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A letter from Chairman Zhu Baoguo to the shareholders
Release time:
2021-03-24
Dear shareholders:
In 2020, the COVID-19 pandemic ravaged the world, affecting both domestic and international markets to varying degrees. At the same time, China continued to deepen the reform of its medical and health system, and the relevant policy and regulatory framework is being further revised and improved. In this challenging yet opportunity-filled industry backdrop, our group found opportunities in new "crises," overcame difficulties, and moved forward steadily. Through the hard work of all employees, we further achieved high-quality sustainable development and successfully completed our annual operational goals.
This year, the company reshaped its corporate Culture values, with the mission of "putting patient quality of life first" and adhering to the vision of "being a leader in the pharmaceutical industry." We consistently maintained the development tone of "starting anew from scratch," focusing on innovative pharmaceuticals, continuously strengthening the advantages of innovative drugs and high-barrier complex formulation platforms, striving to break through higher growth barriers, and working hard to achieve high-quality corporate development. Meanwhile, after the outbreak of COVID-19, the group united as one, standing shoulder to shoulder with frontline medical workers, responding quickly and taking action. We donated cash and medicines worth over 16 million RMB to the Zhuhai Red Cross and other locations. Additionally, during the pandemic, the group did not stop its targeted poverty alleviation efforts for chronic diseases. Currently, the group has launched chronic disease poverty alleviation projects in eleven counties and one township across six provinces, including Gansu, Sichuan, Shanxi, Jilin, Tibet, and Henan, helping many impoverished families escape the troubles of illness and lighting a beacon of hope for economically disadvantaged families with the spirit of Healthy China.
2020 Review
In 2020, the group achieved operating revenue of 10,520.41 million RMB, a year-on-year increase of 12.10%; achieved net profit of 2,131.33 million RMB, a year-on-year increase of 45.82%; achieved net profit attributable to the shareholders of the company of 1,714.91 million RMB, a year-on-year increase of 31.63%; excluding non-recurring gains and losses, the net profit attributable to the shareholders of the company from the main business in 2020 was 1,431.55 million RMB, a year-on-year increase of 20.14%.
Based on the group's operating performance and overall financial situation in 2020, the board of directors recommends a profit distribution plan for the group in 2020: based on the total share capital determined by the equity registration date for the implementation of the 2020 profit distribution plan (excluding the number of shares repurchased but not yet canceled), it is expected that on June 25, 2021, a cash dividend of 12.50 RMB (including tax) will be distributed to all shareholders for every 10 shares. No bonus shares will be issued, and no capital reserve will be converted into share capital. The 2020 profit distribution plan is subject to approval at the company's 2020 annual general meeting.
In 2020, the group's key products in various business segments continued to perform well. The sales of the main product, injectable Esomeprazole Sodium, saw a rapid and significant year-on-year increase, while the sales of injectable Leuprolide Acetate microspheres, Paliperidone Hydrochloride tablets, and Fluvoxamine Maleate tablets also achieved sustained significant growth year-on-year. Additionally, the main product of traditional Chinese medicine, antiviral granules, saw a substantial year-on-year increase in sales due to the pandemic. Furthermore, the new coronavirus antibody detection reagent products achieved new sales, allowing the company's overall performance to steadily grow despite the impact of COVID-19. By the end of 2020, two COVID-19 testing products received EU CE certification, further expanding the supply of COVID-19 virus detection reagents and enabling the group’s products to better meet global pandemic prevention needs.
Currently, the group has entered a new stage of innovation-driven development. The innovative drug Esomeprazole series products and high-barrier complex formulation injectable Leuprolide Acetate microspheres continue to grow rapidly, further increasing their contribution to the group's revenue and profits, becoming a powerful engine for the group's rapid development. Additionally, the varieties and businesses from the biopharmaceutical and microsphere platforms in the group's R&D pipeline are injecting new vitality into our operational development.
Our biopharmaceutical R&D pipeline involves new antibodies, multi-specific antibodies, and recombinant protein drugs in fields such as oncology, reproductive health, and immune diseases. We are also continuously advancing the construction of ADC technology platforms and new CAR-T technology platforms, closely collaborating with domestic large-molecule biopharmaceutical R&D companies, top international scientists, cutting-edge cell therapy companies in the U.S., and the Institute of Biophysics of the Chinese Academy of Sciences. Several products under research are accelerating their clinical advancement. Additionally, for the high-barrier complex formulation platform, the company will continue to expand its leading advantages in innovative R&D in the domestic microsphere field, with a series of rich research varieties being laid out, including several high-sales-potential blockbuster varieties.
R&D innovation has always been the main channel for sustainable high-quality development. We continue to promote product innovation and upgrading, focusing on unmet clinical needs, concentrating on innovative drugs and high-barrier complex formulations, and continuously strengthening the innovative R&D and operational layout of products in the fields of mental health, oncology, and immunology based on our existing advantages in assisted reproduction and gastrointestinal fields. In 2020, injectable Esomeprazole Sodium was included in the "Thirteenth Five-Year Plan for China's Pharmaceutical Science and Technology Landmark Achievements"; injectable Triptorelin Acetate microspheres (1-month sustained release) and recombinant humanized anti-human IL-6R monoclonal antibody injection made significant clinical progress; injectable Aripiprazole microspheres (1-month sustained release), injectable Octreotide Acetate microspheres (1-month sustained release), and recombinant anti-human IL-17A/F humanized monoclonal antibody injection obtained clinical approval; Amlodipine Besylate capsules and Tinidazole tablets passed consistency evaluation. The breakthrough progress achieved in the R&D of these key varieties has accumulated valuable experience for advancing the R&D and registration of other varieties and further consolidated the company's position as a leading innovative pharmaceutical enterprise.
While continuously strengthening independent innovation, we are also actively expanding external cooperation, increasing strategic cooperation with high-end enterprises and institutions in the industry, and continuously focusing on cutting-edge technologies. We comprehensively sort out available resources, striving to build a first-class international business team, focusing on core products, and developing innovative business cooperation models in key global market areas to accelerate the promotion of the group's international industrial layout.
In terms of sales, the marketing team actively implements sales deployment, continuously increasing evidence-based marketing and academic marketing efforts: in the second half of 2020, the sales of prescription drug varieties significantly recovered. Additionally, by adopting innovative marketing concepts and promoting precise online and offline marketing, the market share of OTC varieties such as antiviral granules has greatly increased; the competitiveness and market share of raw material drug products in overseas markets have further improved, with several products achieving the number one global market share, and establishing long-term strategic partnerships with globally renowned companies such as Pfizer, Teva, Becton Dickinson, and Merck, being recognized as a high-quality supplier in the international market.
In terms of strategic development, to further focus on the innovative pharmaceutical main business and enhance the comprehensive competitiveness of the company's holding subsidiary, LIZHU Reagents, the company's shareholders' meeting approved the spin-off of LIZHU Reagents to be listed on the Shenzhen Stock Exchange's Growth Enterprise Market at the end of 2020. LIZHU Reagents completed the filing for guidance with the Guangdong Securities Regulatory Bureau in November 2020 and submitted the first interim guidance report in February 2021. Additionally, in January 2021, the company's shareholders' meeting approved the restructuring and reform of the equity structure of the platform company in the biopharmaceutical field, further optimizing the equity structure of the platform company.
For many years, while focusing on our own business, we have always maintained a corporate culture of growing together with employees, providing every employee with opportunities for sustainable development. The group, through a diversified training system and a comprehensive compensation and benefits mechanism, not only provides employees with a broad stage to showcase their talents but also continuously improves the working environment for employees, offering competitive compensation and benefits and a diversified development platform within the industry.
Future Outlook
In 2021, we will continue to closely monitor the global pandemic dynamics to ensure that production and business activities proceed smoothly and orderly. At the same time, we will apply new technologies, new models, and new thinking in various fields of business operations, digitizing and intelligently upgrading management to accelerate adaptation to the new trends of the constantly changing market and economic environment. At the beginning of 2021, a joint venture company (Henan Health Yuan Biomedical Research Institute Co., Ltd.) established by our subsidiary and Health Yuan's subsidiary signed a strategic cooperation agreement with Tencent Quantum Laboratory. We will work with Tencent to jointly promote the application of quantum computing + artificial intelligence in the fields of microbial synthetic biology research and related drug research, contributing to the development and progress of pharmaceutical research and development technology.
In the post-pandemic era, we will always adhere to the mission of "patient quality of life first" and the vision of "being a leader in the pharmaceutical industry," taking unmet clinical needs as the starting point for innovative research and development, focusing on the main business of innovative pharmaceuticals, and further strengthening Lizhu's leading advantages in innovative drugs and high-barrier complex formulation platforms. We will increase investment in technological innovation and management innovation, enhance the company's digitalization and intelligence level, pay attention to environmental protection, and continuously invest funds to improve processes and update equipment to achieve energy conservation and emission reduction goals. At the same time, we will pay more attention to social responsibility, actively participate in charitable activities, adhere to health poverty alleviation and industrial assistance, and give back to society with practical actions.
At the beginning of this year, General Secretary Xi Jinping called on the people of the whole country to bravely be pioneers, willingly be the working cattle, and strive to be the old yellow cattle in the new development stage. Every employee of our company should fully understand the spirit of the General Secretary's speech, always follow the Party, live up to the expectations of the times, practice the core values of the enterprise, solidly do all the work, and strive to continuously advance breakthroughs towards deeper innovation and higher quality development!
Here, on behalf of the company's board of directors, I would like to express my sincere gratitude to all shareholders, all employees of the group, and partners for their long-term care and support for the group!
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