On the evening of April 28, Tonghua Dongbao Pharmaceutical Co., Ltd. ("the Company" or "Tonghua Dongbao") released its quarterly report for Q1 2022. Specifically, the revenue hit RMB 887 million, up 7.85% YoY, the net profit attributable to shareholders of the listed company grew 146.90% YoY to RMB 831 million, and the net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, rose 15.63% YoY to RMB 389 million. The basic earnings per share (EPS) was RMB 0.41.

Increasing profitability facilitates long-term development

During the reporting period, the substantial increase in net profit of the Company was attributed to the expanded total addressable market and increasing profitability, as well as the investment income generated from the transfer of shares in Xiamen Amoytop Biotech Co., Ltd.

The revenue and profit in Q1 continued the growth momentum in 2021. The growth of insulin product sales, especially the continued release of insulin analogs, drove operating income to record highs. At the same time, due to lower cost and higher efficiency, the gross profit margin increased to 83.05%, and the profit margin excluding non-recurring gains and losses attributable to the parent company improved by 2.95 percent points YoY to 43.86%.

The impressive performance growth will provide ample financial support for future investment in innovation, R&D, and promising cooperative projects, in favor of long-term business development. At the same time, the Company will continue to increase cash dividends and conduct well-timed share repurchases to enhance shareholder returns.

Fruitful R&D results fuel innovation

During the reporting period, Tonghua Dongbao further strengthened innovation and R&D, with a total R&D spending of RMB 72 million, an increase of 15.18% YoY. The Company has comprehensively improved its R&D efficiency and made significant headway in the R&D of some products. In Q1, the first subject was enrolled in the Chinese phase I clinical trial of URAT1 inhibitor, a Class 1 novel drug for gout/hyperuricemia; BC Combo was approved for clinical trials by the Center for Drug Evaluation (CDE) of the China National Medical Products Administration (NMPA) and the Federal Institute for Drugs and Medical Devices (BfArM) in Germany; the application for a license to manufacture empagliflozin, an oral anti-diabetic drug, was accepted, and the application for registration of additional specifications of sitagliptin metformin tablets was also accepted.

Tonghua Dongbao also sought external cooperation to integrate the resources of all parties. In February 2022, the Company signed a strategic cooperation agreement with the Second Xiangya Hospital of Central South University to build a base for business-university-research-medical institution cooperation. In the future, the two parties will share resources and complement each other's advantages in talent training, drug development, clinical trial application, and result commercialization, adding further momentum to the Company's innovation and R&D.

Increasing shareholder returns and fulfilling social responsibility

During the reporting period, Tonghua Dongbao completed its 2021 share buyback and cancellation plan, totaling approximately RMB 264 million. Afterward, the Company announced a new round of share buyback and cancellation for a total amount not exceeding RMB 360 million. This new round of share buyback further enhances the return to shareholders. It reflects the management's confidence in the Company's future and recognition of the Company's value, and also demonstrates the Company's high regard for investors' rights and interests.

China has been battling severe COVID-19 outbreaks since March. With a close eye on the pandemic situation, Tonghua Dongbao has taken early precautions and responded quickly to maintain stable production and market supply. While wrestling with the pandemic, the Company manages to ensure normal and stable production, supply, and other business activities.

Looking ahead, the Company will continue investing in innovation and R&D, rolling into the future of an innovative pharmaceutical company on the two wheels of in-house R&D and external cooperation. Moreover, the Company will accelerate the adoption of insulin analogs by and increase their sales to public hospitals across China. Meanwhile, it will step up efforts to tap into retail channels and private hospitals to expand into incremental markets. In this way, the Company can further enhance the sales and market share of its products and ultimately achieve long-term success.