Core Business Steadily Increased; Concrete progress for Internationalization

HONG KONG — Luye Pharma Group Ltd. (the “Company”, together with its subsidiaries, “Luye”, stock code: 2186.HK), a leading innovative pharmaceutical company in China with strong R&D capability and a global vision, announced on 29 March its annual results for the year ended 31 December 2016.

In the year under review, Luye recorded continuous and steady growth in both revenue and net profit. Revenue increased by 13.8% year-on-year to RMB2,918 million; consolidated net income attributed to owners of the company amounted to RMB892 million, representing a 18.2% year-on-year increase.

The year 2016 saw the implementation of the China’s latest healthcare reform as well as overall improvement of the pharmaceutical industry. According to IMS, the industry logged an overall growth rate of 8.1%, a notable improvement compared with the previous year. Luye itself also showed marked improvement in its business performance, thanks to its excellent management teams, strong product portfolio and outstanding sales and marketing strategy. The business results for the year are in line with the Company’s expectations and have brought considerable profits to shareholders.

Sales revenue from products related to oncology, cardiovascular system, and alimentary tract and metabolism increased by 13%, 5% and 18% respectively. Sales revenue from other products increased by 80.9%. On the whole, Luye maintained balanced growth in each segment while its core products are occupying an increasingly large share of the market, covering a wider market spectrum and infiltrating increasingly deeply in the market.

According to the Insurance Catalogue (2017 Version) released by the Ministry of Human Resources and Social Security of the PRC in February, 2017, Luye’s product Bei Xi has been elevated from Class B to Class A in the Insurance Catalogue. Reimbursement restrictions on five products including Xuezhikang were eased or removed. Three products, including Sidinuo and Okai, were incorporated in the Catalogue. Luye believes it can well leverage on existing policies to speed up promotion efforts and expand its market share, thus achieving rapid, steady growth.
The year 2016 was also a year where Luye reached an important milestone on its path of internalization. On 30 November 2016, the Company completed the merger and acquisition (“M&A”) of European firm Acino’s transdermal drug delivery system (“TDS”) and implant business. Subsequent integration of the newly acquired business in the Company was completed smoothly.

The product portfolio of the newly acquired business, which comes with a comprehensive system of research and development (“R&D”), production and sale of transdermal patch, consists mainly of more sophisticated specialty patch categories with a higher profit margin, such as central nervous system, pain and hormone spaces. Various highly sophisticated products have been commercialized and launched with success. The merger and acquisition, together with the Group’s existing business, is expected to create great synergy. The Company will continue to step up the process of internationalization through more M&A initiatives.

In terms of R&D, the research platform of transdermal patch has been properly integrated, thus strengthening the Company’s research capability in innovative pharmaceutical products. Meanwhile, overseas research has been moving forward smoothly. Goserelin Acetate Extended Release Microspheres for Injection, which is used for the treatment of carcinoma of the prostate and the breast, has obtained approval for clinical trial from the US Food and Drug Administration (“FDA”). The Company has also obtained an approval from the Federal Institute for Drugs and Medical Devices in Germany to commence clinical trials for Rivastigmine Multi-day Transdermal Patch for the treatment of Alzheimer’s disease.

On the domestic R&D front, clinical trials for Risperidone Extended-release Microspheres were finished. In 2016, The Group has obtained an approval to carry out clinical trials for three Acetate Extended Release Microspheres products, namely, Goserelin, Triptorelin and Exenatide.

Looking to the future, the management of Luye, said: “Luye will firmly adhere to the Company’s strategy of striving for innovation and internationalization. In the domestic market, Luye will continue to expand its market share in its three key therapeutic areas: oncology, cardiovascular system and diabetes. Meanwhile, more efforts will be devoted to the research of central nervous system drugs products. Luye will make substantial efforts to develop its international business and promote its candidate products globally. The Company is also keen to capture more M&A opportunities and speed up the process of internationalization, with a view to becoming the most respectable innovative pharmaceutical company.”