Corporate Profile
Chairman's Statement
Directors and Senior Management
Awards and Achievements
To all Shareholders:
On behalf of the Board of Directors, I am pleased to present to the shareholders the annual results of Wuyi International Pharmaceutical Company Limited (“Wuyi Pharmaceutical” or the “Company”) and its subsidiaries (collectively, the “Group”) for the financial year ended 31 December 2015.

2015 was a year full of challenges and opportunities to the Chinese pharmaceutical industry. The government continued to increase medical input to enhance the medical and healthcare standards with the successive implementation of various medical-related policies and measures, aiming to satisfy the basic medical needs of the general public. In the meantime, the reduced medical insurance fee also increased the pressure upon pharmaceutical enterprises, and the falling drug prices caused by tendering at the provincial level even brought more severe challenges to pharmaceutical enterprises. In an industry environment vulnerable to rapid changes, the Group responded proactively and made progress while ensuring stability by enhancing production efficiency, enriching product mix and improving marketing plans. Hence, the Group achieved relatively satisfying results during the year.

For the year ended 31 December 2015, the Group successfully turned loss into profi t with turnover increased by 1.1% to RMB555,700,000 as compared to that of last year, and the profi t attributable to owners of the Company substantially increased by 193.6% to RMB41,200,000. The gain from disposal of land and property held by Fuzhou Sanai Pharmaceutical Co., Ltd., a wholly-owned subsidiary of the Company, effectively improved the cash fl ow of the Company.

During the year, the sales volume of the Group’s products remained relatively stable. Although the sales of our key product, Perilla Oil Capsule, dropped due to the suspension of production as a result of the disposal of Fuzhou Sanai plant, the four newly launched Western prescription drugs during the year, which are injection products, captured good sales record. In addition, the sales performance of Compound Chinese Angelica Injectible was satisfactory with a signifi cant increase of 75.7% in turnover as compared to that of last year. Benefi ting from the increase in production output of ordinary medicines of the new plant zone and the sales strategy of “higher sales volume with less margin”, the sales volume of six Western prescription injection products remained stable during the year and stimulated the sales of other products, hence improving the turnover in the rural areas.

To make better use of resources, the Group further reduced its investment in advertisement. Through integrating promotional activities such as new medicine and academic promotion seminars, as well as medicine trade fairs, the Group spent extra efforts in the target markets and maximised the utility of marketing resources.

Regarding research work, as the prospect of Research and Development (“R&D”) of the entire industry is uncertain, the Group controlled its R&D expenditure for new drugs cautiously and concentrated the resources on the research of new medical treatment results of Perilla Oil Capsule and anti-hepatitis Compound Drug Liver & Gall Bladder Tablets under the joint cooperation with the Department of Medicine of Peking University. The Group will suspend new investment in R&D for new drugs until the prospect of government approval becomes clear.

Since 2016 is the start of the “13th fi ve years plan”, “Healthy China” is included in the strategy of the country for the fi rst time and hence, medical reform continues to be the centre of focus of the country and has entered the critical stage. In March, the General Offi ce of the State Council published the Guiding Opinions on Promoting the Healthy Development of the Pharmaceutical Industry to strengthen the strategic plan for medical reform with an aim to enhancing the core competitiveness of the pharmaceutical industry and promoting the sustainable healthy development of the industry. In addition, as the medical care market in China continues to expand together with the increased pace of the aging of population in China, the progress in the urbanisation policy and the people’s rising income level, the rigid demand for medical products is further highlighted. Hence, the pharmaceutical industry is still one of the industries with the largest growth potential and the various innovative sales models of pharmaceutical products will be the driving force for the growth of the industry. Among them, “Internet + Medical” will be the major trend for the future development of the industry, and also the key factor for the pharmaceutical enterprises to grow their profi ts and consolidate their market share.

To seize the opportunities created by the internet plus, the Group will make good use of the resources acquired during the year from Fujian Liumai Medical Services Co., Ltd. to further explore the digital medical and healthcare services market and enlarge the business scale of distribution of medical products. The Group is currently improving the strategic plans for online and offl ine sales, putting more effort into the development of an online sales platform, enhancing collaboration with e-commerce partners and optimizing the logistics network so as to make preparation for the future implementation of the policy on online sales of medicine.

On the other hand, the new plant located in Haixi Industrial and Trading Development Zone, Jianyang City, Fujian Province has completely taken over the original production capacity of the plant of Fuzhou Sanai. It is hoped that the coordination process of the new plant will be completed in the near future to refl ect the advantages of full production capacity and the enhanced effi ciency in production and operation.

In the future, the Group will pay close attention to the trend of development regarding the medical reform and cope with the market changes proactively with the aim of seizing great opportunities, enhancing profitability and striving for even greater returns.

I would like to express my heart-felt gratitude on behalf of the Board to Wuyi Pharmaceutical’s management team and all the staff for their continuous effort and contribution. In the meantime, I have to thank shareholders for their ongoing support to the Group. In the past, we have overcome many challenges hand in hand; in the future, we will continually unite to further create handsome returns for the business partners and shareholders of the Group.

Lin Ou Wen

Hong Kong, 6 April 2016

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