2020A n n u a l R e s u l t s

All For Health Health For All

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Contents

Chapter III Business Highlights and Future Strategies

Chapter I Annual Performance Review

Chapter II Macro Economy and Industrial Policies

Q & A

2

Annual Performance

Review

3

The Business Achieved Sustainable Growth with The Growth Rate Above The Industry Average Level

Net Profit Attributable to Parent CompanyRevenue

Quarterly Accumulated Revenue Growth

Unit: RMB million

Note: The disclosed but unaudited figures for the first quarter and the firstthree quarters are prepared in accordance with the PRC accountingstandards, while the disclosed but unaudited semi-annual data which isprepared in accordance with Hong Kong Accounting Standards.

425,272.73

456,414.61

2019 2020

7.32%

6,252.54

7187.28

2019 2020

14.95%

8.83% 8.83%

Gross Margin

1.47%

1.57%

Net Profit Margin

95,179

201,665

312,688

425,272

94,400

203,765

327,610456,415

3Ms 6Ms 9Ms 12Ms

2019 2020

-0.82%

1.04%

4.77%

7.32%

Quarterly Accumulated Revenue Growth Ratio

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Main Profit Indicators

2020 2019 Change

Gross Margin 8.83% 8.83% 0

Selling Expenses Ratio 3.10% 2.95% +0.15P.P

Administrative Expenses Ratio 1.54% 1.63% -0.09P.P

Loss Ratio on Disposal of Financial Assets Measured at Amortised Cost 0.28% 0.46% -0.18P.P

Operating Margin 3.89% 3.79% +0.10P.P

Finance Costs Ratio 0.65% 0.74% -0.09P.P

Net Profit Margin 2.65% 2.50% +0.15P.P

Profit Margin Attributable to Owners of the Parent 1.57% 1.47% +0.1P.P

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Other Financial Indicators

Operating Indicators 2020 2019 Change

Trade receivables turnover days 107 98 +9

Inventory turnover days 39 36 +3

Trade payables turnover days 92 85 +7

Cash collection days 54 49 +5

Cash Flow Indicators

Net cash from operating activities (RMB million) 11,154.61 18,777.10 -7,622.49

Net cash from investing activities (RMB million) -2,202.76 -6,795.97 +4,593.21

Net cash from financing activities (RMB million) 2,025.85 -13,084.57 +15,110.42

Other Indicators

Closing gearing ratio 71.10% 71.49% -0.39P.P

Capital expenditure (RMB million) 4,585.24 4,867.89 -5.81%

EPS(RMB) 2.31 2.11 +9.48%

DPS (RMB) 0.69(Taxed） 0.6（Taxed） +15.00% 6

Constant Optimization of Business Structure

2015

2020

Net Profit Doubled

CAGR16.26%

Source: The figures of the revenue and net profit of the year disclosed in the annual report for that year.

Revenue Doubled

Unit: RMB million

CAGR14.98%

The 13th Five-Year Plan Came to A Successful Conclusion

227,069 258,388 277,717

344,526 425,273

456,415

2015 2016 2017 2018 2019 2020

5,696 6,892 7,868

9,404 10,620

12,097

2015 2016 2017 2018 2019 2020

94.13%

3.81%

2.06% PharmaceuticalDistributionRetailPharmacyOthers

74.18%

5.15%

19.04%1.63% Pharmaceutical

DistributionRetail Pharmacy

Medical Devices

Others

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Macro Economy and Industrial Policies

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Orderly Macroeconomic Recovery and Steady Recovery of Economic Growth

-6.8%

3.2%4.9%

6.5%

-8.0%-6.0%-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%

Q1 Q2 Q3 Q4

Year-on-year Growth Ratio of GDP for Each Quarter of 2020

Year-on-year Growth Ratio of GDP for Each Quarter of 2020

In 2020，China actively coordinated the prevention and control of the pandemic, promoted the resumption of work andproduction in an orderly manner and took a series of relief measures. Leveraging on its structural advantages and strongresilience, China’s economy became the only major economy in the world to achieve positive growth that year.In 2020, China’s GDP reached RMB101.6 trillion with continuous improvement in various economic indicators and steadyrecovery of the economic growth rate. The completion of the main objectives of economic and social development taskswas better than expected.

Source: National Bureau of Statistics 9

Medical Reform Policies Continued to Advance with The Advantages of The Leading Enterprises Emerging

In 2020, after the pandemic prevention and control became normalized, the pharmaceutical industry showed a significantrecovery with the rebound of China’s economy. The growth of the entire medical and health care industry continues tofaster than that of the macroeconomic. The continuous reform of the medical insurance system and the development ofinnovative technologies have brought new opportunities and challenges for the pharmaceutical industry.

Volume-based Procurement of Drug and high-value consumables

Negotiation for Medical Insurance Catalog Diagnosis Related Groups (DRGs)

• The market concentration has improved continuously and the competitive advantages of the leading enterprises have further emerged;

• Promote the channel reconstruction and service transformation of the distribution industry;

• The growing demand for innovative services have brought new opportunities and challenges.

• The health care industry has been transformed and upgraded;

• The competition across the industry has been gradually diversified. It became a new development trend in the industry to seek win-win cooperation in competition.

Innovative Technologies Contributed to Industry Growth

Medical Reform Policies Promoted The Industry Transformation

Internet+

Artificial intelligence

Internet + medicine + drug + insurance

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Business Highlights and Future Strategies

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The Group followed the trend of the transformation to flattened network and downward extension of channels broughtby the medical insurance reform, continued to cover the distribution network at all levels of medical institutions,enhanced its intensive operation capabilities, and actively undertook the market share of volume-based procurementrelated products，thereby promoting the continuous growth in the distribution segment.

Leading Position in Distribution Solidified, and Advantages in Network Emerged at A Faster Pace

医药分销业务收入增长情况

As of the end of 2020, the Group's pharmaceutical distribution business has continuously strengthened its leading advantages, and its regional competitiveness has emerged at a faster pace.

More than 500,000 terminals covered lower-tier market throughout provincial, municipal, and autonomous regional areas;

The proportion of direct sales business and the proportion of revenue derived from non-provincial capital cities continued to grow.

Unit: RMB million

337,316.63

348,294.38

2019 2020

3.25%

Revenue Growth of Pharmaceutical Distribution Business

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The transformation and upgrade of the distribution industry have further promoted the reconstruction of drug sales and distribution models with significant advantages of leading enterprises

Build Integrated Service Platforms, Adjust and Optimize The Product Structure

Under the environment of volume-based procurement policy, the Group’s position in the industry has been strengthened continuously

The acquisition rate of related varieties is still leading the industry

The market share and total distribution volume have increased significantly

The ability to obtain innovative drugs and medical devices products further emerged

Successfully Build Nationwide Integrated Marketing Service Platforms

Focus on The Adjustment and Optimization of Business Structure and Product Proportions

Strengthen its ability to undertake varieties under volume-based procurement and innovative drugs

Further enrich and optimize the product structure

Actively integrate existing nationwide network andbusiness resources, promote model innovation

Relying on the resources of upstream suppliers, theGroup has continued to develop marketing projectsfor innovative drugs in lower-tier market

Achieve horizontal derivation of business modeland service capabilities

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During the Reporting Period, the Group actively overcame the challenges posed by the outbreak of the pandemic andcontinued to promote the construction of the medical devices distribution network and the innovation of the businessmodel. At the year end, the sales revenue from the medical devices business increased rapidly, with the growth potentialof the medical devices segment emerging at a faster pace.

Medical Devices Business Grew Steadily and The Network Coverage Strengthened Continuously

Unit: RMB million

The volume-based procurement of high-value consumables was implemented, marking the transformation and reform of the medical devices industry entering the critical stage

The Group continued to improve its medical devices distribution network. During the Reporting Period, coverage over prefecture-level cities further increased to 76%

69,293.54

89,402.25

2019 2020

29.02%

Revenue Growth of The Medical Devices segment

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During the Reporting Period, the Group focused on promoting the innovation and upgrading of medical devices business models and supply chain service capabilities，continuously improving customer adhesion, expanding service models and driving rapid development of value-added business.

The Innovation and Upgrading of Service Capabilities and Rapid Development of Value-Added Services

Drug-device Synergic Development

Centralized Delivery

In-hospital Logistics Management

Value-Added Services and Technological Innovation of The Supply Chain

The number of centralized delivery projects and SPD projects amounted to 1,735

During the Reporting Period, centralized delivery and SPD projects grew rapidly, which demonstrated the strong strength of the Group in technological empowerment and technological innovation.

During the Reporting Period, the Group acquired preliminary production and manufacturing capabilities in the medical consumables category, with products sales quickly covering 31 major cities across the country, laying a solid foundation for the upstream extension of the medical devices segment.

Technological Empowerment

Business Synergy

Technological Innovation

Smart Logistics

Logistics Lean Management

Supply Chain Scenario Solution

Focus on The Development of Medical Device Manufacturing

729

1416216

319

2019 2020

SPD Projects Centralized Delivery Projects

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Continue to Improve Retail Network , and Further Promote Wholesale-Retail Integration

Growth of Retail Segment Business

14,803.90

19,803.29

24,164.34

2018 2019 2020

A Rapid Year-On-Year Increase in The Number of Retail Stores

Unit: RMB million

To align with the new development direction of the industry, the Group focused on implementing the developmentstrategies of “wholesale-retail integration” and “nation-wide integration” to continuously promote the high-qualitygrowth of the retail pharmacy segment. During the Reporting Period, the Group’s retail pharmacy business recordeda total revenue of RMB 24,164.34 million, representing a year-on-year increase of 22.02%.In 2020, the Group further optimized its network coverage retail pharmacy business through extended expansion and completed the merger and integration of retail business such as Chengda Fangyuan during the year, thereby strengthening its regional competitive advantage.

5,021

1,183

7,660

1,317

01,0002,0003,0004,0005,0006,0007,0008,0009,000

Guoda Pharmacies Professional Pharmacies

As of the end of 2019 As of the end of 2020

52.6%

11.3%

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During the Reporting Period, the Group’s retail pharmacy segment has comprehensively promoted the integrateddevelopment of online and offline businesses. The Group actively responded to medical insurance reform policies, andtook a series of measures to consolidate the development potential and further strengthen the competitiveness of theGroup's retail pharmacy business.

Coordinated Development Achieved Through Resource Integration and The Potential Consolidated Through Technological Innovation

Improve the convenient community service model, expand the service radius and enhance service adhesion for Consumer

Improve professional pharmacy service capabilities such as in-store consultation and medication guidance

Promote the continuous growth of specialized pharmacies, such as pharmacies for severe and chronic diseases, medical insurance unification pharmacies and DTP pharmacies

Promote the “Internet +” technology applications and explore model innovation and technology upgrade

Promote the rapid development of internet hospitals

Carry out in-depth cooperation with medical institutions at all levels and undertake online prescription circulation

Deepen the connection with the medical insurance unification account payment channel

Focus on the development of innovative cooperation projects with commercial insurance companies

Implement the development strategies of “wholesale-retail integration” and “nation-wide integration”

Continuously deepen the coordination and collaboration of national procurement and logistics resources

Offline Pharmacies

Resource Integration

Technological Innovation

Channel Expansion

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Continued to Improve Headquarters’ Support Capabilities and Further PromoteIntegrated Construction

Focus on planning for the transformation to “nation-wide integration”, continue to improve headquarters' governance capabilities, integrate superior resources of the pharmaceutical distribution and retail pharmacy segments and promote the balanced development of core businesses.

Continue to Optimize The Synergy of Business

As of the end of Reporting Period, the Group has completed the construction of cross-field multi-dimensional pharmaceutical industry service platforms, which including specialty drug service platform, marketing service platform and retail e-commerce platform, thereby achieving the extension of service models.

Construct Cross-Field Service Platforms

Further promote data integration and optimization, and employ innovative technologies to accelerate the transformation of the overall business process to flatness and refinement.

Strengthen various expenses supervision measures and promote the sharing of the financial system to continuously promote cost optimization. In 2020, the financial expenses ratio of the Group was 0.65%, representing a year-on-year decrease of 0.09 percentage point.

Further Promote Digital Transformation

Consolidate and Optimize The Cost Management and Control

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Actively Fulfilled The Corporate Mission and Effectively Enhanced The Industry Influence

In 2020, the pharmaceutical distribution companies at all levels within the Groupresponded quickly and successfully completed the procurement, storage and allocation ofprotective materials, treatment equipment, and anti-epidemic drugs, exemplifyingSinopharm’s corporate philosophy of “All for Health, Health for All”, and fully reflecting theGroup’s efficient network operation and collaboration capabilities.

The performances of the Group during the pandemic havebeen highly recognized by relevant state ministries andcommissions, and have also received commendations from theMedical Materials Safeguard Team of the State Council’s NovelCoronavirus Pneumonia Epidemic Joint Prevention andControl Mechanism, and the State-owned Assets Supervisionand Administration Commission, which enhanced the Group'scorporate image and industry influence.

Based on the anti-epidemic results, the Group established the irreplaceable position in China'smedical and health emergency protection system. The Company will actively undertake theestablishment of the internet platform under the national medical and pharmaceuticalemergency protection system in future.

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Future Plan

Accelerate The Development of Medical Device

Network

Promote The Vertical Extension

of The Segment

Seize the opportunity arising from the concentration and expand network coverage

Focus on promoting drug-device synergic development to build a national integrated professional service system for medical institutions

Explore innovative application scenarios such as “retail channels, communities and families”

Promote the organic extension of the medical devices business to upstream manufacturing

Further Promote Digital

Transformation

Improve Business Operation Efficiency

Improve the management system and organizational structure of the Group through streamlining and rebuilding business processes and data assets, thereby laying the foundation for digital transformation

Strengthen the management and control of risks and expenses, and promote high-quality growth of the business

Consolidate The Leading Position

of Distribution

Strengthen The Coordination

And Integration of Resources

Strengthen The Establishment of

The Omni-Channel Professional

Service Platform

Continuously Expand The Retail

Network

Consolidate the coverage advantages of the existing network over medical institutions and undertake new business models such as hospital consortium and medical community

Explore business opportunities in innovative fields including Internet hospitals and elderly care institutions, and increase the Group's business share in the incremental market

Accelerate the integration of procurement and logistics resources across the country and strengthen the comprehensive service capabilities of channels

Explore multi-channel digital marketing strategies, promote Internet application scenarios and construct a differentiated professional pharmaceutical service model

Promote the professional pharmacy standardization construction, improve chain management capabilities and delivery service efficiency

Expand the service capabilities for chronic diseases, severe diseases, special diseases, serious diseases and other professional medication fields, so as to increase user adhesion

Deepen cross-field cooperation and comprehensively enhance the capabilities with online-offline coordination 20

This report may contain forward-looking statements that involve risks and uncertainties. These statements are generally expressed in predictive terms, such as believe,expect, anticipate, estimate, plan, forecast, target, may, will, or other similar expressions, to express expected or possible future actions or the results thereof. You should notplace undue reliance on these forward-looking statements, which apply only on the date of this report, to make judge for future actions.

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Your Questions are Welcomed.

Thank You!

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