase of approximately 31.4% as compared for the same period of 2019. The profit for the Period attributable to owners of the Company Group increased by approximately 38.3%, since the unrealized gain dropped as a result of the depreciation of exchange rate excluding the effect of changes in exchange rate during the Period.

Product Performance

Pharmaceutical Preparations and Medical Devices

Pharmaceutical products and medical devices are currently the major sources of profit contribution of the Group.  Major products under this category include respiratory, ophthalmic and ENT medicines, cerebro-cardiovascular emergency medicines and medical devices. For the six months ended 30 June 2020, revenue from pharmaceutical products and medical devices was approximately RMB1,902.0 million (for the same period of 2019: RMB1,998.8 million). The revenue from respiratory and ENT medicines and devices was approximately RMB1,040.1 million, representing a decrease of approximately 11.3% as compared with same period in 2019, which was mainly attributable to certain degree of impact during the epidemic on the sales of respiratory and ENT products, in particular prescription medicines, of which: (i) During the Period, the revenue from ophthalmic products of the Group was approximately RMB353.7 million, which was similar to the revenue for the same period of 2019. Revenue of the core non-prescription eye drops “Rui Zhu” was approximately RMB93.5 million, representing a significant increase of approximately 34.2% as compared with same period in 2019; (ii) During the period, the revenue from respiratory and ENT products of the Group was approximately RMB686.4 million (for the same period of 2019: RMB817.7 million). Besides, the revenue of the Group’s cerebro-cardiovascular medicines was approximately RMB665.1 million, and increased by approximately 2.2% as compared with same period in 2019.

Biotechnology Products and Nutritional Products

The core products of the bio-technology products and nutritional products include Taurine, amino acid products, bio-pesticides, bio-feed additives and steroid products, etc. During the Period, the revenue of the bio-technology products and nutritional products was approximately RMB697.7 million (for the same period of 2019: approximately RMB747.0 million). By virtue of the business expansion strategy of international business and healthcare business, the revenue of amino acid products increased by approximately 13.0% to approximately RMB286.8 million.

Specialized Pharmaceutical Ingredients and Other Products

Specialized pharmaceutical ingredients and other products are the relatively stable segment among the product segments of the Group. The Group has always been proactively investing to improve product technology and product quality, reforming the production technology to increase efficiency, and adjusting the product matrix to enhance market competitiveness and improve economic efficiency. However, subject to the overall decline in the pharmaceutical industry owing to the epidemic, the relevant revenue of this segment decreased slightly by approximately 2.0% to approximately RMB 350.3 million during the Period.

Innovation Planning

The Group is committed to the development of innovative products in the therapeutic areas including precise intervention, tumor immunology, antiviral and anti-infection, respiratory, ophthalmic and ENT, cerebro-cardiovascular emergency. In the field of precise intervention, the Group has built its global “precision diagnostics + treatment” strategic platform integrating “vascular, neurological and oncological”, which consists of vascular imaging diagnostics of Canada based Conavi Medical Inc., vascular intervention of Germany based Cardionovum GmbH (“Cardionovum”) and neurological intervention product new stent retriever of Nanjing Kanite Medical Technology Co., Ltd.* (南京凱尼特醫療科技有限公司, “Nanjing Kanite”) as well as tumor intervention products including SIR-Spheres® Y-90 resin microsphere of Australia based Sirtex Medical Pty Ltd (“Sirtex”) and TAVO™ of United States based OncoSec Medical Incorporated (“OncoSec”), gradually optimizing its strategic planning of "Treating the heart and brain with the same therapeutic method ". In the field of tumor immunology, the Group also introduced the mRNA production technology and obtained global exclusive rights to innovative oncolytic virus products in the first half of 2020, with a view to providing a new clinical method for tumor treatment.

The field of anti-virus and anti-infection is also one of the key focus areas of the Group. The current R&D pipeline includes HIP project and new drug APAD for the treatment of sepsis, and the new drug for the treatment of parainfluenza. In the field of ophthalmology and respiratory, the Group has three innovative products in the late clinical stage for the treatment of dry eye disease, pterygium and allergic rhinitis. At present, the Group has sufficient R&D pipelines comprised of approximately 74 projects under research. And the Group has achieved fruitful R&D progress during the Period, obtained 1 medical device registration certificate and obtained 3 consistency evaluation approvals.

The Group’s International R&D Centre is about to be settled in Optics Valley of China, Wuhan, and together with overseas companies including Australian based Sirtex and Grand Medical Pty Ltd., United States based OncoSec and Germany based Cardionovum, the Group’s R&D centres around the globe have begun to take shape. The Group and its associates have more than 480 R&D personnel, including over 200 persons with master's or doctorate degrees, as well as over 30 prestige scientists worldwide. The composition of R&D team is diverse, including outstanding local talents with plentiful empirical experience and well-known scientists at home and abroad as well as professionals who have worked in large-scale overseas multinational pharmaceutical enterprises for years.

During the Period, the Group has made significant investments in pre-clinical research, clinical trials and drug registration of its pipeline projects, and reached agreements with a number of companies for obtaining the rights of R&D, manufacturing and commercialization of different products and for the consolidation of further cooperation, with a total investment amount of over RMB900 million.

Investment and M&A

In the first half of 2020, the Group continued to implement the development strategy of “self-development + global expansion”, further exploring high-quality innovative projects around the world to expand the Group’s product pipeline and enhance the Group’s comprehensive strengths, and putting vigorous efforts in transformation towards innovation and internationalization. On the one hand, the Group has gained innovative ophthalmic drugs by relying on the existing advantageous areas such as respiratory, ophthalmic and ENT. On the other hand, with a focus on the two major directions of “precise intervention and tumor immunology field” and “anti-viral and anti-infection field”, the Group has further explored in tumor immunology and neurological intervention, and at the same time obtained new sepsis drug to further enrich the product line of anti-infection field.

In March 2020, the Group entered into a technology transfer agreement with AnTi New Bio-technology Limited to obtain the development and commercialization rights of a world-wide first developed new drug APAD for Sepsis. In April 2020, the Group entered into a product licensing agreement with Cloudbreak Bio-Pharmaceutical Science and Technology (Guangzhou) Co., Ltd. (“Cloudbreak”) to obtain an exclusive production (including technology transfer) and commercialization right in the Greater China Region for a worldwide innovative product CBT-001 developed by Cloudbreak, which further enriched the product pipeline of innovative drugs with high barrier to entry in such sector. In May 2020, the Group entered into an equity investment agreement with eTheRNA to make an equity investment of EUR9 million in eTheRNA Immunotherapies NV (“eTheRNA”), and the Group will obtain approximately 12% of the preferred series B shares of eTheRNA and exclusive strategic cooperation for mRNA platform. The expansion of the mRNA vaccine platform technology may further optimize the Group’s planning in the fields of tumor immunotherapy and infectious disease treatment. In June 2020, the Group entered into a subscription agreement to invest in CNCB Grand Healthcare Investment Fund LP, which will be able to share the Group’s R&D and financial risks in investments of world’s leading pharmaceutical companies and pharmaceutical device manufacturers, while further expanding the scope of development and enhancement of innovative projects. In July 2020, the Group entered into an equity investment agreement with Shanghai Revolmmune Therapeutics Biotechnology Limited to obtain the licensing cooperation of world-wide innovative Vesicuar Stomatitis Virus product, which further strengthened the Group’s presence in the field of tumor immunology. In July 2020, the Group committed to invest in Nanjing Chuangyi Doyen Equity Investment Partnership (Limited Partnership)* (南京創熠東銀股權投資合夥企業(有限合夥), “Nanjing Fund”). In July 2020, the Group, together with Nanjing Fund and Shanghai Hongsheng Enterprise Management Partnership (Limited Partnership) subscribed and acquired in stages Nanjing Kainet (南京凱尼特). The Group will obtain medical devices in five areas of neurointervention including the third-generation thrombotic stent and its ancillary products for the treatment of ischemic stroke. The Group will expand its product pipeline in precise intervention treatment and build an integrated platform for the R & D, production and sales of medical devices in cardio-cerebrovascular intervention therapy.

The Board of China Grand Pharmaceutical and Healthcare Holdings Limited, commented: “In the first half of 2020, the pandemic of COVID-19 posed huge challenges to the domestic medical system but also played a significant role in promoting the industry consolidation in the domestic healthcare sector. With the implementation of a series of favorable policies for industry development and financing environment, the Group will follow industry policies, grasp the new opportunities arising from the reform of the medical industry, consolidate the existing business segments, and continuously enriching product line with high entry barrier. The Group will sticks to stressing on the extensive development of R&D platform, increase the investment in R&D, recruit international professionals, introduce international R&D platform and high-entry-barrier products, and broaden revenue sources through multi-channel expansion to strengthen competitive advantages and improve comprehensive strength in international markets, thus to benefit more patients and earn higher returns for shareholders.”