Cr Resources Shuanghe: Other institutions investigated our company on August 26

On 2021-08-30, China Resources Shuanghe (600062) issued an announcement that the others were investigated on 2021-08-26, and this survey was received by Chairman Feng Yi, Director and President Yu Shunting, and Secretary of the Board of Directors and Vice President Fan Yanxi.

The main contents of this survey are:

The company briefed investors on the operating situation and financial situation in the half year of 2021. From January to June 2021, the company achieved a main business income of 4.6 billion yuan, an increase of 12.2% year-on-year; Achieved net profit (attributable to the parent company) of 600 million yuan, an increase of 7.3% year-on-year; Overall gross margin was 58.2%. The company's senior management focused on the company's operation and future development prospects, research and development strategies and epitaxial mergers and acquisitions and other issues to conduct in-depth exchanges and communication with investors, the specific situation is as follows: problems

1: How is the company's infusion business performing? What is the structural adjustment of the product? A: In the first half of 2021, the infusion business achieved revenue of 1.34 billion yuan, an increase of 18.4% year-on-year. Minutes of the 2021 interim results briefing meeting On August 26, 2021, the new crown pneumonia epidemic was significantly better than the same period last year, and the hospital diagnosis and treatment order was significantly restored compared with the same period, but due to the normalization of epidemic prevention and control, the grass-roots opening rate and the lack of hospitalization rate, the infusion industry as a whole has not yet recovered to the 2019 level, and the company's basic infusion sales are similar to those of competitors, and the market share is stable. The company put forward the strategic development plan of "one axis and two wings" for the infusion business, giving full play to the core capabilities of Shuanghe in the field of infusion, such as brand, scale and coverage, and creating a safety quality control platform that leads the industry standard; Based on safety and clinical convenience, the infusion technology and packaging material form are continuously upgraded, and the proportion of flexible packaging products such as BFS is continuously increased, and the proportion of flexible packaging infusion in basic infusion is maintained at about 60%; Accelerate the layout of nutritional and therapeutic infusions, form a product echelon, gradually expand production and sales, and improve the profitability of infusion business; Carry out extended services for hospital customers, assist them in improving management efficiency, and form a stable information exchange network and cooperative relationship. issue

2: Is there an advantage in the gross profit margin of the infusion business compared to competitors? What is the trend in market share? A: The company adheres to the strategic path of low cost and large scale, and improves efficiency by optimizing product structure, base integration and automation, and the overall cost continues to decline and the gross profit margin level continues to increase. The overall gross profit margin of infusion in the first half of the year was 54%, an increase of 3.76 percentage points year-on-year. In terms of sales, the infusion business has more than 2,000 commercial customers, terminals covering 31 provinces and cities across the country, maintaining a large share of the base market and continuing to open up blank markets, especially in Beijing, Anhui, Shaanxi, Hubei and other provinces have a high market share, during the reporting period, the above provinces achieved double-digit growth in sales, the overall market share remained stable. issue

3: What is the impact of centralized procurement on the company? What is the company's response? A: The policy of purchasing with volume has a greater impact on the entire pharmaceutical industry, for Shuanghe opportunities 2021 interim results briefing meeting minutes August 26, 2021 3 coexist with challenges, the company actively takes measures to cope with the normalization trend of procurement with quantity, make transformation adjustments, for the overall management of products at different stages after the procurement of volume, unified planning of the market, seize the market opportunities brought by volume procurement: for products to be included in the volume of procurement, actively participate in the bidding, there are currently 7 products selected in the country collection In the first half of the year, the collection of selected products to achieve sales volume, scale growth, the fourth batch of procurement with volume since May this year began to implement, Fusui Yue and Pregabalin capsules 2 products selected this centralized procurement, Fu Sui Yue revenue increased by 58% year-on-year, the newly listed prebalin capsule sales quickly increased; Concentrate on the varieties that have not entered the collection, explore the business model of characteristic chronic disease products with No. 0 and Sugar Shiping as the core, and clearly understand the operation mode of quantity procurement products represented by Fu Sui Yue, lead the professional management of chronic diseases at the county level, and drive the growth of chronic disease business; For products that have been affected by volume procurement, they will move to retail and OTC to seize the off-standard market. issue

4: What are the company's strategic measures to promote R&D innovation and transformation? How the company considers the construction of the R&D team and the construction of the organization Answer: In order to cope with the drastic changes in the policy of the pharmaceutical industry, the company has clarified the advanced path of R&D innovation, increased R&D investment and actively promoted innovation and transformation on the basis of existing product consistency evaluation and generic drug development. Generic drug research and development strengthens market value-oriented, focuses on key projects and varieties with market value, accelerates the research and project layout of high-value varieties, and provides support for innovation; In terms of innovation and transformation, we will gradually develop innovative drugs and biosimilar drugs, focus on building innovative technology platforms, including generic drugs with high technical barriers and differentiated generic drugs, and build the core driving force for business growth. The company established the Innovation Division in early 2021, following the concept of "science first, daring to be the first, perseverance, openness and inclusiveness", committed to applying cutting-edge science and technology to innovative drug development, and providing unmet clinical treatment needs (oncology, rare diseases, pediatrics) with a breakthrough 2021 interim results briefing meeting minutes on August 26, 2021. The Innovation Division has comprehensively promoted organizational construction, talent introduction, incentive mechanism innovation, etc., and hopes to actively explore business opportunities for the development of innovative drugs and biological drugs through the continuous adoption of flexible and diversified cooperation models. The company also established cooperative relations with a number of universities, in July and Ningbo University signed a contract to build a polypeptide innovative drug joint research institute and academician studio, will be through a series of projects to cooperate in the development of peptide innovative drug research, accelerate the company's strategic layout in the field of peptides, the company is currently negotiating with a number of universities to form a workstation, intends to use their advantages to quickly set up research and development projects. In July 2021, the company obtained an exclusive license from Novita in the United States for the development, production and commercialization of the new target Fascin protein inhibitor NP-G2-044 in Greater China (Chinese mainland, Hong Kong, Macao and Taiwan). Fascin protein inhibitor NP-G2-044 is a new small molecule compound developed by Novita in the United States, is the world's first small molecule inhibitor acting on Fascin protein, the previous study found that it can effectively inhibit Fascin protein thereby reducing tumor invasion and tumor metastasis, and can be used as an oral drug that potentially controls tumor metastasis in the future. At present, the compound has completed phase I clinical trials in the United States and is undergoing phase II clinical trials in the United States, which is expected to fill the gap in the field of tumor metastasis treatment as an oral drug that potentially controls tumor metastasis. The company plans to submit a clinical trial application to the State Food and Drug Administration of China at the end of this year or early next year. The company starts from the high-barrier technology platform, to the transformation of differentiated generic drug research and development, by the preparation research and development team and the newly invested Zhejiang Apis of Peptides research and development team to jointly build a polypeptide technology platform, with polypeptides as the core, focusing on the construction of solid phase synthesis and delivery technology two professional technical platforms. issue

5: What is the company's future investment and M&A direction? What areas will be mainly laid out? A: The company's epitaxial M&A work serves the company's strategy. The company focuses on innovation transformation and low cost, focusing on the general generic drug business, infusion business, differentiated drug business, and innovative drug business, and the minutes of the 2021 interim results briefing meeting on August 26, 2021, the five major business platforms actively carry out epitaxial mergers and acquisitions, focusing on innovative drugs, differentiated generic drugs, etc., to feed innovation with imitation and drive the future with innovation. The sources of funds for epitaxial M&A are mainly its own funds and financing. The company's M&A targets mainly come from the following aspects: First, through the mergers and acquisitions of existing mature companies, while supporting the scale, it has changed to cost reduction and efficiency increase, innovation and reform, and there are currently several projects in close contact; The second is to actively carry out BD sourcing in the fields of polypeptide, psychiatric/neurology, anti-tumor and other fields, and 2 projects have been signed in the first half of the year, and many projects are currently in the research and development pipeline; The third is the merger and acquisition of biosimilars, providing product support for the company in 3-5 years, focusing on the company's existing fields and anti-tumor, immunity and other fields.

The main business of CR Shuanghe: processing and manufacturing of large-volume injections (including multi-layer co-extrusion film infusion bags), small-volume injections (including anti-tumor, final sterilization, non-final sterilization), lyophilized powder injections (including penicillins), tablets (including cephalosporins), hard capsules, granules (including cephalosporins), rinse agents, soft capsules, aerosols, gels, coating agents (for external use), imported drug sub-packaging (hard capsules), biochemical APIs, traditional Chinese medicine extraction, psychotropic drugs (the specific production scope is as follows: The drug production license shall prevail; The drug production license is valid until December 3, 2025); Sales of the company's own products, machinery and electrical equipment; Technology development, technology transfer, technical services (except for projects without special approval); Production of pharmaceutical machinery and equipment (only for branch operations); Self-operated and agent of all kinds of import and export business of various commodities and technologies, except for commodities and technologies operated by the state limited by the company or prohibited from import and export; Operate import processing and "three to one supplement" business; Operate counter-marketing trade and entrepot trade. (Enterprises independently choose business projects and carry out business activities in accordance with law; Projects that require approval in accordance with the law shall carry out business activities in accordance with the approved content after approval by the relevant departments; It is not allowed to engage in business activities of projects prohibited or restricted by the national and municipal industrial policies. )

According to the 2021 interim report of China Resources Shuanghe, the company's main revenue was 4.63 billion yuan, up 11.64% year-on-year; the net profit attributable to the mother was 595 million yuan, up 7.28% year-on-year; the non-net profit was 558 million yuan, up 6.0% year-on-year; the debt ratio was 24.57%, the investment income was 2.5352 million yuan, the financial expenses were -14.3902 million yuan, and the gross profit margin was 58.14%.