On the evening of August 24, Tonghua Dongbao Pharmaceutical Co., Ltd. (stock code: 600867, hereinafter referred to as "Tonghua Dongbao" or the "Company") released its 2021 half-year report. In H1 2021, the Company recorded operating revenue of RMB 1.662 billion, up 12.71% YoY, a net profit attributable to owners of the parent company of RMB 674 million, up 24.47% YoY, a net profit excluding non-recurring gains and losses attributable to shareholders of the listed company of RMB 655 million, up 20.93% YoY. The weighted average return on net assets increased by 1.17 percentage points to 11.69%.

Constantly improved product mix and profitability

The Company’s main business contributed an increasing share of the revenue, demonstrating greater profitability. The overall revenue from insulin products hit RMB 1.439 billion, an increase of 15.19% YoY. Among them, the sales revenue of human insulin drug substances (DS) and injections amounted to RMB 1.280 billion, up 5.92% YoY. According to data from Pharmcube, as of H1 2021, the Company’s human insulin has taken up more than 38% of the Chinese market by sales volume. The sales revenue of insulin glargine DS and injections hit RMB 159 million. By now, the Company’s Insulin Glargine Injection has been approved for use in more than 3,300 secondary and above hospitals in 29 provinces and cities across China. Thanks to the decrease in procurement costs and continuous optimization of the product mix, the Company achieved a consolidated gross profit margin of 82.48%, up 3.43 percentage points YoY, and a net profit margin of 40.53%, up 3.88 percentage points YoY.

Heavy investment in innovation and R&D and enriching product portfolios

In H1 2021, the Company’s total R&D investment hit RMB 152 million, up 46.94% YoY. The Company has steadily advanced the R&D of insulin analog, ultra-rapid-acting insulin, GLP-1, oral hypoglycemic agents, among others, on the basis of its existing second- and insulin analog products. Among them, Insulin Aspart has passed the on-site production verification and GMP compliance inspection, and is expected to be approved for marketing in the second half of the year; the NDA applications for Insulin Aspart 30 and 50 Injections were accepted in July; database lock was performed for liraglutide in June, and the clinical study report is scheduled to be available in December this year; and the NDA application for repaglinide tablets, an oral hypoglycemic agent, was accepted in June.

As China enacts policies to encourage drug innovation, the Company is making a strong foray into the field of novel drugs, while maintaining a focus on the R&D of drugs for diabetes and other major endocrine diseases. This March, the Company unveiled three novel diabetes drugs, among which, the world’s first triple SGLT1/SGLT2/DPP4 inhibitor was approved for a clinical trial in June. In June, the Company further introduced two novel gout drugs, marking a solid step forward in the field of endocrine drugs. Heavy investment in innovation and R&D has significantly improved the Company’s position and competitiveness in the industry.

Improved management system and steady strategic transformation

During the reporting period, Tonghua Dongbao continued to optimize its corporate governance, management system, and incentive mechanism, aiming to further enhance the Company’s operations and efficiency across the board. In Q1 2021, the Company bought back nearly RMB 120 million worth of shares for employee equity incentives, which demonstrates the management’s recognition of the Company’s value, and the Company's willingness to launch continued equity incentives and establish a long-term mechanism for the common growth of employees and the Company. In July, the Board of Directors of the Company approved a plan to buy back shares worth up to RMB 360 million and cancel them to return surplus cash to shareholders. This move further demonstrates the management’s recognition of the Company’s strategic transformation, confidence in the Company’s future development, and determination to strengthen the return to shareholders and safeguard their interests.

Going forward, Tonghua Dongbao will keep improving its governance structure, incentive mechanism, and product portfolios. While consolidating and expanding its competitive advantages in insulin products, the Company, guided by the philosophy of "Establishing a Global Brand Through Consistent Innovation", will continue to focus on the R&D of cutting-edge and key technology for treating diabetes and other endocrine diseases and promote innovation to achieve its vision of being an explorer and leader of novel drugs R&D in the field of endocrinology as soon as possible.