On the evening of August 21, 2023, Tonghua Dongbao Pharmaceutical Co., Ltd. ("Tonghua Dongbao" or the "Company") released its semi-annual report for 2023.

In H1 2023, the Company's revenue stood at RMB 1.366 billion, down 1.53% YoY. Net profit attributable to shareholders of the listed company was RMB 485 million, dropping 59% YoY mainly due to last year's investment income of RMB 897 million in the same period. Net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, was RMB 480 million, up 8.75% YoY.

In Q2 2023, the Company's revenue was RMB 701 million, up 40.18% YoY. Net profit attributable to shareholders of the listed company was RMB 234 million, down 33.30% YoY. Net profit attributable to shareholders of the listed company, excluding non-recurring gains and losses, surged to RMB 233 million, up 346.90% YoY.

Consistent sales growth, improved performance QoQ

With the approvals of insulin glargine, insulin aspart, and repaglinide, the Company's product portfolio has strengthened, broadening treatment options for patients and unlocking further growth. During the reporting period, human insulin sales grew steadily, while insulin analogs continued their rapid expansion, reinforcing the Company's lead in the industry. The ongoing sales growth largely countered the decrease in revenue from lower centralized purchasing price, leading to improved operational performance QoQ. For Q2, the Company reported a revenue of RMB 701 million, up 40.18% YoY and 5.35% QoQ. The growth in sales also boosted the Company's market share. According to Pharmcube data, in H1 2023, the Company captured 44.6% of the human insulin market, maintaining the nationwide top spot.

Accelerated gout drug development carving new growth avenues

During the reporting period, the Company accelerated R&D for two novel gout/hyperuricemia drugs, aiming to address unmet clinical needs and rejuvenate the Company's growth trajectory.

URAT1 inhibitor:

The Phase I clinical trial reveals that the URAT1 inhibitor is safe and well-tolerated. A single dose effectively reduces blood uric acid levels in a dose-dependent manner, and continuous dosing amplifies this effect. The database for the Phase IIa clinical trial has now been locked and unblinded.

XO/URAT1 inhibitor:

The XO/URAT1 inhibitor is the first homegrown dual-target inhibitor for gout entering clinical trials. By optimizing both XO and URAT1 roles in reducing uric acid, it promises greater efficacy with fewer side effects, leading to significantly higher medication adherence, potentially making it a best-in-class drug. The Phase I trial has enrolled its first subject.

Consistent returns: 12 years of dividends

Prioritizing shareholder returns, the Company has declared dividends for 12 straight years. During the reporting period, the Company distributed about RMB 496 million in cash dividends for 2022. With an additional RMB 496 million from mid-year dividends, the total cash dividends for 2022 approached RMB 1 billion, reflecting an annual dividend payout ratio of 62.7%. This highlights the Company's commitment to protecting shareholder interests and enhancing investor confidence. Moving forward, the Company will continue its focus on the endocrine metabolism sector, aiming to deliver superior returns to shareholders.

Innovative growth and future prospects

With sales of current products surging, the Company's performance is on a recovery trajectory. For the latter half of 2023, the liraglutide injection and empagliflozin tablets are expected to gain approval, and the Company is gearing up for their launch.

The Company will continue to focus on innovation within endocrine metabolism medications. Committed to clinical value, we aim to fast-track results into market-ready solutions, expanding our market presence. On the R&D front, we will focus on two approaches, in-house R&D and working with external partners, to expand our R&D pipeline. Commercially, we seek to both broaden domestic sales channels and expedite overseas expansion, paving the way for continued growth.