yichang hec changjiang pharmaceutical co., ltd
TRANSCRIPT
Stock Code: 1558
YiChang HEC ChangJiang Pharmaceutical Co., Ltd. (A joint stock limited company incorporated in the People's Republic of China)
01
02
03
04
06
Results Highlights
Financial Analysis
Business Review
Future Product Line
Appendix
05 Blackstone Partnership
Results Highlights
Business Review
R&D Pipeline
M&A and Strategic Partnership
Financial Analysis
Appendix
01
02
03
04
06
05
Contents
2
Results Highlights
Results Highlights
Robust business growth
• Revenue grew 56.8% to RMB2,510 million compared to the same period last year.
• Gross profit grew 59.4% to RMB2,112 million compared to the same period last year.
• Net profit* grew 45.7% to RMB943 million compared to the same period last year.
Sales of main products maintained high growth rate
• Driven by the nationwide academic promotion, enhanced coverage of healthcare institutions and extended primary healthcare facility
penetration, sales of main products maintained high growth rate.
• Sales of Kewei (Oseltamivir phosphate) granules and capsules grew 89.5% to RMB2,247 million compared to the same period last year.
• Sales of Ertongshu (Benzbromarone) grew 149% to RMB99 million compared to the same period last year.
R&D pipeline in sound progress
• Phase III clinical trial for Yimitasvir phosphate is in progress, NDA to be submitted by the end of this year.
• Phase II clinical trial for Furaprevir has been completed and Phase III clinical trial is about to start.
• Phase III clinical trial for Insulin Glargine Injection has been completed, while other insulin projects are in ideal progress.
• HEC Research Institute has 307 drugs under development, 50 of which are Category 1.1 Innovative Drugs.
Milestone achievements in M&A and strategic partnership
• Introduced Blackstone as a long-term strategic investor.
• Acquired 6 domestically-leading generic drugs from Sunshine Lake Pharma.
• Acquired API manufacture base HEC Pharmacy to expand production capacity.
• Proposed acquisition of another 27 generics from Sunshine Lake Pharma.
4 Note: (1) Total profit and total comprehensive income attributable to equity shareholders of the company
2018 Full Year Financial and Operational Highlights
Note: (1) Total profit and total comprehensive income attributable to equity shareholders of the company
Strong financial performance, increased production capacity and expanded sales team lead to enhanced business scale,
which supports continuous robust financial performance in subsequent periods
Revenue (RMB million) Net Profit (RMB million) (1)
Number of Sales Team Personnel (Headcount)
693 942
1,602
2,510
2015 2016 2017 2018
CAGR: 54%
266
381
647
943
2015 2016 2017 2018
196 404
856
2,690
2015 2016 2017 2018 5
Penetration of Main Products in Class II & III Hospitals
CAGR: 52%
4,574
6,111
2,416
5,494
7,828
3,531
Kewei capsule Kewei granule Ertongshu
2017
2018
Business Review
Sales Performance of Main Products Existing product portfolio maintained rapid growth while long-term growth will be further reinforced by the 6 domestically-
leading generic drugs previously acquired and continuous expansion of product pipeline in the future.
Product (Generic Name) Sales (RMB Million) Change Remark
Kewei
(Oseltamivir phosphate) granules
1,618 68% 2018 Essential Drug List
Kewei
(Oseltamivir phosphate) capsules
629 43% First to pass BE*,
2018 Essential Drug List
Ertongshu
(Benzbromarone tablets)
99 149% First to pass BE*,
2018 Essential Drug List
Xinhaining (Amlodipine tablets)
Oumeining (Telmisartan tablets)
Xining (Cetirizine hydrochloride tablets)
130 4% -
Main
Products
Products
to be
Launched
Anti-infection
Generic Name Current Status 2017 Market Size
(RMB Million) oral/all
dosage form
Sales Strategy
Levofloxacin tablets First to pass BE 700 / 3,600 Enter the market rapidly
and gain share supported
by stable supply of API,
sufficient capacity and
established sales network.
Clarithromycin sustained release tablets First to pass BE 437 / 705
Clarithromycin tablets First to pass BE 200 / 705
Moxifloxacin tablets First to pass BE 381 / 2,576
Olmesartan tablets Priority review 262 / 263
Esomeprazole magnesium
enteric-coated capsule
Priority review 900 / 2,200
CVS
Digestive System
Source: IMS
7
Anti-virus
Endocrine/
Metabolic disease
CVS and others
BE: Quality and efficacy consistency evaluation for generic drugs
3.8% 3.5%
4.6%
3.7%
5.1% 5.2%
6.0%
2.8% 2.8% 3.0%
2.8% 3.1% 3.2% 3.2%
2.4% 2.4% 2.4% 2.3% 2.5%
2.8%
2.3%
2012 2013 2014 2015 2016 2017 2018
Annual Peaks Annual Averages Annual Troughs
Influenza – Remains Immense Market Potential in China
Public awareness of influenza prevention continues to increase, driving prescription paradigm shift to more scientific
treatments away from Amantadine & TCM drugs, which currently still account for >50% in treating seasonal flu.
Source: Chinese National Influenza Center
• According to WHO, global annual prevalence of influenza estimated
at 5%-10% in adults and 20%-30% in children
• Public awareness of seeking medical attention is gradually
established, with ILI rates on the rise at hospitals in sentinel
surveillance hospitals
Influenza activity
showed repetitive
pattern with more
patients seeking
medical attention
• In China, appx. 10-15% children attend to doctors for influenza virus
infection
• During peak seasons, treatment rate spikes to over 40% for pre-
school children and 30% school-age children
Higher influenza
incidence
for children
• Influenza treatment market in China grows at 22% CAGR during
2014-19
• By 2019, market size of anti-influenza products in China will
potentially reach RMB5.3 billion
Steady market
growth
• Influenza treatment market in China shifting from Amantadine-based
drugs to clinically-approved treatments led by Oseltamivir.
Management estimates Oseltamivir usage rate currently at ~40% vs.
>90% in the U.S.
• Amantadine is not recommended in the U.S. and most developed
countries due to ineffectiveness against influenza and acquired drug
resistance
• NMPA now expressly prohibits the use of Amantadine for treating
newborns and infants under 1 year old and do not recommend
prescription for children younger than 5
Prescription shift
to Oseltamivir
from Amantadine
and TCM
1
2
3
4
China Influenza-Like Illness (ILI) as % of Outpatients
8
Oseltamivir is Recommended as First-line Treatment for Influenza in China
Recent influenza activity has heightened public and physician awareness of influenza, accelerating adoption of Oseltamivir as
the recognized and recommended treatment
9
• NHFPC: Recommended by NHFPC
as the first choice medicine to
treat H1N1 influenza (Swine Flu),
as well as H7N9 influenza (Avian
Flu)
1
Listing Process
2 Health Insurance
3 Medical Evidence
4 Global Recognition
• In 2001, original product appeared on the
market
• In 2006,Kewei Capsules appeared on the
market
• In 2008, Kewei Granule, the unique dosage
form for children appeared on the market
• Treatment of influenza A and B
• Prevention of influence A and B
• Treatment and prevention of
influenza in infants aged above 2
weeks
• WHO: Listed as an “Essential Drug” in the WHO Model
List of Essential Drugs
• USCDC: Recommended as a key anti-viral treatment for
influenza
• ECDC: Recommended for the treatment of influenza in
Europe
• From 2009, Kewei Capsules have been covered by
national health insurance
• Kewei granules, listed in 2017 NDRL, are the only
pediatric chemical drug approach to the treatment of
influenza
6 National
Recommendation
• In new influenza treatment guidelines published in 2018 by the
NHFPC, Oseltamivir is the recommended first line treatment
for influenza, expanding prescription to suspected cases
for high-risk patients / patients with severe symptoms, and
specifically recommending granule form for children
• Listed in National Essential Drug List (2018 Edition)
5 First Choice Medicine
(RMB million)
CAGR: 84%
10
Kewei is the Preferred Brand Name for Oseltamivir in China
Kewei is the preferred Oseltamivir brand across
China, with market share further increased after
exit of the only domestic competitor in 2017
• Statistics suggests stable prevalence of
influenza in China. With increasing awareness of
seeking medical attention while preventive
measures gradually established, the sales volume
of Kewei will continue to rapidly grow
• Ranked #1 in terms of sales in the oseltamivir
phosphate products since 2013
• The only manufacturer of the patent-protected
granules form of oseltamivir phosphate in China,
targeting pediatric medicine market with IP
protection through 2026
• In 2017, Kewei granules form ranked #7 in all
pediatric medicine in China
Kewei Historical Sales Growth
3.0% 2.8%
3.1% 3.2% 3.2%
China Influenza-Like Illness (ILI) as % of Outpatients Cases
(Annual averages)
120 322
544
962
1,617
75
132
192
440
629
194
454
736
1,401
2,246
2014 2015 2016 2017 2018
Kewei Capsules
Kewei Granules
Source: Chinese National Influenza Center
Growth Potential for the sales of Kewei Remains
Significant market potential remains across China, most notably in northern regions, with continued hospital penetration,
OTC channel expansion and prescription per hospital increase further driving Kewei sales growth
Coverage of Kewei in Class III & II Hospitals
1,822
3,224
6,111
7,828
972 1,819
4,574 5,494
2015 2016 2017 2018
Kewei Granules Kewei Capsules
Coverage of Kewei in Primary Healthcare Institutions (1)
& OTC Pharmacy
Covered 46,150 primary healthcare institutions,
a year-on-year increase of 72%
Note: (1) Primary healthcare institutions refer to community hospitals and
institutions other than Class III and II hospitals
Covered over 100,000 OCT pharmacies
Province
2018 %
Contribution
YoY %
Growth
Guangdong 24.0% 41%
Shandong 7.2% 24%
Fujian 5.2% 140%
Hubei 5.1% 60%
Jiangsu 4.8% 85%
Province
2018 %
Contribution
YoY %
Growth
Shandong 7.2% 24%
Hebei 4.1% 43%
Shaanxi 3.4% 64%
Beijing 3.3% 47%
Inner Mongolia 2.3% 13%
Top 5 Provinces (Municipalities) and Top 5 Provinces in the North
(Municipalities) by Kewei Sales
11
Hyperuricemia (Endocrine / Metabolic diseases) Rapid Growth in Sales of Ertongshu
Established professional team specializing in endocrine and metabolic diseases to implement academic promotion towards
hyperuricemia treatment. The practice of chronic diseases management has been gradually established.
• There is estimated 180 million hyperuricemia patients in
China, among which 12 million diagnosed with gout and
the number is still growing
• Hyperuricemia is nowadays the fourth “high” disease,
following hypertension, high cholesterol and high blood
sugar, with prevalence in mainland China recorded at 13.3%
• The CAGR of the overall hyperuricemia market in China is
expected to reach 13.7% during 2014-2019. Peak market
capacity potentially reaches RMB1.5 billion by 2019
• Ertongshu is the first generic to pass consistency
evaluation
• Sales model changed from combination of direct sales and
distribution to solely direct sales model in 2017 to focus on
academic promotion which contributed to strong growth
• As of the end of 2018, Company has a marketing & sales
force team of ~260 people designated for endocrine
diseases
Source: PDB 12
Hyperuricemia Treatment Share
Breakdown
21%
79%
Benzbromarone
Other drugs
Sales of Ertongshu
30 36
44 39
99
2014 2015 2016 2017 2018
(RMB million)
Market Share of Ertongshu in
Benzbromarone
18%
82%
Ertongshu
Other brands
Restructure of
sales model
Sales Team Overview and Future Strategy
Continued expansion of sales force providing strong support for future product growth and driving further penetration in
healthcare institutions and prescriptions per institution
13
Headcount Year Remark
404
856
2016
2017
Sales team focused on Kewei products only
Sales team geographical coverage expansion beyond Guangdong
2,690 Reinforce 4 sales models, including core product direct sales team, general
practitioner-based direct sales team, non-core products distributor-based
team, and OTC channel team, jointly enhancing market penetration
2018
1 2
4 3
• In-house sales team responsible for academic promotion
of main products (Including generic and innovative new
drugs) across Class II hospitals or above
• The team had 1,277 members as of December 31, 2018
• In-house sales team responsible for academic promotion
in general practitioners-based healthcare institutions
(Class I Hospitals and Community Clinics)
• The team had 532 members as of December 31, 2018
Direct Sales Team in Primary Healthcare
Institutions
Direct Sales Team in Class II&III hospitals
• Responsible for distributors-based sales of non-core
products in all healthcare institutions
• The team had 55 members as of December 31, 2018
Distributors Management Team
• In-house sales team responsible for sales of main
products in OTC pharmacies
• The team had 216 members as of December 31, 2018
OTC Channel Sales Team
R&D Pipeline
15
Diabetes & HCV - Targeting Critical Therapeutic Areas Continued progress on pipeline development, targeting to become one of the top local companies in China with full insulin
portfolio and effective HCV infection drugs
HCV
Diabetes
Drug Name Target
Mechanism Current Status
Estimated approved
to market in Preliminary Results Product Highlight
Yimitasvir phosphate NS5A
Combined with
Sofosbuvir/
Phase III
2019
• Phase II SVR12 up to
100%
• Good safety and
tolerance profiles
• Oral dosage form
• Administered once
daily for 12 weeks
Furaprevir NS3/4A
Combined with
Yimitasvir/
Completed Phase II
2020
• Phase II data showed
profound efficacy and
safety
• Oral dosage form
• Administered once
daily for 12 weeks
Kangdaprevir sodium NS3/4A Completed
Phase I - -
• Pan genotype triple
DAA
Recombinant human
insulin injection - NDA 2019
• Based on Phase I and
III clinical trials,
recombinant human
insulin injection product
is comparable in
efficacy and safety as
the originator drug
• Established
collaboration with a
group of clinical trial
centers. Product
efficacy and safety
have been recognized
by patients and
physicians
• R&D standards /
clinical development
strategy based on the
latest EU/US biosimilar
drug guidelines, with
product quality
comparable to the
originator drugs
• Employing yeast
expression system,
with advanced
production engineering
and scale-up flexibility
Isophane protamine
recombinant human insulin
injection(pre-mixed 30R)
- Phase III 2020
Insulin glargine injection - Phase III 2020
Insulin aspart injection - Phase I 2021
Insulin aspart 30 injection - Phase III 2021
Market Potential and Company Strategy for HCV drugs
HCV represents a market with unmet clinical needs and embedded potential. With diversified product portfolio,
Company has devised a holistic strategy to target the market.
• WHO statistics showed global HCV
contraction rate currently standing at
3%, and with 180 million infection
carriers
• China has about 10 million people
diagnosed with HCV
• The figure increases by 250,000
every year • Approximately 2% to 7%
Hepatitis C patients may
progress to liver cancer
• Subject enrollment has been completed for Phase-III
clinical trial of Yimitasvir Phosphate + sofobuvir
combination. NDA expected to be submitted in 2019
• Phase-II clinical trial of Yimitasvir Phosphate + furaprevir
have been completed, and phase-III trial will start soon
• Yimitasvir Phosphate has secured special funding from the
12th "Five-year Plan" program
• Company aims to become one of the first Chinese
pharmaceutical companies to launch oral interferon-
free DAAs therapy
RMB
• Established JV to co-develop a new oral
interferon-free DAAs combination therapy
(Yimitasvir / Furaprevir)
• Potentially a leading anti-HCV medicine in
China
HCV Project Meets Expected
Progress and Will be Launched
Within This Year at Earliest
Established Joint Venture to
Expedite R&D Progress
Leading Innovation Supported
by State Key Laboratory of Anti-
infection
• Acknowledged as National Key Anti-
Infection Laboratory by Ministry of Science
and Technology in 2015
• Comprehensive drug selection and evaluation
platform and advanced team of R&D talents
from China and overseas
• Projects under research focusing on HCV,
HBV and influenza
16
180 million Infection carriers globally
New cases in China per year
250,000
7% HCV patients may
progress to liver cancer 30 billion Peak market size
The HEC Edge of Anti-HCV drugs
17
Yimitasvir / Sofosbuvir and Yimitasvir / Furaprevir combinations are positioned as the first batch of domestically-
manufactured dual-DAA treatments to achieve commercialization in China
All anti-HCV drugs currently being developed by HEC are oral forms.
Administered orally once a day, exhibiting a higher degree of compliance
compared to pegylated interferon / ribavirin (PR) combination
Developed by domestic company, the product will apply for inclusion into medical
insurance reimbursement immediately after market launch, with clear price advantage
HEC's strong anti-viral products sales team is a firm guarantee of a substantial market share
Yimitasvir Phosphate + Sofosbuvir
Oral dosage form with improved patient compliance
Local enterprises enjoy advantages in market entry
Established hospital network and professional marketing & sales team
Yimitasvir Phosphate + Furaprevir
Clinical trials on the pan-genome type
combination therapy already in progress
Outlook for the Diabetes Market in China
Insulin represents an attractive market with large patient pool and growth potential
425 million diabetic adult patients
globally, per statistics from IDF.
Most patients are aged 40-59 , with
higher morbidity rate recorded in
developing countries relative to
developed economies
Estimated by the prevalence (11.6%) of
diabetes among Chinese adults, the total
number of diabetes patients in the country
is around 114 million
Data from sample hospitals in China showed that
insulin accounts for roughly 40% of medicines used in
diabetes treatment. If insulin consumption in primary
healthcare facilities is factored in, the actual
proportion is projected to be below 40%
diabetes patients
in China
18
diabetic patients
Worldwide
Insulin accounts for 60% of
drugs used in diabetes
treatment across the world
• Substitution of imported drugs by Chinese
products
• The proportion of insulin in all diabetes drugs
will increase to global level
• An upgrade from 2nd-generation to 3rd-
generation products
114 million
425 million 60%
40%
Long-term market
opportunity（to 2023)
Edge of HEC’s Insulin Products
• HEC has a complete insulin portfolio covering second and third generation insulin products, among
the only few local pharmaceutical companies capable of developing a full range of insulin products
• Cater to medication preferences (e.g. pre-mixed, long-acting and reinforced drugs) of medical practitioners
Complete product line strategy
• Reliable production technique, with commercialized production in batch achieved during the IND
application process
• Employ a yeast expression system with streamlined technique, scale-up flexibility and cost-effectiveness
• Both insulin phase-1 plant and phase-2 plant (under construction) are designed in compliance with GMP
standards in China, U.S. and E.U. The phase-1 plant has been in operation for several years, and has
gained experience in commercial production of 2nd-gen and 3rd-gen insulin APIs and injections, with
sustainable and reliable production techniques
Advanced technology
• R&D standards and the clinical development strategy are formulated based on the latest EU/US biosimilar
guidelines, with aim of developing high-quality biosimilar comparable to the originator drugs, outperform
local competitors
• Clinical trials were conducted by renowned organizations and researchers in the field. HEC collaborates
with leading global clinical research organizations to facilitate the research program and expedite the
market launch process. The Company’s product has gained recognition from opinion leaders, laying the
groundwork for subsequent successful marketing.
Top quality
Insulin APIs production capacity
• Recombinant human 600kg/year
• Insulin glargine 200kg/year
• Insulin aspart 450kg/year
19
Insulin injections production capacity
Company is well-positioned to capture the insulin market opportunity with a comprehensive portfolio of second and third
generation insulin products
• Current capacity 2.5 m cartridges
• Capacity in 2019 10 m cartridges
• Capacity in 2021 80 m cartridges
Supported by Leading R&D Team at Research Center
Company drug pipeline replenishment underpinned by the Research Center, allowing Company to selectively acquire high value
drugs (Company has pre-emptive right to purchase products from Research Center in China)
20
• HEC Research Center had over 2,000 R&D staff, including 24 overseas
experts, 6 experts of “National 1,000 People Plan” (国家千人计划) and 1
officer of “Young Leadership Program” (青年领军人才).
• The Company has an experienced clinical research team currently
consists of 168 staff.
Strong R&D team
• 50 National Class 1.1 Innovative Drugs and 5 innovative biological
products.
• 27 research projects granted as “the National Major Innovative Drug
Projects” (国家新药创制重大专项) In the 11th, the 12th and the 13th Five
Years Plan.
Rich pipeline of new drugs
• The Company has the pre-emptive right in China to purchase products
from Research Center
• Drugs acquired but not successfully approved will be fully refunded
Pre-emptive Rights
Number of Pipelines
Breakdown by Therapeutic Areas
54 56
182 252
2017 2018
Innovative Generic
Oncology 24%
CVS & Metabolic diseases
9%
Fibrosis 14%
Immune-inflammatory
11%
Other 20%
Anti-infective 22%
21
Oncology
Infectious
disease
Project Indication Pre-Clinical Phase I Phase II Phase III
HBV Morphathiadine
Ningetinib
Larotinib
CT413
CT365
NSCLC / AML / RCC
Esophageal cancer
Solid tumors
Solid tumors
Respiratory
tract disease
Yifenidone* CT365*
Litapiprant
IPF
IPF
Asthma
Endocrine &
metabolic
disease
HEC-DUAL
Rongliflozin
HEC96719*
Obesity/NASH/T2DM
T2DM
NASH
Mechanism/Target
Capsid inhibitor
Axl/c-met/VEGFR2
EGFR
Axl/Mer
PI3K/mTOR
TNFα/TGFβ
PI3K/mTOR
CRTH2
-
SGLT-2
-
* Submitted IND to both FDA and China NMPA
Diversified New Drug Pipeline for Future Acquisition (Partial list)
Morphathiadine – Potential first-in-class innovative new drug to
cure HBV infection
• Suppress HBV replication by Interfering with capsid assembly and its function.
• Clinical trial data showed significant viral DNA-lowering outcome with decrease
in HBeAg and HBsAg, in a controlled trial with Entecavir.
• Clinical trial ahead of other competitors of the same mechanism, potential first to
market in China.
2 IPF drugs received FDA orphan drug designation
• Yifenidone and CT365 received FDA orphan drug designation.
• Pre-clinical data showed favorable PK properties, potential best
in class.
• Clinical trial commenced in both China and the U.S.
22
• Macrolides antibiotics：Azithromycin tablets
Anti-infection
• Schizophrenia：Olanzapine orally disintegrating
tablets、Olanzapine tablets、Aripiprazole orally
disintegrating tablets, Aripiprazole tablets
• Parkinson’s disease：Entacapone tablets
• Depression：Escitalopram tablets, Duloxetine
enteric capsules
CNS
• Type 2 diabetes：Linagliptin tablets, Linagliptin and
metformin hydrochloride tablets, Sitagliptin tablets,
Sitagliptin and metformin hydrochloride tablets,
Alogliptin tablets
• Hyperuricemia：Febuxostat tablets
Endocrine/Metabolic diseases
Proposed Acquisition of 27 Domestically-leading Generics
• HBV: Entecavir tablets
• HIV, HBV:Tenofovir alafenamide tablets
HBV
• Hypertension：Amlodipine tablets、Metoprolol
succinate sustained-release tablets
• Serum lipid control：Rosuvastatin calsium tablets,
Atorvastatin calcium tablets
• Anti-thrombosis：Ticagrelor tablets, Rivaroxaban
tablets, Apixaban tablets, Clopidogrel tablets
CVS
• ED, PAH(Pulmonary artery hypertension)：Sildenafil
tablets,Tadalafil tablets
• Bladder overactivity：Solifenacin tablets
Reproductive/Urinary system
Proposed acquisition of another batch of 27 domestically leading generics in major therapeutic areas including anti-infection,
CNS, CVS and diabetes. The acquisition will further enrich the product portfolio of the Company and contribute to the
establishment of an all-rounded medical solution platform
Source：IMS 2017 China market data
China market size ：RMB 800 million China market size ：RMB 4.75 billion
China market size ：RMB 1.9 billion
China market size ：RMB 19.5 billion
China market size ：RMB 760 million
China market size ：RMB 3.07billion
Financial Analysis
Financial Overview (P&L)
24
[MS to Translate]
(RMB Million) 2018 2017 Change
Revenue 2,510 1,602 56.8%
Cost of Revenues (399) (280) 42%
Gross Profit 2,112 1,321 60%
EBITDA 1,165 796 46%
Profit from operations 1,104 752 47%
Net Profit (1) 943 647 47%
Gross Margin 84% 82% -
EBITDA Margin 46% 50% -
Operating Margin 44% 47% -
Net Margin 38% 39% -
Basic and diluted EPS (RMB/share) 2.09 1.43 -
Notes:
(1) Total profit and total comprehensive income attributable to equity shareholders of the company
Financial Overview (Balance Sheet)
25
(RMB Million) 2018 2017
Total assets 4,561 3,776
Total liability 882 715
Net assets 3,679 3,061
Gearing ratio 1.45% 0.65%
Quick ratio 1.99 3.09
Cash and cash equivalents 594 887
Acquired US$400 Million Strategic Investment From Blackstone
26
Completed the
issuance of H share
convertible bonds
with annual interest
rate of
to Blackstone on
• As a long-term strategic investor, Blackstone will support the Company in its vision of becoming a leading Chinese pharmaceutical company and the preferred Chinese partner for international collaborations;
• Attractive long-term funding to accelerate drug acquisitions and intrinsic business investment in support of future business growth;
• Additional funding allows Company to pursue key growth initiatives while maintaining stable dividend payout to shareholders;
• Strategic partner to help drive implementation of global best practices and ensure continuous value creation for Company shareholders. Major measures and initiatives in plan include:
Strengthening corporate governance via appointment of Blackstone director by co-nomination of non-executive director with experience in pharmaceutical sector to the board of directors
Establishing strategic partnerships with global pharmaceutical entities
Improving IR functions and capital markets communication to raise company profile
• Establishment of Strategic Operating Committee and Drug Acquisition Committee to optimize the Company’s strategic direction and governance to ensure value maximization for all public shareholders
Thank You！ Our Mission:
For Everyone’s Health
Appendix
Structure of the Group
29
Company is Parent Group’s sole pharmaceutical platform in China and now fully consolidated into the Parent Group
生活方式/健康
• 旅游
• 健康养生
• 化妆品
中国药业
• 创新药
• 仿制药
医药母公司研究中心
• 创新药物研发
• 全球药物知识产权收购
• API
电子材料
• 铝产品
• 氟化工产品
东阳光集团
50%所有权
Parent Group(1)
Guangdong HEC Technology Holding Co., Ltd.
(Listed on Shanghai Stock Exchange)
H-Share Shareholders
53.32%
50.04% 49.96%
Note: (1) Shenzhen HEC Industrial Development Co., Ltd. and affiliates
100% 60%
Yichang HEC Pharmaceutical Manufacturing Co.,Ltd
Dongguan Yangzhikang Pharmaceutical Co., Ltd
100% 100%
Yichang HEC Pharmaceutical Co., Ltd.
Dongguan HEC TaiGen Biopharmaceuticals Co., Ltd.
HEC History and Milestones
30
2006 2013 2016
2001 2008 2015
1 3 5 2 4 6
2018
7
2018
8
• Granted
manufacturing
approval for
oseltamivir
phosphate in China
• Kewei products
recorded the
largest market
share in the
oseltamivir
phosphate product
in the PRC
• Developing novel DAA combo for
curing HCV through JV with TaiGen
Biotechnology
• Obtained clinical trial approvals for 3
insulin injections, including Insulin
Glargine injection
• HEC Pharm awarded the “2016 Listed
Enterprises Award”
• Commenced
pharmaceutical
operations in the PRC
with the establishing of
the Company’s
predecessor entity in
Hubei Province
• Became the only
manufacturer of Kewei
Oseltamivir Phosphate
granules in China
following the registration
with CFDA
• Established as a joint stock limited
company post re-organization
• Established strategic cooperation
partnership with controlling
shareholder, providing a pre-emptive
right to acquire pharmaceutical
products being developed by HEC
Research Group for China
• HEC Pharm commenced trading on
HKEX on Dec. 29, 2015
• Kewei recommended as the first line
treatment for both
diagnosed/suspected influenza cases
by NHFPC
• Included in Hang Seng Composite
SmallCap Index
• Included in Hong Kong Stock Connect
List under the Shenzhen-Hong Kong
Stock Connect
• Blackstone
strategic
investment via
convertible
bond issuance
Senior Management Team
31
Mr. TANG Xinfa Chairman and Non-Executive Director
• Joined the Company in May 2015, and also serving as the Chief Officer of the State Key Laboratory of
New Drug Research and Development for anti-virus
• Joined Shenzhen HEC Industrial in 2002, having served senior management positions at Sunshine Lake
Pharma, Ruyuan HEC Pharma, Linzhi HEC Pharmaceutical Investment, and Dongguan HEC Research
• He has 15 years of management experience
• Received a master degree from Xiamen University in September 2002
Mr. JIANG Juncai Executive Director
and General Manager
• Successively served as a researcher at the
biochemistry division, a researcher and deputy head
of the traditional Chinese medicine division and the
deputy head of the zoological and botanical division of
Sunshine Lake Pharma from July 2006 to May 2012
• Served as a director of Yidu HEC Industrial
Development Co., Ltd. from March 2012 to May 2015
• He joined the Company serving as executive director
in May 2015
Mr. CHEN Yangui Executive Director
and Director of Sales Department
• Joined Dongguan HEC Research in October
2005, and successively held several different
managing positions in company
• He joined the Company in May 2014 and has
been serving as executive director since May
2015
Executive Director,
Deputy General Manager Mr. WANG Danjin
Executive Director,
Deputy General Manager Mr. ZHU Qiaohong*
Executive Director,
Deputy General Manager Mr. LI Shuang
CFO Mr. LEI Xiantong*
Mr. PENG Qiyun Secretary of the Board
Mr. ZHANG Qiang* CFO
Notes: Mr. ZHU Qiaohong has resigned as executive director as on Feb 20 2019. Mr LEI Xiantong has resigned as
CFO as on Feb 25 2019 while the Board has appointed Mr. ZHANG Qiang as CFO on the same day.
32 Source：IMS
Indication Product Estimated
approval
granted in Current Status
2017 China market size
(RMB million)
(Oral form / all dosage form)
Originator
company / Brand
name
2017 Sales record of
originator drug in
China
(RMB million)
Remarks
Serum lipid control
Atorvastatin calcium tablets 2020 • In progress 5,800 / 5,800 Pfizer/Lipitor 3,927 • E.U. to China
Rosuvastatin calcium tablets 2020 • In progress 2,893 / 2,893 AstraZeneca/ Crestor 1,584 • E.U. to China
Hypertension
Amlodipine tablets 2019 • In progress 2,645 / 2,645 Pfizer/Norvasc 1,571 • E.U. to China
Metoprolol succinate
sustained-release tablets 2021 • Target to be first 3
generics passing BE 1,070 / 1,070 AstraZeneca/Betaloc 996 • U.S. to China
Anti-
thrombosis
Clopidogrel tablets 2020 • In progress 6,300 / 6,300 Sanofi/Plavix 3,663 • E.U. to China
Ticagrelor tablets 2019 • Target to be first 3
generics passing BE 415 / 415 AstraZeneca/Brilinta 415 • U.S. to China
Rivaroxaban tablets 2020 • Target to be first 3
generics passing BE 640 / 640 Bayer/Xarelto 640 • U.S. to China
Apixaban tablets 2020 • Target to be first
generic 7 / 7 BMS/Eliquis 6.6 • U.S. to China
HBV Entecavir tablets 2019 • In progress 4,750 / 4,754 BMS/Baraclude 1,412 • E.U. to China
HBV/HIV Tenofovir alafenamide
tablets 2020 • Target to be first
generic -/- Gilead - • U.S. to China
Anti-infection Azithromycin tablets 2020 • In progress 800 / 800 Pfizer/Zithromax 132 • U.S. to China
Schizophrenia
Olanzapine tablets 2019 • In progress 1,772 / 1,772 Eli Lily/Zyprexa 299 • U.S. to China
Olanzapine orally
disintegrating tablets 2019 • In progress 9 / 9 Eli Lily/Zyprexa 9 • E.U. to China
Aripiprazole tablets 2020 • Target to be first 3
generics passing BE 170/170 Otsuka/Abilify 132 • E.U. to China
Proposed Acquisition of 27 domestically-leading generics
33 Source：IMS
Indication Product Estimated
approval
granted in Current Status
2017 China market size
(RMB million)
(Oral form / all dosage
form)
Originator
company / Brand
name
2017 Sales record
of originator drug
in China
(RMB million)
Remarks
Schizophrenia Aripiprazole orally
disintegrating tablets 2020 • Target to be first 3
generics passing BE 190/190 Otsuka/Abilify - • E.U. to China
Depression
Duloxetine enteric
capsules 2020 • Target to be first 3
generics passing BE 230/231 Eli Lily/Cymbalta 178 • U.S. to China
Escitalopram tablets 2020 • In progress 780 / 780 Lundbeck/Cipralex - • E.U. to China
Parkinson’s Disease Entacapone tablets 2019 • Target to be first generic 46/46 Orion/Comtess - • U.S. to China
Type II diabetes
Linagliptin tablets 2019 • Target to be first generic 37 / 37 Boehringer
Ingelheim/Trajenta 37 • U.S. to China
Linagliptin and metformin
hydrochloride tablets 2019 • Target to be first generic n/a Boehringer Ingelheim/
Jentadueto - • U.S. to China
Alogliptin tablets 2019 • Target to be first 3
generics passing BE 19 / 19 Takeda/Nesina 19 • U.S. to China
Sitagliptin tablets 2020 • Target to be first generic 260/260 Merck/Januvia 257 • E.U. to China
Sitagliptin metformin
hydrochloride tablets 2019 • Target to be first generic 42/42 - - • E.U. to China
Hyperuricemia Febuxostat tablets 2020 • In progress 414 / 414 Takeda/Uloric - • E.U. to China
ED, Pulmonary artery
hypertension
Tadalafil tablets 2020 • Target to be first 3
generics passing BE 426 / 426 Eli Lily/Cialis 426 • E.U. to China
Sildenafil tablets 2019 • Target to be first 3
generics passing BE 1,542 / 1,542 Pfizer/Viagra 1,049 • E.U. to China
Bladder overactivity Solifenacin tablets 2021 • In progress 36/36 Astellas/Vesicare 33 • U.S. to China
Proposed Acquisition of 27 domestically-leading generics(Cont’d)