Sihuan Pharmaceutical Announces 2011 Annual Results

HONG KONG, March 19, 2012 /PRNewswire-Asia/ -- Sihuan  Pharmaceutical Holdings Group Ltd. (HKEx: 0460) ("Sihuan Pharmaceutical" or the "Company"), a leading pharmaceutical company with the largest cardio-cerebral vascular drug franchise in China's prescription market, today announced its annual results for the year ended 31 December 2011. Despite a very challenging environment, Sihuan Pharmaceutical once again posted exceptional performance. The Company's product portfolio was further diversified with newly acquired products, demonstrating its strong sales and marketing capabilities and successful identification, acquisition, and integration of high potential assets. In addition, the Group's continuous efforts in research and development ("R&D") were reflected in breakthroughs by both its innovative and generic drugs.

Financial Highlights

• Revenue of the Group increased by 116.2% to RMB2,242.1 million in 2011 from RMB1,036.9 million;
• Gross profit margin improved from 71.8% in 2010 to 76.5% in 2011;
• Profit attributable to owners of the Company increased by 57.8% to RMB824.0 million in 2011;
• Basic earnings per share increased by approximately 22.0% in 2010 to approximately RMB15.90 cents; and
• A final dividend of RMB2.5 cents per share and a second special dividend of RMB7.2 cents per share were recommended by the Board and are subject to the approval of the shareholders at the annual general meeting of the Company to be held on 1 June 2012.

For the year ended 31 December 2011, the Company's revenue grew by 116.2% to RMB2,242.1 million. Net profit attributable to the Company's equity owners grew by 57.8% to RMB824.0 million. Importantly, all of this was achieved during what was a relatively challenging year for the Chinese pharmaceutical industry from an operational perspective.

During the past year, Sihuan Pharmaceutical has managed to identify and leverage opportunities for further growth. Industry consolidation has allowed the Company to seek valuable M&A opportunities in order to drive diversification and growth. On the back of steady growth from the Company's existing products, such as Kelinao, Anjieli, Qu'Ao and Qingtong, the Company significantly increased the variety in its product offering and produced several more flagship products from its newly acquired products, such as Oudimei and Yuanzhijiu. Sales of its newly acquired products recorded significant growth, exceeding one-third of the Company's total sales, meaning it is far less reliant on too few products and is creating a very balanced revenue stream.

Sihuan Pharmaceutical has had a year of breakthroughs in terms of R&D, with Category I innovative drug Apapenum and exclusive, Category IV new drug Cinepazide Mesilate receiving clinical approval from the State Food and Drug Administration (SFDA). The Company now has 10 innovative patented drugs at various stages of development and has more than 5 cases pending approval for production licenses, including the Roxatidine injection, a first-to-market generic drug.

The Company is also focused on effectively developing its proven sales and marketing capabilities and has furthered its geographical penetration, expanded its sales and marketing team, and strengthened awareness of its brand. As a result of the Company's continuous efforts in securing tenders, the Company boosted its sales by winning tenders for its key products in most regions and at stable price levels. Its existing products have reached additional clinical departments in hospitals already covered in its distribution network and its newly acquired products have reached around 4,000 hospitals. In line with new GMP standards, the Company is currently conducting its Company-wide upgrade of production systems.

Dr. Che Fengsheng, Chairman and CEO of the Company, said, "Despite a challenging environment, Sihuan Pharmaceutical once again posted exceptional performance in 2011, highlighting the strength and adaptibility of our business. Leveraging the robust sales growth of cardio-cerebral vascular ("CCV") products, a more diverse and optimized product portfolio, and the Company's R&D capabilities, Sihuan Pharmaceutical achieved its internal targets and a growth rate that outperformed the industry last year. We solidified our position as the largest CCV franchise and have grown into the country's ninth largest pharmaceutical company in terms of hospital purchase price in China's prescription drug market."

Overview of Product Portfolio and Related Performance

The market share of the Company's CCV products in China's prescription drug market has risen to 9.4% from 7.5% in 2010 during the past year.  The Company has maintained steady growth of its existing products such as Kelinao, Anjieli, Qu'Ao, GM1 and Qingtong, which provide a solid foundation for the Company's business. Thanks to its stronger sales and marketing capabilities, sales of its newly acquired products, such as Oudimei, Yuanzhijiu and Yimaining recorded significant growth, exceeding one-third of our total sales.

The Company's non-CCV products, such as Zhuo'ao, Bi'ao, Ren'ao and Pojia also recorded satisfactory performance in 2011, which is mainly attributable to stronger sales and marketing capabilities and successful tendering. Sales of these products increased 7.6% to RMB212.1 million, representing approximately 9.5% of total revenue. Sales of its key product, Ren'Ao, Zhuo'Ao and Bi'Ao, Pojia and Luoanming posted satisfactory growth. Among the Company's non-CCV products, anti-infective drugs have seen decreases in sales, mainly due to government regulations on the clinical usage of anti-infectives.

Outlook for 2012

Looking forward, the Company will continue to optimize its product portfolio and enhance its sales and marketing capabilities to take advantage of broader market opportunities. In particular, the Company will focus on maintaining a steady growth of its existing products, supporting fast-growing newly acquired products, and improving the range and market share of CCV products to solidify its leading position in China's CCV prescription drug market. For its non-CCV products, the Company will explore other therapeutic areas such as oncology and CNS.  The Company will also continue to strengthen its proven sales and marketing model to further its penetration in the country to maximize the delivery of its existing and newly acquired products and drive overall performance.

Sihuan Pharmaceutical will identify appropriate opportunities for acquisition and collaboration that complement its business development strategies. The Company has also placed equal importance on R&D during the current year and is looking to expand its efforts beyond pharmaceuticals and into high-growth potential areas such as biotechnology. The Company is actively seeking opportunities for cooperation with overseas pharmaceutical companies in joint ventures and innovation initiatives to optimize its product portfolio and support the expansion of its business. The regions the Company is targeting for this kind of activity are North America, Europe, Japan and Taiwan. The Company also aims to apply for Investigational New Drug ("IND") with the U.S. Food and Drug Administration ("FDA") in 2012 for anti-hypertension drug Tylerdipine Hydrochloride, a Category I innovative drug and its first international drug to apply for both domestic and overseas registration.

Dr. Che concluded, "Despite recent regulatory changes and intensified competition in the market, we firmly believe that the pharmaceutical industry will continue to experience robust growth. We are in a strong position to effectively navigate through the industry's regulatory challenges, backed up by our strong sales and marketing capabilities, our proven and innovative R&D capabilities, and our diverse and expanding product portfolio, all of which will serve to further grow the business and deliver long-term sustainable results for our shareholders."

About Sihuan Pharmaceutical Holdings Group Ltd.

Founded in 2001, Sihuan Pharmaceutical Holdings Group Ltd. is a leading pharmaceutical company and the largest cardio-cerebral vascular drug franchise in China's prescription drug market by market share. The success of the Group can be attributed to its differentiated and proven sales and marketing model, diversified portfolio of market leading drugs, extensive nationwide distribution network and strong research and development capabilities. The company's current products encompass the top five medical therapeutic areas in China: cardio cerebral vascular system, central nervous system, metabolism, oncology and anti-infectives. Their major products such as Kelinao, Anjieli, Chuanqing, Qu'Ao GM1 and Oudimei are widely used in the treatment of various cardio-cerebral vascular diseases.

SOURCE Sihuan Pharmaceutical Holdings Group Ltd.

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