Profit Attributable to Owners of the Company Rapidly Increase 61.4% to HK$1,150.9 million

Five Major Investment and Acquisition Projects Boost Expansion

Independent R&D and International Expansion Develop Synergistically

Results Highlights:

• The Group performed strongly in its 2019 Annual Results, with its revenue increased by 10.6% to HK$6,590.6 million as compared with same period of 2018, among which the pharmaceutical preparations and medical devices increased 24.3% as compared with the same period last year. The profit for the Year attributable to owners of the Company for the Year increased 61.4% to HK$1,150.9 million as compared with same period of 2018.
• During the Year, the Group kept on strengthening the corporate strategy in promoting products with high-entry barriers, products with brands and products integration of raw materials and preparations, which brought out an obvious attainment of operation. Throughout years of efforts, the operating profit of the Group recorded continuous growth and thus the Board proposed a final dividend of HK$0.096 per share.
• The major product Qie Nuo of Beijing Jiu He Pharmaceutical Limited benefited from the effort of developing primary and retail markets by the newly established non-prescription drug sales team of the Group and also the market recognition of pediatric formulations, and thus the revenue during the period was significantly up to approximately RMB909.8 million.
• During the Year, the Group conducted a total of five major investment and acquisition activities. The Group will further optimize product structure and global layout, strengthen existing reserve of innovative products in core therapeutic areas, and accelerate the improvement in research and development strength and realize global presence, to promote core competitiveness and profitability, and become one of the leading enterprises in the Chinese pharmaceutical market.
• An innovative coronary intervention product “Paclitaxel Releasing Coronary Balloon Dilatation Catheter” (the “RESTORE DEB”), which is the first product in China market being able to treat 2 indications (in-stent restenosis (“ISR”) and small vessel disease (“SVD”), being co-developed by the Group and Cardionovum GmbH, an associated company of the Group in Germany, was recently granted the medical device registration certificate by National Medical Products Administration of PRC. The Group will be responsible for the promotion and distribution of such products in China.
• During the Year, the Group became one of the second batch of centralized production base construction units for minority-variety drug (inadequate drugs) approved by the Consumer Goods Industry Department of the Ministry of Industry and Information Technology of China. The Group will receive strong support from the Ministry of Industry and Information Technology and the National Development and Reform Commission in terms of production technology transformation, drug quality and efficacy consistency evaluation, and the relevant products will also be given priority review and approval from the food and drug supervision agencies. Relevant supportive policies not only further enhance the comprehensive strength of the Group, but also provide guarantee for the growth of minority-variety drug performance.

(March 27, 2020, Hong Kong) China Grand Pharmaceutical and Healthcare Holdings Limited (“GP (HK)” or the “Company”, stock code: 00512) is pleased to announce the unaudited consolidated annual results for the year ended 31 December 2019 (the “2019” or the “Year”) of the Company and its subsidiaries (collectively the “Group”).

During the Year, the Group recorded revenue of approximately HK$6,590.6 million, an increase of  approximately 10.6% as compared with the same period of 2018. The increase in revenue is mainly due to the Group vigorously developing specialized pharmaceutical products with large market and high-entry barriers, exclusive or protected pharmaceutical products and branded pharmaceutical products, especially the pharmaceutical preparation category recorded significant growth. The Group’s average gross profit margin increase 8.2 percentage points to approximately 61.3% as compared with the same period of 2018. In 2019, benefited from the increment of revenue, gross profit, and the share of profit from associates (net) recorded approximately HK$130.3 million, the profit attributable to the owners of the Company was approximately HK$1,150.9 million with the increment of approximately 61.4% as compared with the same period of 2018. The Board proposed a final dividend of HK$0.096 per share.

Product Performance

Pharmaceutical Preparations and Medical Devices

Pharmaceutical preparations and medical devices are the major sources of profit of the Group. The core products include ENT medicines, cerebro-cardiovascular medicines and medical devices, etc. In 2019, the revenue amount of pharmaceutical preparations and medical devices was approximately RMB3,763.1 million with an increase of approximately 24.3% as compared with the same period of 2018. Among this segment, the revenue from ENT medicines and devices was approximately RMB2,179.1 million, which was increased by approximately 24.4% as compared with the same period of 2018. It was benefit from the substantial growth of the two major sub-divisions of the ENT field, in which: (i) in 2019, the revenue from the ophthalmic products was approximately RMB748.0 million, with an increment of approximately 15.3% as compared with the same period of 2018; (ii) in 2019, the revenue of the respiratory and ENT products of the Group was approximately RMB1,431.1 million, with an increment of approximately 29.8% as compared with the same period of 2018. In addition, the revenue of the Group’s cerebro-cardiovascular medicines was approximately RMB1,168.6 million, increased by approximately 38.3% as compared with the same period of 2018.

Bio-technology Products and Health Products

The core products of the bio-technology products and health products include Taurine, amino acid products, bio-pesticides, bio-feed additives and steroid products, etc. The revenue of the bio-technology products and health products for 2019 was approximately RMB1,372.5 million, increased by approximately RMB9.09 million as compared with the same period of 2018. As benefit from the exploration of international business, the revenue from the amino acid products increased by approximately 13.4% to approximately RMB488.5 million as compared with the same period of last year. The bio-pesticides and bio-feeding related products also recorded an increase of approximately 15.4%.

Specialized Pharmaceutical Raw Materials and Other Products

Specialized pharmaceutical raw materials and other products are the comparatively stable sector among the three core product sectors of the Group. To enhance the market competitiveness and improve the economic efficiency, the Group has always been investing in the improvement of the product technology and the product quality, reformation in the production technique to enhance the efficiency, and adjusting the product matrix. The revenue was also increased during the Year, and recorded an increase of approximately 6.0% to approximately RMB674.4 million as compared with last year.

Business Highlights

In 2019, the Group conducted a total of five major investment and acquisition activities, with an aim at further strengthening our existing reserve of innovative products in core therapeutic areas, accelerating the improvement in our research and development strength, and speeding up the realization of global presence, thus  providing driving force for the long-term development of the Group.

In February 2019, the Group entered into an exclusive license agreement with Swiss-based R&D company Glenmark Specialty S.A., thereby the Group being licensed to exclusively sell Ryaltrisin China for a period of 20 years, which will supplement the product offerings of the Group in ENT. In October 2019, the Group purchased 44% shares of OncoSec Medical Incorporated, and also acquired commercialization right of the TAVO™ (Tavokinogene Telseplasmid), the world’s first gene immunotherapy product, in China and other 38 Asian countries, further expanding the Group’s product pipeline in the anti-tumor field and accelerated our accession to the tumor immunotherapy market valuing more than RMB1 trillion. In November 2019, the Group entered into an exclusive licensing and co-development agreement with Griffith University in Australia, pursuant to which the Group obtained the global development and commercialization rights for the world-wide first developed product for the treatment of parainfluenza infection. The development of this product will fill the gap of treatment for parainfluenza infection in the market, and further enhance the Group’s capability of research, development and innovation and also improve its international presence. In December 2019, the Group entered into a tripartite agreement with Sirtex Technology Pty Ltd. and Australian National University, pursuant to which the Group was granted the license to the research & development cooperation related to HIP project, as well as the intellectual property rights related to the project, helping the Group to enter new significant markets in the fields of first aid and anti-infection. In December 2019, the Group entered a licensing agreement and a share subscription agreement with BRIM Biotechnology, Inc. (the “BRIM”), pursuant to which the Group obtained the development and commercialization rights in China of BRM421, an internationally first product used for the treatment of dry eye disease which is developed by the BRIM, and the Group acquires approximate 6% equity of BRIM at a price of NTD155.0 million, which will further enrich the product lines of innovative drugs with high entry barriers in the ophthalmic sector.

The Board of China Grand Pharmaceutical and Healthcare Holdings Limited, commented: “The Group will make full use of its self integrated advantages to continue to develop technical barrier and branded pharmaceutical products, by adhering to the two-wheel development strategies of independent R&D and mergers and acquisitions at home and abroad, we will continue to enrich the Group’s innovative product pipeline, consolidate and strengthen existing areas of strengths, and gradually establish a market leadership position.  Whilst we bring benefits to more patients, we also enhance the corporate market competitiveness and risk resilience, and bring considerable returns to shareholders and investors.”