– Revenue Reaches HK$156.7 Billion;
– Accelerates Strategic M&As Pushes to Take Business International

HONG KONG —┬áChina Resources Pharmaceutical Group Limited (“CR Pharmaceutical” or the “Group”) (stock code: 3320), today announced its annual results for the year ended 31 December 2016 (“Reporting Period”). The Group recorded total revenue of HK$156,705.2 million for the year ended 31 December 2016, representing an increase of 6.9% year-on-year. Revenue of the three major business segments, namely pharmaceutical manufacturing, pharmaceutical distribution and pharmaceutical retail, accounted for 14.3%, 83.2% and 2.5% of the Group’s total revenue respectively. The Group’s gross profit amounted to HK$24,109.1 million, representing an increase of 3.9% year-on-year. Gross profit margin was 15.4%, a slight decrease of 0.4 percentage point. The change was mainly due to the faster revenue growth in pharmaceutical distribution business, compared with the pharmaceutical manufacturing business. Profits attributable to owners of the Company was approximately HK$2,821.4 million, representing a slight decrease of 1% compared with the last corresponding period, mainly due to RMB depreciation, a one-off gain on the disposal of non-core assets in 2015 and the one-off charges in 2016 arising from listing expenses and tax expenses from paying for special dividends. Excluding those non-recurring items and the impact of RMB exchange rates fluctuation, profits attributable to owners of the Company grew satisfactorily in 2016.

Earnings per share were HK$0.57 in 2016. The Board proposed a final dividend of HK$0.09 per share.

– Stable growth of pharma manufacturing business

During the reporting period, segment revenue of the Group’s pharmaceutical manufacturing amounted to HK$25,316.3 million, representing an increase of 4.4% year-on-year. The segment had a 59.7% gross profit margin, representing an increase of 1.4 percentage points when compared with that in 2015, which was mainly due to product mix optimization, increase in product value such products as E-Jiao products, and continuous improvement of the manufacturing process. As at 31 December 2016, the segment manufactured a total of more than 500 types of pharmaceutical products and operated two nationally certified engineering and technological centers, two nationally certified enterprise technical centers and 15 certified provincial or municipal research centers.

– Rapid growth of pharma distribution business, entering into four provinces in western China

The Group accelerated network expansion and established distribution platforms in four provinces, namely Yunnan, Guangxi, Sichuan and Chongqing. The effort has not only strengthened the regional leadership of the Group, but has also expanded the coverage of its distribution network to 23 provinces, municipalities and autonomous regions across the country, driving the segment revenue of pharmaceutical distribution business up by 7.4% year-on-year to HK$132,295.6 million.

– Steady improvement of competitiveness of pharma retail business

The pharmaceutical retail business recorded segmental revenue of HK$3,914.5 million, representing a year-on-year increase of 7.2%. The increase was mainly due to the rapid growth of the “Direct-to-Patient” (DTP) business. As at 31 December 2016, the Group had 739 retail pharmacies in total.

On top of focusing on developing its own business, the Group also actively seeks for opportunities to cooperate with multinational corporations. For example, the Group has pushed to develop new market leveraging the cooperative relationship of its parent company China Resources (Holdings) Company Limited with FUJIFILM Corporation. At the same time, the Group is on constant look out for merger and acquisition opportunities. It has signed a strategic cooperative agreement with Hefei Tianmai Biotechnology Development Co. Ltd., allowing it to set foot in the biopharmaceutical sector for facilitating sustainable growth of its businesses.

Looking ahead, the Group will continue to implement its six key business expansion strategies, which included expanding pharmaceutical manufacturing business and enriching its product portfolio to realize sustainable growth of the business; improving its distribution network and innovative service patterns to become the pharmaceutical supply chain intelligent service providers; strategically developing in the biopharmaceutical sector, optimizing research and innovation system and accelerating product development and industrialization; accelerating development through strategic acquisitions to consolidate industry leadership; enhancing international cooperation together with comprehensive competitiveness, and facilitating international business operation, as well as promoting business collaboration, optimizing resources allocation and improving operational efficiency.

At the same time, by relying on its own advantages and following the new industry trends, the Group will speed up the development through strategic mergers and acquisitions and international collaboration. It will improve its intrinsic development potential through optimizing product mix and service innovation, enhancing its research and development capabilities and unearthing synergies among its businesses so as to achieve long-term stable and sustainable development of its pharmaceutical manufacturing, pharmaceutical distribution and pharmaceutical retail businesses and continue to reinforce and elevate the Group’s leadership in the PRC pharmaceutical industry.