On the evening of January 24, 2022, Tonghua Dongbao Pharmaceutical Co., Ltd. (stock code: 600867, hereinafter referred to as "Tonghua Dongbao" or the "Company") released its financial estimated results for 2021. Specifically, the revenue is estimated to hit RMB 3.252 billion, up 12.45% YoY, the net profit attributable to owners of the parent company grew 43.40% YoY to RMB 1.334 billion, the net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, rose 17.54% YoY to RMB 1.123 billion. The basic earning per share (EPS) was RMB 0.66, up 43.48% YoY.

Expanding business scope and optimizing product structure

Focusing on the main business, the Company achieved rapid growth in sales of insulin products in 2021. In particular, the sales of insulin analog surged over 200% from 2020. While ensuring the stable sales growth of human insulin, the Company made every effort to promote its insulin glargine products in hospitals nationwide. Up to now, the Company's insulin glargine has been used by more than 3,700 hospitals of level 2 or above across China. This laid a solid foundation for the sustained growth of insulin glargine. Thanks to the steady expansion of human insulin and the strong growth momentum of insulin glargine, the Company recorded double-digit growth in operating income in 2021.

Improving the company governance and operational efficiency

The Company improved its governance structure in 2021. Since 2019, the Company has been building up a team of young professional managers with market savvy. It has also introduced strategic investors, restructured the board of directors, developed an incentive mechanism that focuses on both long-term and short-term effects, and promoted a modern management system. As a result, the Company has seen continuously improved operational efficiency and cost management and control capability. Thanks to the expanded production scale, optimized product structure, improved operational efficiency, and reduced unit cost of products, the Company has notched up greater gross profit margins.

Tapping the existing assets and beefing up R&D investment

The Company has charted a clear course of development and spared no effort in R&D investment. To maximize its existing assets, the Company decided to transform toward an innovative pharmaceutical company. Additionally, to reserve more funds for centralized procurement, it sold a stake in Amoytop in 2021, which contributed to the Company's profits and cash flow for 2021. In doing so, the Company recouped the funds needed for supporting the development of novel drugs, expanding the market, and improving the product structure, thus helping the Company achieve high-quality and sustainable development.

Stressing return to shareholders and building confidence in growth

The Company carried out two share repurchases in 2021 for equity incentives and cancellation respectively. In the first quarter, the Company repurchased about RMB 120 million worth of shares for equity incentives. In July, the Board of Directors of the Company passed a plan to buy back no more than RMB 360 million worth of shares for equity cancellation. The share repurchases demonstrated the management's confidence in the Company's future development, the willingness to establish a long-term mechanism for the mutual growth of employees and the Company, and the determination to strengthen the return to shareholders.

2022: Staying true to the original aspiration and forging ahead

What's past is prologue. In 2021, insulin glargine became a principal contributor to the Company's sales growth. The approved insulin aspart and oral anti-diabetic drugs also turned into new pillars of business growth. With these achievements, Tonghua Dongbao will open up more possibilities in the market of diabetes treatment. The Company has been beefing up R&D investment, enriching the R&D pipeline, and expanding the talent team, in a sign of its determination in novel drug R&D. In 2022, Tonghua Dongbao will stay true to its original aspiration and continue to make independent innovation and write a new chapter for the Company's future development.