China Shineway Pharmaceutical Group Limited
HKEx Stock Code: 02877 Chinese
About Shineway Chairman's Statement
Company Profile
Chairman's Statement
Corporate Structure
Corporate Governance
Awards and Achievements
Management Team
Corporate Information

Dear shareholders,

On behalf of the board of directors (the "Board") of China Shineway Pharmaceutical Group Limited (the "Company" or "SHINEWAY"), I am pleased to present the annual report of the Group for the year ended 31December, 2015.

In the last five years, in response to the changing market conditions, SHINEWAY started its infrastructure reform according to its long term development direction, reconsolidated its resources, continued its innovation development and established its long term development strategy plan according to the practical situation in its market place. In 2015, according to our strategy plan, business infrastructure from suppliers to distribution was established. Suitable products were added to our existing product portfolio. The current business covered modern Chinese medicine research and development, production, sales, internet business and prescription granules business.

The sales and marketing management system changed from channel management to terminal management in 2015. The development of terminal management system was established steadily. The research and development system as well as the technology innovation system moved to a new level. The group was gradually transforming to a high technology enterprise. SHINEWAY successfully acquired Beijing Wanter Bio-Pharmaceutical Co., Ltd. in 2015. With biopharmaceutical products including Pseudomonas Aeruginosa injection and others, we started our business in biopharmaceutical sector. The prescription granule department and e-commerce departments were also established. The new business management infrastructure was up and running. Chinese prescription granule products were launched in 2015 and SHINEWAY became the one and only one Chinese prescription granule manufacturer in Hebei. With the support of every staff of the Company, we continued our quality production, integrated our resources, successfully controlled our costs and implemented our result oriented management system. With all the necessary control adjustments, we implemented our management system with all the necessary refinement, normalization and standardization. 2015 was a year for SHINEWAY to set up its foundation, to reform its sales platform and product structure. As general administrative expenses were increased, profit for the years was decreased. Our operating income and profit amounted to RMB2,055 million and RMB658 million respectively.

The Group recorded sales revenue of approximately RMB2,055 million in 2015, representing a year-on-year decrease of approximately 7.8%. The Group's profit for the year amounted to approximately RMB658 million in 2015, representing a year-on-year decrease of approximately 6.7%. The sales of injection products recorded a decrease of approximately 13.4% over the previous year. The sales of soft capsule products recorded a decrease of approximately 8.0% over the previous year. The sales of granule products recorded an increase of approximately 10% as compared with the previous year.

SHINEWAY's innovation research and development system and management system achieved significant achievement in 2015, including the three-level R&D system that further expand our area of research and development. Projects under research and development covered Chinese medicine, chemical drugs, biochemical drugs and healthcare products. We had 4 new drug projects in 2015 and the total number of ongoing projects amounted to 26. We obtained 2 clinical trials approvals, submitted 25 new patent applications and received 9 patent authorizations in 2015. Development of healthcare products focused on middle to high end products to meet the demands from the healthcare product market. 9 supplement products and 6 food products were launched. The cumulative number of patent application is 134 and 52 of them are authorized, including 7 patents authorized in seven nations and regions including United States, European Unions and Russia. SHINEWAY had already passed the certification of the intellectual property management system. Our proprietary product Shujin Tongluo granule obtained the national patent award. We undertook over 40 national science and technology major projects cumulatively.

Phase III SLT Clinical Trial was launched in Australia that marked our solid footprints in the worldwide Chinese medicine market.

SHINEWAY's Medical Department started our evidence-based research on products launched including Shu Xie Ning injection and Huamoyan granule etc. That provided solid academic and sales support for our frontline sales and marketing team.

SHINEWAY was listed in the Top 100 Pharmaceutical Manufacturers in China Pharmaceutical Industry and the Top 10 Enterprises in the Hebei Pharmaceutical Industry. SHINEWAY received many awards including the First Prize for the Quality Technology in Hebei.

2016 is a year of implementation for SHINEWAY. With the new infrastructure and new situation of the pharmaceutical industry, we will intensify our strategic and innovation focus according to our strategic direction. We will further strengthen our academic sales capabilities and specific brand management capabilities. With the accelerated development of retail sales and hospital sales network, we will reinforce our development and management in hospital, retail and primary health-care sectors. We will uplift our modern Chinese medicine business, expedite the bio-pharmaceutical business, develop the supplement market, speed up our e-commerce business, promote our healthcare products and accelerate the prescription granule business. SHINEWAY will continue our technology innovation, strengthen our research and development investment, focus on gross profit contribution, increase our performance efficiency, lower the manufacturing costs, improve the synergy between departments, improve our operation under the new market norm and develop our healthcare business. For bio-pharmaceutical business, we will develop our business based on existing products. With addition products from research and development and acquisition, bio-pharmaceutical business will be our future growth driver.

SHINEWAY's accomplishments are inseparable from our staff's hard work. On behalf of the Board, I would like to extend my sincere gratitude and high respect to our diligent staff for their dedication and efforts during the year.

Li Zhenjiang
Chairman of the Board

Hong Kong, 30 March 2016

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