Huadong Medicine Co., Ltd.
2020 Annual Report
April 2021
To the shareholders
In2020, HuadongMedicineencounteredunprecedentedchallenges,including
COVID-19pandemicimpactontheentiremanufacturingoperation,theunsuccessfulGPOparticipationofAcarboseproducts,aswellas theimpactofaseriesofsubsequentpoliciessuchasthe GPOprocessandNationalDrugReimbursementList(NDRL)pricenegotiations.
Nevertheless,weacknowledgedthatHuadongovercamethesechallenges andsuccessfully
metitsfullyearoperational&businesstargets.Althoughthe Company’s totalrevenuewas
slightlydelclinedyearonyearwhileprofitgrowthhadbeensqueezed,thePharmaceutical
Industrybusinesssectormaintaineditsgrowth,whilebuckingmarkettrends.Acarbosetabletsmaintaineditsmarketshare andcontinuedto increase itsshareoftheex-hospitalandretail
markets.Thisachievementwasreallyahard-won!
HuadongMedicine’s R&Dstrategyhasalwaysadheredtothe corporatephilosophyofbeing“Devoted toscience,Dedicatedtopatients”,with “clinicalvalue,healthcareeconomicalvalueandcommercialvalue”askeyfocuses.Ithas establishedapipelineofinnovative
productsinthefieldofoncology, immunologyandendocrinology.ThroughreconstructionofinnovativedrugR&Dfunctions,the Company’s R&Dcapabilityhasbeensignificantly
strengthened.TheINDapplicationinChinaforanin-licensedADCproductwas completedwithin 100days andhasalreadyobtainedCTAapprovalfromCDE.Theexcellentexecutioncapabilityofthe R&Dteamhasunderpinnedourconfidenceinthe longtermtransformationandgrowthoftheCompany’sinnovativedrugbusiness.IntheTAofdiabetes,the Companycontinues tomonitorcutting-edge technologiesandinnovativeproductpipelineglobally,and
willcontinueenrichingitsproductportfolio.TheCompanyhasalreadyparticipatedand
investedinanumberofdomesticandinternationalbiotechcompanieswithleading
technologies.Throughestablishingdifferentiatedpeptideinnovationtechnologyplatform,
autoimmunedisease antibodytechnologyplatform,microbialfermentationcytotoxin
technologyplatformandinnovative linker technologyplatform,aswellasmutuallybeneficialcollaborations, HuadongMedicineisbuildingandimprovingitspharmaceuticalresearchanddevelopmentecosystem.
Huadongcommercialdistributionbusinesshasbeenadheringtothephilosophyof “caringtheworldwithsincerity,integrity,persistenceandbeingpragmatic”, transformingfromabasicdistributortoanintegratedserviceproviderwithgreaterindustryexpertise.The Company’s
coldchainbusinessispositionedas thewhole life-cycleprecisionmanagementandcontrolforbiologicalspecialtydrugs.Ithas continuouslystrengthenedthecompetitive advantageofthecoldchaincapabilityanddriventhehigh-qualitydevelopmentofdigitalintelligentsupply
chain.TheCompanywillvigorouslyexpande-commercebusiness,establishanew “online
offlineinteraction” growthmodel, andactivelyexplore thenewhealthcareservicesbusinessof“internet+ chronicdiseasemanagement”.
HuadongMedicinehasbegunexpandinginthefieldofaestheticswhenChina’saestheticsindustryisintheascendant. Wehavewitnessedaestheticsproductstransitioningfrom
discretionaryconsumerproductstonecessitiesandthe industryisabouttoexperiencea longtermhigh growthphase. Thisstrengthenedourcommitmentto expandinthefieldofaesthetics.Thereare stillsignificantupside inaestheticsoverthe longterm. Goingforward,wewill
continuefollowingthestrategyof “globaloperationalpositioning, dual-cyclebusiness
development”,make Chinaanimportantmarketforaestheticsandbring"first-in-class",
high-endinternationalproducts toChinaovertime. Wewillleverage theCompany’s
establishedaestheticsdistributioncapabilitiesinChinaandthe fastgrowthoftheaesthetics
industry,tosupportrapidavailabilityofhighqualityinternationalproductportfolioin Chinaandprovidebeautyseekerspersonalisedanddifferentiatedaestheticsproductportfolios.Thus,anewmodelofdomestic andinternationaldual-cyclejointgrowthandmutualpromotionisformed.
2021willbeanothersignificantyearfor HuadongMedicine’s strategic transformation.As
GPOpoliciesandpricereductionmaycontinueto impacttheCompany’soveralloperation,HuadongMedicinewillalsoface thestrongestpressureonitsbusiness growthinhistory.
Nevertheless,weconstantlyremindourselves:don’twastea goodcrisis.ThecurrentsituationofChina’spharmaceuticalmarketrepresents arareopportunityfor HuadongMedicineto
transformintoan innovative companyandexpand globally.
Expansionininnovativepharmaceuticalbusinessremainsfirmlyas themainthemeof
HuadongMedicine.Aesthetics, asacore strategicfocusofthe Company’shealthcarebusiness,marksthebeginningofthe Company’s globalizationstrategy.Wearecommittedto continuestrategicallypositioningacrossthe globalpharmaceuticalandhealthcarevaluechain,and
activelyintegrateintoglobalpharmaceuticalinnovationcollaborationsbystrengtheningourowninnovativedrugR&Dcapabilities andkeyadvantages.
Thisis aneraofsurvivalofthefittestandintheendallsandswillberemovedandonlythegoldleftshinning.Fromnowontotheforeseeablefuture, theonlycertaintyis thatwewill
continueexperiencingvariousuncertaintiescausedbyinfrastructuralchangesin theindustry.HuadongMedicinewillremaincommittedto its co
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