Shanghai Fudan Zhangjiang Bio Pharmaceutical : Interim Report For the Six Months Ended 30 June 2020

September 10, 2020 at 05:05 am EDT

上海復旦張江生物醫藥股份有限公司

Shanghai Fudan-ZhangjiangBio-Pharmaceutical Co., Ltd. *

(a joint stock company incorporated in the People's Republic of China with limited liability)

(Stock Code: 1349)

INTERIM REPORT

For the six months ended 30 June 2020

For identification purpose only

Key Financial Indicators of the Company

KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE COMPANY
1. Five years financial data highlights Results

					Unaudited
			Six months ended 30 June
	2020		2019		2018		2017		2016
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Revenue	235,615		390,693		295,705		272,040		241,910
Profit before income tax	27,997		93,412		53,905		52,680		49,013

Income tax expense	1,368		(8,340)	(8,031)	(7,133)	(7,475)
Profit for the period	29,365		85,072		45,874		45,547		41,538
Profit attributable to：

Shareholders of the Company	29,079		91,720		52,408		49,572		45,936
Non-controlling interests	286		(6,648)	(6,534)	(4,025)	(4,398)
Total comprehensive income


for the period	29,416		85,078		45,915		45,367		41,538
Total comprehensive


attributable to：
Shareholders of the Company	29,130		91,726		52,449		49,392		45,936
Non-controlling interests	286		(6,648)	(6,534)	(4,025)	(4,398)


EBIDTA	58,240		127,809		83,862		78,710		65,524
Basic and diluted earnings per share

for profit attributable to the	RMB	RMB	RMB	RMB	RMB
shareholders of the Comapny	0.0310		0.0994		0.0568		0.0537		0.0498
Assets and liabilities

	Unaudited			Audited
	30 June			31 December
	2020		2019		2018		2017		2016
	RMB'000	RMB'000	RMB'000	RMB'000	RMB'000
Total assets	2,402,467		1,564,825		1,469,691		1,145,134		1,120,753
Total liabilities	(533,849)	(631,676)	(515,259)	(252,652)	(247,699)

	1,868,618		933,149		954,432		892,482		873,054
Capital and reserves


attributable to：
Shareholders of the Company	1,870,370		931,525		943,218		872,390		843,554
Non-controlling interests	(1,752)	1,623		11,214		20,092		29,500

	1,868,618		933,148		954,432		892,482		873,054

Key Financial Indicators of the Company

KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE COMPANY (continued)
1. Five years financial data highlights (continued)
  The Company adopted the China Accounting Standards for Business Enterprises to prepare its overseas financial statements since 24 February 2020 and made relevant adjustments on its interim consolidated financial statements for the six months ended 30 June 2019 according to China Accounting Standards for Business Enterprises. The interim consolidated financial statements of the Company for the six months ended 30 June 2018, 2017 and 2016 were prepared in accordance with the International Financial Reporting Standards and no adjustments were made thereto.

(II)	Key accounting data
				Unit: RMB
				Change as
				compared with
		Reporting	Corresponding	the corresponding
		Period	period	period of
	Key accounting data	(January to June)	of last year	last year (%)
	Revenue	235,614,896	390,693,485	-39.69
	Net profit attributable to shareholders
	of the listed company	29,078,874	91,719,590	-68.30
	Net profit deducting non-recurring profit or
	loss attributable to shareholders of the
	listed company	10,530,619	76,608,030	-86.25
	Net cash flows from operating activities	60,819,045	100,662,251	-39.58
		As at the end		Compared with
		of the Reporting	As at the end	the end of last
		Period	of last year	year (%)
	Net assets attributable to shareholders
	of the listed company	1,870,369,519	931,525,379	100.79
	Total assets	2,402,467,436	1,564,824,553	53.53
(III)	Key financial indicators
				Change as
				compared with
		Reporting	Corresponding	the corresponding
		Period	period	period of
	Key financial indicators	(January to June)	of last year	last year (%)
	Basic earnings per share (RMB per share)	0.03	0.10	-70.00
	Diluted earnings per share (RMB per share)	0.03	0.10	-70.00
	Basic earnings per share after deduction of
	non-recurring profit or loss (RMB/share)	0.01	0.08	-87.50
	Weighted average rate of return on net assets			Decreased by 6.29
	(%)	3.19	9.48	percentage point
	Weighted average rate of return on net assets
	after deduction of non-recurring profit or			Decreased by 6.81
	loss (%)	1.17	7.98	percentage point
	Proportion of R & D investment in operating			Increased by 10.69
	revenue（%）	24.15	13.46	percentage point

Key Financial Indicators of the Company

KEY ACCOUNTING DATA AND FINANCIAL INDICATORS OF THE COMPANY (continued)
1. Key financial indicators (continued)
  Description of key accounting data and financial indicators
  The financial statements in the interim report of the Company were prepared in accordance with the China Accounting Standards for Business Enterprises and related requirements issued by the Ministry of Finance of the People's Republic of China ("PRC") and it is unaudited. Unless otherwise specified, the currency referred to in this interim report for accounting purpose is RMB.
  The revenue of the Company and its subsidiaries (the "Group") during the six months ended 30 June 2020 ("Reporting Period") decreased by 39.69% comparing to the same period in 2019. As the Group's main products have to be used for treatment in hospitals, the sales volume and terminal use of the Company's products were adversely affected to different extents during the The COVID-19 epidemic (the "Epidemic") with those of ALA and LIBOd® decreasing obviously due to the restrictions of products transportation and the treatment of patients. The net profit attributable to shareholders of listed company decreased by 68.30% compared with the same period of last year.
  During the Reporting Period, the Company's net cash flow from operating activities decreased by 39.58% compared with the same period of last year, which was mainly due to the decrease of revenue, and affected by the Epidemic, the slow down of the Group's receivables collection for the six months ended 2020.
  As at 30 June 2020, net assets attributable to shareholders of listed company and total assets increased by 100.79% and 53.53% respectively compared with the end of last year, which was mainly due to the funds raised by the Company in the initial public offering on the The STAR Market of the Shanghai Stock Exchange ("STAR Market") in June 2020.

DIFFERENCES IN ACCOUNTING DATA BETWEEN DOMESTIC AND OVERSEAS ACCOUNTING STANDARDS Not applicable.

Key Financial Indicators of the Company

NON-RECURRINGPROFIT OR LOSS ITEMS AND AMOUNTS

		Unit: RMB
Non-recurring profit or loss items	Amount	Notes(if applicable)
Gains or losses from disposal of non-current assets	3,652,221	Note 5(43) in "Financial Report"
Government grants recognized through profit or loss	13,013,136	Note 5(39) in "Financial Report"
for the period (other than government grants which
are closely related to the Company's normal business
operations, which comply with national policies and can
be enjoyed continuously based on a fixed amount or a
fixed quantity according to a certain standard)
Profit and loss from entrusting others to invest or	4,344,657	Note 5(40) in "Financial Report"
manage assets
Other non-operating income and expenses other	293,274
than the above items
Other profit/loss items falling within the definition	-982	Note 5(40) in "Financial Report"
of non-recurring profit and loss
Effect on minority interests	-549,923
Effect on income tax	-2,204,128
Total	18,548,255

IV. OTHERS

Not applicable.

Overview of the Company's Businesses

INTRODUCTION OF THE MAIN BUSINESSES, OPERATION MODEL AND INDUSTRY SITUATION OF THE COMPANY DURING THE REPORTING PERIOD
1. The main businesses of the company
  The Group is mainly engaged in innovative research and development, production and marketing of biomedicine. Since its establishment, with the ultimate goal to stay as an innovator and a leader in the bio- pharmaceutical industry, the Group has committed to exploring unmet needs and deficiencies of clinical and patients treatment as well as developing novel and more effective treatments/medicines, so as to realize our mission that "The More We Explore, the Healthier Human Beings Will Be".
  The main products of the Group includes:
2. 1. Aminolevulinic Acid Hydrochloride Topical Powder (艾拉®, ALA)
    ALA, first in class drug, the first photodynamic drug for the treatment of condyloma acuminate in the world. It has become the preferred choice in the clinical therapy after many years of marketing. Compared with traditional therapy, the ALA photodynamic therapy has remarkably reduced the recurrence rate of condyloma acuminate, solving a clinical problem and filling in the vacancy of condyloma acuminate treatement in special parts on the body (urinary canal, ananl canal and cervix) internationally. The therapy of ALA combined with photodynamic technology initiated by the Company was recorded in the text book of Dermatovenercology and relevant clinical treatment guidance from 2013. The latest ninth edition of Dermatovenercology adds the new application of the aforementioned therapy on the acne treatment.
  2. Long Circulating Doxorubicin Hydrochloride Liposome Injection (里葆多®, LIBOd®)
    LIBOd® for the treatment of tumors, was launched to market in August 2009. The drug is a new doxorubicin formula which adopts the advanced stealth liposomal encapsulation technology and has passive targeting characteristics. It is a new generation of replacement for anthracycline drugs. In oncology, it has the advantages of enhancing efficacy and remarkably lowering the effects of cardiac toxicity, myelosuppression and hair-loss. Doxorubicin hydrochloride liposome is used for the treatment of Kaposi's sarcoma, breast cancer, ovarian cancer and other kinds of tumors.
  3. Hemoporfin For Injection (复美達®, FuMeiDa)
    FuMeiDa, the first photodynamic drug for the treatment of PWS in the world, is a new drug with new drug target, new compound and new indication. After injection into the blood, Hemoporfin spreads quickly to the surrounding tissues and tends to distribute specifically in vascular endothelial cells. It would selectively damage the photosensitizer-rich vascular endothelium by the use of laser or LEDs with certain wavelength. The dilated and abnormal capillaries in the lesions of patients will be cleared by photodynamic reaction and further effects of coagulation system. PWS had no good treatment before. As one of the second generation photosensitizer, compared with traditional therapies, Hemoporfin is featured by stable chemical structure, lower photosensitization, rapider metabolism, shorter light-avoidance period requirement, more uniform to treat, higher cure rate, lower incidence of scar formation and lower recurrence rate. The excellent efficacy of the drug in the market and the high cure rate compared to the traditional laser treatment rejoice the clinicians and researchers. The latest ninth edition of Dermatovenercology adds Hemoporfin developed by the Group as new photosensitizer for the treatment of PWS.

Overview of the Company's Businesses

INTRODUCTION OF THE MAIN BUSINESSES, OPERATION MODEL AND INDUSTRY SITUATION OF THE COMPANY DURING THE REPORTING PERIOD (continued)
1. Operation model of the company
2. 1. Profit model
    The Group is mainly engaged in innovative research and development, manufacturing and marketing of biological medicine. Through the industrialization of independent research and development products, the Group finally realizes sales revenue and profit. During the Reporting Period, the main business income of the Group mainly comes from the sales revenue of the Company's pharmaceutical products.
  2. Procurement model
    The Group's procurement system is mainly divided into raw materials for production procurement, R&D related procurement and daily office supplies procurement. The Group has formulated the Management System of Material Requisition and Purchase Application, the Procedures of Material Procurement Management and Supplier Management under cGMP system to ensure the orderly progress of the Group's procurement activities.
  3. Production model
    The Group's production system is built in strict accordance with the relevant national laws and regulations. The Company's production system is established by the production department and the quality department. The Company implements the production strategy of "sales oriented production" and formulates the production plan according to the sales orders, the expected sales situation and the inventory volumn.
  4. Sales and marketing model
    The Group mainly relys on distributors for product sales. The Group's photodynamic drugs ALA (艾拉®) and FuMeiDa (复美達®) use the Company's own team for promotion, while the anti-tumor drug, LIBOd® (里葆多®) uses an entrusted CSO for market promotion.
  5. Management model
    The Group is committed to establishing a standardized and stable enterprise management structure. The Group will maintain the interests of all the stakeholders by improving standardized operation systems and scientific decision-making systems with greater transparency and the establishment of an effective accountability mechanism.

During the Reporting Period, the Group's operation model did not change significantly.

Overview of the Company's Businesses

INTRODUCTION OF THE MAIN BUSINESSES, OPERATION MODEL AND INDUSTRY SITUATION OF THE COMPANY DURING THE REPORTING PERIOD (continued)
1. Basic information of the Company's industry
2. 1. Overview of the development of China's pharmaceutical industry
    The pharmaceutical industry is an important part of the national economy. With the development of economy and the improvement of people's living standard, China's pharmaceutical industry presents a sustained and promising development trend, and the status of the pharmaceutical industry is gradually improving. In the future, China's pharmaceutical industry will continue to grow and its position in the national economy will continue to improve.
  2. Current situation of dermatology medicine industry in China
    At present, air pollution is becoming more and more serious, which causes the incidence rate of skin diseases to increase, and the factors causing such diseases are evloving. Dermatosis is a common and frequently occurring disease in medical science, which is characterized by a wide range of patients, large number of symdromes and long treatment time. In recent years, the number of patients with skin diseases continues to grow, and their age is becoming younger and younger. Due to the repeated skin diseases, delayed treatment and high treatment costs, skin diseases bring great disadvantages to the rehabilitation of patients.
  3. - The treatment of condyloma acuminate
      Condyloma acuminate, also known as genital warts or venereal warts, is a sexually transmitted disease caused by human papillomavirus (HPV) infection, belonging to the category of skin and venereal diseases. Up to now, HPV have been discovered, which mainly infect epithelium. Human beings are the only host of such virus. Hpv-6,11,16,18 are the main viruses causing condyloma acuminate. The purpose of the treatment of condyloma acuminate is to remove the wart and reduce or prevent recurrence as much as possible. The treatment of Condyloma acuminate in mainly includes drug therapy, physical therapy and photodynamic therapy. Among them, the representatives of drug therapy are 0.5% podophyllotoxin tincture (ointment), 5% imiquimod cream, 80%-90% trichloroacetic acid (TCA) or dichloroacetic acid (BCA), interferon and fluorouracil; the representatives of physical therapy are surgical treatment, cryotherapy, laser therapy, electrocautery; photodynamic therapy refers to ALA photodynamic therapy.
    - The treatment of PWS
      PWS is a common congenital vascular malformation characterized by ectatic capillaries in the papillary layer of the dermis. The visible manifestation of this disorder is usually relatively flat patches composing of expanded capillaries that rarely swell up. The lesions tend to become darker and thicker with time and rarely fade away during the patient's life. PWS may occur on anywhere of the body; its appearance on face and neck is reported to be about 0.3~0.4% incidence of infants worldwide. Before age 40, over 65% of patients without treatment will face the situation of thicken and modular lesions causing great negative effect to the patients' appearance and severe emotional depression.

Overview of the Company's Businesses

INTRODUCTION OF THE MAIN BUSINESSES, OPERATION MODEL AND INDUSTRY SITUATION OF THE COMPANY DURING THE REPORTING PERIOD (continued)
1. Basic information of the Company's industry (continued)
  3. Current situation of China's antineoplastic drug industry
  Malignant tumor is one of the most serious diseases threatening human health and social development. Among the 184 countries and regions in the world, the incidence of malignant tumor in China is in the middle and above the average level, accounting for 21.8% of the global malignant tumor incidence.
2. - The current situation of anthracycline antineoplastic drug industry
    Anthracyclines are anti-tumor antibiotics, which are chemical matters produced by microorganisms with antitumor activity. Anthracycline drugs include daunorubicin (DNR), doxorubicin (ADM), epirubicin (EPI), pirarubicin (THP), mitoxantrone (MIT) and carborubicin. Doxorubicin ranks first in the market share of anthracycline anticancer drugs in China, and it is also the fastest growing variety. Doxorubicin is commonly used in the treatment of malignant lymphoma, acute leukemia and breast cancer. It not only has satisfactory curative effect on lymphoma, Kaposi's sarcoma, multiple myeloma, gynecological tumor, breast cancer and other tumors, but also can effectively improve the related adverse reactions, significantly reduce cardiac toxicity and improve the treatment index.

CORE TECHNOLOGY AND R&D PROGRESS
1. Core technology, advance level and changes during the Reporting Period
Since the establishment, the Company has always adhere to the R&D philosophy that based on the premise of clear market demand, the decisive factor in project evaluation is whether a project can reflect unique clinical treatment effect. In addition, the Company also selects products with technical barriers for industrialization. On the premise of meeting clinical needs, the Company will try to realize differentiated competition, utilize R&D resources effectively and maximize economic benefits.
Based on the above R&D philosophy, the Company has formed the genetic engineering technical platform, photodynamic technical platform, nano technical platform and oral solid preparation technical platform. The Company's core technologies are obtained by independent research and development.
1. Genetic Engineering Technical Platform
  The Company has been based on genetic engineering technology since its establishment, and has successively developed cytokines, fusion proteins, monoclonal antibodies, antibody coupled drugs products for unmet clinical needs, and established relevant technical platforms. In the early years, the Company transferred a number of genetic engineering technologies and contributed the revenue for the early development of the Company. With the continuous expansion of the Company, the industrialization of genetic engineering technical drugs has a feasible foundation. In the future, the Company will continue to strengthen the research on genetic engineering technical platform projects that have entered clinical practice, and strive to realize the industrialization of gene drugs as soon as possible.
  Antibody-conjugated drug is an important research and development direction of the Company's genetic engineering technical platform. At present, Antibody-conjugated drugs have shown obvious advantages in clinical treatment, and its curative effect is much higher than that of conventional antibody combined with chemotherapy drugs in the treatment of tumor. In order to grasp the development trend of biopharmaceutical field, the Recombinant Anti-CD30Human-mouse Chimeric Monoclonal Antibody- MCC-DM1 Injection ("CD30-MMAE") for the treatment of tumors is undergoing clinical trial phase I research. The Trop2 antibody-conjugated drug and the Her2 antibody-conjugated drug for triple negative breast cancer, bladder cancer, gastric cancer and other tumors are under pre-clinical study.

Overview of the Company's Businesses

CORE TECHNOLOGY AND R&D PROGRESS (continued)
1. Core technology, advance level and changes during the Reporting Period (continued)
1. Photodynamic Technical Platform
  The scientific exploration of photodynamic therapy began at the beginning of the 20th century. In the late 1970s, photodynamic therapy began to be used in clinical practice. The first photosensitive drug was approved for sales in 1993. Based on the unique therapeutic value of photodynamic therapy in some precancerous lesions and non tumor diseases that can not be treated or intervened, and the absence unified scientific standard in the world, the Company established a prospective photodynamic technical platform in year 1999.
  The Company's photodynamic technology is in the world's leading level. The Company has continued to expand the drug research and development based on the photodynamic technical platform for many years and photodynamic drugs are one of the Company's important product groups. The main photodynamic drugs of the Company are ALA for condyloma acuminate and FuMeiDa for PWS. The research projects mainly include phase IV clinical trial and US registration for Hemoporfin, and indication expansion for ALA, etc.
  The Company took the lead in promoting ALA in the treatment of condyloma acuminate to clinical research in the world, and successfully obtained the registration approval in 2007 and realized industrialization. It provided a new treatment method for the traditional condyloma acuminate treatment and filled in the lack of clinical treatment of condyloma acuminate. Since 2013, the ALA photodynamic therapy program of the Company has been included in the textbook of Dermatovenercology (Eighth Edition) published by People's Health Publishing House, and the application of acne treatment has been added in its latest ninth edition. The ALA photodynamic therapy program has also been included in the "Condyloma Acuminate Diagnosis and Treatment Guidelines (2014)" and "Condyloma Acuminate Treatment Expert Consensus (2017)" issued by the Chinese Medical Association.
  FuMeiDa, another important product from the Company's photodynamic technical platform, has obtained the national chemical drug class 1.1 new drug certificate in 2012, the registration approval in 2016, and achieve industrialization in 2017. FuMeiDa is the only drug approved for the treatment of PWS within the scope of ICH regulatory agencies. It is a new drug with new effect mechanism, new compound and new indication. Based on its obvious technical and clinical advantages, the industrialization of FuMeiDa provides a new solution for the treatment of PWS. The latest ninth edition of Dermatovenercology published by People's Health Publishing House adds Hemoporfin as new photosensitizer for the treatment of PWS developed by the Group as a therapy.
  In the future, the Group will continue to emphasize on the features of "one drug for several indications" and "a new scalpel for clinical treatment" of photodynamic drugs and follow the treatment principle of photodynamic drugs to carry out research on multiple indications such as CIN infected by HPV ("CIN") and acne. The Group is commencing further research on molecular mechanism and the effect mechanism of photodynamic drugs in order to discover new photodynamic compound to improve the efficacy and overcome the defects. At the same time, exploration of the fundamental research on the relationship between the penetrating power of different light wavelengths and the treatment of tumour is under progress. Meanwhile, the Company has planned to apply for the international registrations for the launched drugs, which will lay a foundation for the international development of the Group.
  Under this technical platform, the projects in research of the Group during the Reporting Period is Aminolevulinic Acid Hydrochloride used for the treatment of CIN, which is currently in phase II clinical research; and the application Aminolevulinic Acid Hydrochloride used for the treatment of moderate and severe acne,which is under phase I clinical research.

Overview of the Company's Businesses

CORE TECHNOLOGY AND R&D PROGRESS (continued)
1. Core technology, advance level and changes during the Reporting Period (continued)
1. Nano Technical Platform
  Nano preparation can not only improve the water solubility and bioavailability of the drug, but also use its EPR effect to target delivery of anti-tumor drugs to achieve effect enhancement and toxicity reduction. There are many technical barriers in the research and development of nano drug: 1) the structure of liposomal formulation is complex and there are few drugs launched into the market, so it is difficult to form a complete technical system; 2) lacking of high-quality excipients, the threshold and the expenses for the development of new lipids is relatively high; 3) the application technology and production process of liposomes are quite different due to the differences in design so that the production equipments need to be customized; 4) the steps of lipsomes preparation are complex and there are much more quality control points. It is difficult to maintain the quality consistency. The Company started the research and development of liposome drugs under the context of pure fundemental research and lack of industrial application of liposome drugs in China and gradually established a nanotechnical platform.
  Under this technical platform, LIBOd® for the treatment of tumors, was launched to market in 2009.
  According to the requirements of relevant PRC laws and regulations, the Company started the domestic bioequivalence evaluation research from 2019. Nanoparticle Albumin-bound Paclitaxel (紫杉醇白蛋白納米粒) for the treatment of tumors is under the pre-clinical study and its improvements have been made in large-scale production processes. The production of such project has been upgraded and the Company will launch the bioequivalence study and then apply for the drug registration base on the market conditions. The Group will further develop drugs based on the platform of preparation technology of nano drugs to speed up the ability and the progress of commercialization for the Group.
2. Oral Solid Preparation Technical Platform
  Although the Company has successfully realized the industrialization of several drugs after years of research and development, there are still problems such as long industrialization cycle and much empty window period. In recent years, based on the strategic consideration of the long-term development, the Company has established the oral solid preparation technical platform on which various new drugs and generic drugs with specific clinical value are being developed, so as to shorten the period of industrialization projects. Small molecule targeted drugs and special oral preparations are the research fields of new drugs with high attention nowadays. The company is developing several new drugs and generic drugs with unique clinical therapeutic value. Oral solid preparation technology will be one of the basic technology platforms for the long-term development of the Company.
  Under this technical platform, obeticholic acid (奥貝膽酸) for the treatment of hepatobiliary disease of the Group has obtained a relevant patent in mainland China and is performing the bioequivalence study. It is a generic drug of a medicine developed in the US and listed worldwide for the treatment of primary biliary cirrhosis (PBC). Such drug has a large market in China which is a country with high incidence of hepatobiliary disease. The selective inhibitor project for JAK1, a small molecular targeting drug of the Group, has been confirmed to have great therapeutic value on the autoimmune disease. The Company is looking forward to finding a new me-better drug containing therapeutic advantages.

Overview of the Company's Businesses

CORE TECHNOLOGY AND R&D PROGRESS (continued)
1. R&D achievements obtained during the reporting period
  The selective inhibitor project for JAK1, a small molecular targeting drug of the Group, obtained the clinical trial approval during the Reporting Period.
  During the Reporting Period, the Group applied for 1 invention patent, and has been granted 2 domestic invention patents. As the end of June 2020, the Group has cumulatively applied for 88 invention patents, and has been granted 48 invention patents.
  For details of the pipeline of the Company, please refer to "Discussion and Analysis on Business Operations"-"II. Core Technology and R&D Progress"-"4. Research Projects".
2. R&D investment

	Unit: RMB
Expended R&D investment for the period	54,373,006
Capitalized R&D investment for the period	2,530,230
Total R&D investment	56,903,236
Portion of R&D investment to the operating revenue (%)	24.15
Portion of Capitalized R&D investment (%)	4.45

4. Research projects

							Unit: RMB0'000
			Amount
		Estimated	Investment
		Total	in the	Accumulated				Specific
		Investment	Current	Investment	Progress or Phased	Target to Be	Technical	Application
No.	Project Name	Amount	Period	Amount	Results	Achieved	Standards	Prospect
1	The registration	23,000.00	360.89	1,274.79	The Group has	Allowing Hemoporfin	Photodynamic	PWS
	project of				conducted an	product to enter	Technical
	Hemoporfin in the				preliminary	into the US market
	United States				communication with	by successfully
					the US Food and	registration and
					Drug Administration	introduction of
					(the "FDA") and will	Hemoporfin to the
					submit the clinical	US market, will
					application as soon	achieve the target of
					as possible after	internationalization
					improving relevant	of the Company's
					proposal.	core products,
						increase new profit
						growth points
						for the Company
						and increase its
						overall scope of
						business, constant

profitability and overall competitiveness.

Overview of the Company's Businesses

CORE TECHNOLOGY AND R&D PROGRESS (continued) 4. Research projects (continued)

Amount

Estimated

Investment

Total

in the

Accumulated

Specific

Investment

Current

Investment

Progress or Phased

Target to Be

Technical

Application

No.

Project Name

Amount

Period

Amount

Results

Achieved

Standards

Prospect

The innovational

24,000.00

1,234.03

3,716.40

For details, please

The focus of this

genetic

Clinical

research and

refer to "Overview

project is to invest

engineering

treatment of

sustainable

of the Company's

in the Company's

technical

tumors, skin

development

Business" - "IV.

research and

platform,

diseases and

project in relation

Analysis of Core

development

photodynamic

autoimmune

to biological

Competitiveness for

platforms for its core

technical

diseases

medicine

the Reporting Period"

technologies, so as to

platform,

"1. Analysis of core

expand its research

nano technical

competitiveness.

and development

platform and

channels,

oral solid

increase its overall

preparation

competitiveness,

technical

strengthen its

platform

sustainable

development ability

in the biomedical

domain, with an

ultimate aim of

achieving the

industrialization of

ongoing projects.

Total

47,000.00

1,594.92

4,991.19

Other explainations: The "Investment Amount in the Current Period" in the table above refers to the outsourcing R&D and clinical research expenses occurred during the Reporting Period. The "Accumulated Investment Amount" refers to the accumulative investment in outsourcing R&D and clinical research during the period covered by the Report on the Investment Project invested with Self-raised Funds In Advance instead of IPO proceeds.

Overview of the Company's Businesses

CORE TECHNOLOGY AND R&D PROGRESS (continued)
5. R&D personnel

Unit: RMB

Basic information
Number of R & D personnel (person)	99
The proportion of R&D personnel in the total number of employees
of the Company	16.02
Total amount of salary of R&D personnel (yuan)	12,730,156
Average amount of salary of R & D personnel (yuan)	128,587

	Education level
Education structure	Number (person)	Proportion (%)
Doctor	6	6.06
Master	42	42.42
Bachelor	41	41.41
Bachelor degree or below	10	10.10
Total	99	100.00
	Age structure
Age range	Number (person)	Proportion (%)
50 and above	6	6.06
40-49	12	12.12
30-39	50	50.51
20-29	31	31.31
Total	99	100.00

EXPLANATION ON MATERIAL CHANGES IN THE COMPANY'S MAJOR ASSETS DURING THE REPORTING PERIOD
For the major changes of the Company's main assets during the Reporting Period, please refer to "Discussion and Analysis on Business Operations"-"III. Operation Result for the Reporting Period" - "(III) Analysis on Assets and Liabilities".
Among them: foreign assets 3,519,934 (unit: yuan, currency: RMB), accounting for 0.15% of the total assets.

Overview of the Company's Businesses

IV. ANALYSIS OF CORE COMPETITIVENESS FOR THE REPORTING PERIOD

1. Analysis of core competitiveness

Thanks to strong support to pharmaceutical companies from the National Guideline on Emerging Sectors of Strategic Importance during the 13th Five-Year Plan period, as a pharmaceutical enterprise focusing on new drug research and development, the Group has adhered to choosing the projects that can meet the unmet needs and deficiencies of clinical and patients treatment since establishment, and the evaluation system of project progress depends on whether specific accomplishment of treatment will be achieved. The Group is seeking a balanced development in the conflict between "me-too" and "first in class". At present, the products of the Company launched or under development of the Group have shown positive prospect and characteristics of less affected by changes of policies. The effort and strategies adopted by the Company over the years have laid a solid foundation and generated a driving force for the Group's development under the new policy environment.

Advantages of R&D Innovation

				Comparison with Industry
Technical Platform	Project Name	Proposed Indications	Progress	Technical Level
	CD30-MMAE	Tumors	Clinical trial phase I	International leading level
	Trop2-directed antibody	Tumors	Pre-clinical study	International advanced level
Genetic engineering	drug conjugate
	HER2-directed antibody	Tumors	Pre-clinical study	International advanced level
	drug conjugate
			Clinical trial phase IV	International leading level: new
	Hemoporfin (海姆泊芬)	PWS	In the process of registration
	compound and new indication.
			in USA
Photodynamic
Aminolevulinic acid	Cervical diseases infected	Clinical trial phase II	International leading level: new
technology
	by HPV		indication.

	Aminolevulinic acid	Acne	Clinical trial phase I	International leading level: new
				indication.
	Doxorubicin liposome	Tumors	In the process of registration in	International advanced level
			USA. Prepare for domestic
Nano technology			bioequivalence evaluation
		research and registration.

	Nanoparticle Albumin-	Tumors	Pre-clinical study	International advanced level
	bound Paclitaxel
Oral solid preparation	Obeticholic acid	Hepatobiliary disease	Bioequivalence study and drug	International advanced level
technology			registration
JAK1 inhibitor	Autoimmune diseases	Clinical trial approval Obtained	International advanced level

Advantages of Technology Platform
Please refer to "Overview of the Company's Business" - "II. Core Technology and R&D Progress".

Overview of the Company's Businesses

IV. ANALYSIS OF CORE COMPETITIVENESS FOR THE REPORTING PERIOD (continued)

1. Analysis of core competitiveness (continued)

Advantages of Promotion
The Group continues to regard academic promotion as its primary marketing method. The Wechat communication platform for photodynamic technology that the Company established serves as a network service system integrated with academic exchanging among dermatology clinician, sharing of clinical case and standard practice video, and a Q&A platform between doctors and patients, etc. The platform has become a relatively well-known professional Wechat subscription account in China. In addition, the Company plans to take advantage of doctor resources on the platform to develop a new sales mode to solve some commonly seen problems in current marketing environment and some commonly seen difficulties for patients in hospital.
Advantages of Product Quality Control
The Company has formulated complete production management and quality control rules and regulations which follow the cGMP standards of China as well as refer to cGMP requirements and guidelines of FDA and EMA in Europe. Quality control is an important part of pharmaceutical production activities. The Company's quality management system mainly includes quality control laboratory control, data analysis and quality review, corrective and preventive measures (CAPA), etc.
In order to implement the quality management system, the Company has developed a quality document management system including standard management procedures, standard operating procedures, standard technical procedures and standard operation records, and established corresponding cGMP data management procedures, which cover both paper data and electronic data to ensure data integrity. At the same time, the Company also develops a quality risk management process and systematically applies it to all aspects of quality control. In order to ensure the stability and consistency of product quality, the Company also carries out continuous verification of various production processes. In addition, the Company's production personnel should be fully trained before assuming their posts, and each employee should be trained, assessed and proven qualified according to the post requirements.
A series of management standards and operating procedures established by the Company have realized the standardization, routinization and institutionalization of all production steps under the high standard cGMP management requirements.
Advantages of Management and Technical Team
The advanced business philosophy and incentive system of the Company attracted a large number of technical personnel to join, forming a mature R&D technology team, which is the conorstone of the Company's core technology platform. The long-term stability of the Company's core management provides important support for the sustainable and stable development of the enterprise. The stable and efficient core technical team has laid the foundation for the long-term development of the Company.

2. Events that seriously affect the company's core competitiveness during the reporting period, impact analysis and countermeasures

Not applicable.

Discussion and Analysis on Business Operations

DISCUSSION AND ANALYSIS ON BUSINESS OPERATIONS REVIEW
During the Reporting Period, there were no significant changes in three major products of the Group and their business model, sales model and price, composition of major customers and suppliers, and tax policies.
Since the outbreak of the Epidemic, the provinces and cities in China have adopted public health measures for emergencies, including but not limited to the limitation on the travel of citizens and implementation of conditional resumption of work after the Chinese New Year holidays, to curb the spread of the Epidemic.The Company has officially resumed operation since February 2020.
As the spread of the Epidemic has been basically brought under control in China, the transportation of products and the treatment of patients have gradually resumed, and the sales volume and terminal use of the medical products of the Group have also gradually recovered. However, due to the fact that the Epidemic control measures are still in place, hospitals and their affiliated departments are still in the process of resumption of operation. The number of patients and frequency of treatments in the hospital are significantly lower than the normal level. Considering the overall impact of patients' medical treatment environment, the Group's business performance in the first half of 2020 were greatly affected. The revenue during the Reporting Period was RMB236,000,000 which decreased by 39.69% compared with the same period of last year.
In respect of R&D, the Group adherd to the genetic technical platform, photodynamic technical platform, nano technical platform and oral solid preparation technical platform. The Group has committed to developing new clinical indications for selected drugs and developing new medicines and innovative treatments to tackle selected diseases. At the same time, the Group has explored and developed the fields of molecular targeting, immunotherapy and other fields in order to have a new R&D direction. During the Reporting Period, with an overall consideration of research resources, risks and R&D cycle, the Group has continually focused on drug development on tumors, dermatological and self-immunological diseases, expanding and strengthening the number and progress of commercialized drugs.
For details of other operating conditions of the Company during the Reporting Period, please refer to "Overview of the Company's Business"-"Introduction of the Main Business, Operation Model and industry situation of the Company during the Reporting Period" and "II. Core Technology and R&D Progress".
FUTURE PROSPECTS
As we expected, the Chinese pharmaceutical industry was facing opportunities as well as severe challenges in recent years. Under the influence of various factors, many enterprises are suffering from sharp decline in income, decrease in profit, and serious shortage of development and R&D funds. Making proper choices has become an urgent issue for every enterprise to discuss.
Since its establishment, the Group, as a pharmaceutical enterprise focusing on new drug research and development, has adhered to choosing the projects that can meet the unmet needs and deficiencies of clinical and patients treatment. The evaluation system of project progress depends on whether specific accomplishment of treatment will be achieved. We know that without exploration, persistence and hard work, it is hard to lead to a pleasant breakthrough in therapeutics, but sometimes it is hard to get the corresponding return when we wait and invest. Even so, we never intend to be a mediocre pharmaceutical production or profit oriented sales enterprise without innovation. We have been seeking a balanced development in the conflict between me-too drugs and first- in-class drugs. Our strategies for research and development are strengthening our research capacities in the fields where we have leading positions, continually expanding the new clinical indications of existing projects, adhering to the projects worth spending time on, gradually applying for international drug registration and decisively terminating the projects that are not in line with the Group's value and make no progress for long term. As long as we endeavor and continue to optimize our specific strategies for research and development, we believe our projects and products will bring great benefits to the Company while demonstrating its value in the future.

Discussion and Analysis on Business Operations

DISCUSSION AND ANALYSIS ON BUSINESS OPERATIONS (continued) FUTURE PROSPECTS (continued)
In addition, we realized that gene technology in terms of signaling pathways control, suppressing or strengthening the protein activity, will become the core technology in the area of new drugs development, especially when the research is based on the most fundamental and specific causes and molecular mechanism of diseases. We keep a close eye on hotspots of existing antibody drugs research, and have established antibody-drug conjugates ("ADC") as the main research and development direction of genetic technical platform. ADC have shown obvious advantages on tumor treatment in clinical trials, which has much better effects than the conventional antibody plus chemotherapy drugs , and ADC has its advantages even when compared with immunotherapy in the treatment of some tumors. After about 8 years of exploration, we have built a drug platform for tubulin inhibitors and topoisomerase inhibitors (sn38, DXd), which lays a foundation for further development of ADC. In particular, the self-developed ADC drug platform which based on topoisomerase DXd is not subject to the corresponding patent restrictions. Our preliminary study on this project shows that it can achieve the full exposure of ADC in plasma and the very low exposure of drugs, as well as the full exposure and accumulation of drugs in tumors, and has a bystander effect. This is an encouraging breakthrough, marking that we will have the opportunity to select different antibodies for different tumors to develop new ADC drugs. We will establish ADC production system as quickly as possible, and strive to realize ADC industrialization as early as we can.
We has been expanding the drugs development based on photodynamic technical platform. Photodynamic drugs have become the most important product line of the Group. The Group is commencing further research on molecular mechanism and their mode of action in order to discover new photodynamic compound to improve the efficacy and overcome the defects. At the same time, exploration of the fundamental research on the relationship between the penetrating power of different light wavelengths and the treatment of tumor is under progress. Meanwhile, we have planned to apply for the international registrations as well as the extension new indications based on the feedback from clinicians for the launched drugs, which will lay a foundation for the commercialization development of the Group.
The selective inhibitor project for JAK1 obtained the clinical trial approval during the Reporting Period and we will start the clinical trial phase I as soon as possible.
For product commercialization, the subsidiary of the Company, Taizhou Fudan-Zhangjiang Pharmaceutical Co., Ltd* ("Taizhou Fudan-Zhangjiang",泰州復旦張江藥業有限公司) has constructed two production lines for the material and injection of Hemoporfin. To fully exploit the capacity of the two production lines before further new self-developed innovative drugs obtaining production approval, the Group will choose several generic drugs which
can be produced with FuMeiDa on the same production line and planned to submit the application of registration. During the Reporting Period, the registration application of Parecoxib Sodium (帕瑞昔布鈉) for analgesia has been submitted and waiting for approval. In addition, the new solid preparation production line of Taizhou Fudan- Zhangjiang is ready for the commercialization of obeicholic acid. More investments on production lines will be made in Taizhou in the next few years so as to gradually make Taizhou Fudan-Zhangjiang become the centralized production base of the Group.

Discussion and Analysis on Business Operations

POTENTIAL RISK FACTORS
1. Risk in relation to new drug development
  The long-term competitiveness of the Company depends on the successful research and development of new products and their subsequent industrialization and market promotion. According to the Relevant provisions of China's Drug Registration Measures and other laws and regulations, the drug registration shall be subject to pre-clinical research, clinical trial filing, clinical trial, production approval and other stages, which shall be approved by the drug regulatory department under the State Council, and the new drug certificate and drug production approval document shall be issued before the production of the drug. The whole process from R&D to launch to the market can take a decade or more, with high costs and uncertainties for the result. At present, many of the Company's products are in the stage of pre-clinical research and clinical trial, which are mainly innovative drugs. If the products under research fail to be developed successfully or the new products fail to pass the registration and approval, the initial investment will be at loss, and the Company's future product planning and future growth potential will also be affected.
2. Risk in relation to relatively limited product types and drug price reduction
  During the Reporting Period, the product types of the Group are relatively limited. Three main products of the Group, ALA, LIBOd® and FuMeiDa account for a large proportion of the total sales revenue. The decline in the revenue of the above leading products will have an adverse impact on the future operation and financial situation of the Group, if they are impacted by competitive products, suffer from significant policy impact, product quality and intellectual property issues so that the Company can not maintain the sales volume and pricing level of the leading products, or failure of timely launch of alternative new products.
  Drug pricing policy formulation and implementation and the control of the overall drug price level was implemented by the National Development and Reform Commission. On 5 May 2015, the National Development and Reform Commission, the Health and Familiy Planning Commission, the Ministry of Human Resources and Social Security and other departments jointly issued the Notice about the Opinions of Promoting the Reform of Drug Prices, from 1 June 2015, drugs other than the narcotic drugs and the psychotropic drugs of category I no longer adopted government-designated pricing. Such notice aimed to improve the mechanism of the drug purchase, give play to the role of health care insurance in drug fees controlling, and actual transaction prices of the drugs are mainly determined by the market competition. Althoug such notice terminated the role of the Pricing Section of the National Development and Reform Commission to set highest drug retail price, but drug prices still are limited by many factors, including the clinical demand, doctors familiarity with the drugs, health insurance payment standard, national or local government public bidding mechanism and third-party payment standard, including commercial insurance, etc., the future drug price forming mechanism could be further reformed, and the final pattern remain uncertain.
  In recent years, with national drug price negotiations, medical insurance directory adjustment, evaluation of consistency and and the relaxation of large-quantity procurement policy,some of the drug's terminal bidding procurement prices gradually decline, pharmaceutical companies are facing increasingly fierce competition. The Company may face risk of drug prices reduction, the causing a potential negative impact on the income of drugs of the Company.
3. Risk in relation to core technical staff resignation
  The Company's core technical personnel is an important part of the Company's core competitiveness, and also the basis and key for the survival and development of the Company. Whether the Company can maintain the stability of the technical staff team and constantly attract outstanding talents to join in is related to whether the Company can continue to maintain its technological leading edge in the industry, as well as the stability and durability of research and development, production and service. If the salary level of the Company is not competivie compared with the same industry competitors, the core technical personnel incentive mechanism can not implement, or human resources control and internal promotion system is not effectively implemented, the Company's core technical personnel will drain, and thus having an adverse impact on the Company's core competitive ability and sustainable profitability.

Discussion and Analysis on Business Operations

POTENTIAL RISK FACTORS (continued)
1. Risk in relation to lack of de facto controller
  As at the end of the Reproting Period, the sharesholding of Shanghai Pharmaceuticals Holding Co., Ltd. ("Shanghai Pharmaceuticals"), China New Enterprise Investment Fund II, Yang Zong Meng and Wang Hai Bo, who directly hold more than 5% of the Company's shares, account for 20.15%, 15.04%, 7.67% and 5.55% of the Company's total share capital (A+H shares), respectively. There are no controlling shareholders or actual controllers in the Company. In addition, the amount of shares held by a single shareholder of the Company shall not exceed 30% of the total share capital of the Company; there is no controlling or actual controlling relationship among the shareholders of the Company, nor is there a common controlling shareholder or actual controlling person. The Company will not rule out the risk that in the future, the lack of actual controllers will lead to the instability of corporate governance structure or the reduction of decision- making efficiency, which will jeopardize the business development opportunities and thus cause fluctuations in the Company's production and operation and operation performance.
2. Foreign exchange risk
  The Group mainly operates in the domestic market. Except for the Hong Kong dollar proceeds from the placing of shares, the operating results and the financial position of the Group will not be substantially affected by the movement in exchange rates.

OPERATION RESULT FOR THE REPORTING PERIOD

ALA for the treatment of condyloma acuminate, LIBOd® for the treatment of tumors and FuMeiDa for the treatment of PWS are three major products of the Group, and together contributed to 99% of the sales revenue of medical products by the Group.

Analysis of main businesses
1. Analysis on changes in relevant items of the financial statements

			Unit: RMB
		Amount for the
	Amount For the	corresponding
Items	current Period	period of last year	Change (%)
Revenue	235,614,896	390,693,485	-39.69
Costs of sales	17,970,463	37,078,195	-51.53
Selling and distribution expenses	117,516,961	192,126,259	-38.83
General and administrative expenses	16,808,417	24,495,339	-31.38
Finance costs	-112,416	2,345,963	-104.79
Research and development expenses	54,373,006	51,197,251	6.20
Net cash flows generated from
operating activities	60,819,045	100,662,251	-39.58
Net cash flows generated from
investing activities	-32,205,077	-7,329,583	not applicable
Net cash flows generated from
financing activities	923,837,507	-192,172,739	not applicable

Reasons for changes in revenue: Since the outbreak of the Epidemic, as the Group's main products have to be used for treatment in hospitals, the sales volume and consumption in terminals of the products were significantly affected by the restrictions of products transportation and the treatment of patients. The major products ALA, LIBOd® and FuMeiDa, have contributed significantly to revenue of the the Group, representing 46%,44% and 9% to the total revenue of the Group, respectively. Compared to the corresponding period of last year, the sales volume of the above products reduced by 48%, 30% and 34%, respectively. For more details, please refer to note 5(32)" in "Financial Report".

Discussion and Analysis on Business Operations

OPERATION RESULT FOR THE REPORTING PERIOD (continued)
1. Analysis of main businesses (continued)
  1. Analysis on changes in relevant items of the financial statements (continued)
  Reasons for changes in costs of sales: The costs of sales mainly decrease with the decrease of revenue. The ratio of cost to sales for the products mentioned above decreased to 8% from 9% for the same period of last year, and the gross profit margin increased a bit correspondingly. The increase of profit margin is mainly due to the decrease of production costs of LIBOd® which benefited from the optimization of production process, the improvement of efficiency of the production workshops, and the effective reduction of the purchase prices of raw materials. At the same time, the Group has been consistent in strict cost control and endeavour to increase the gross profit margin while maintaining the current product structure. For more details, please refer to note 5(32)" in "Financial Report".
  Reasons for changes in selling and distribution expenses: Due to the impact of the Epidemic situation during the Reporting Period, the Company's drug promotion and sales related activities were not fully carried out, and the reduction of sales promotion activities led to a decrease in selling and distribution expenses. For more details, please refer to note 5(34)" in "Financial Report".
  Reasons for changes in general and administrative expenses: The decrease in the general and administrative expenses was mainly due to the deconsolidation of the expenses of Derma Clinic Investment Co., Ltd ("Derma Clinic") since April 2019 after its disposal; at the same time, given the impact of the Epidemic, the Group reduced the daily expenses accordingly. For more details, please refer to note 5(35)" in "Financial Report".
  Reasons for changes in finance costs: The decrease in the finance cost was mainly due to the increase of interest income during the Reporting Period. For more details, please refer to note 5(37)" in "Financial Report".
  Reasons for changes in R&D expense: The Group adopts a conservative and prudent capitalization policy for R&D projects. Only the expenses incurred on those projects which were evaluated to be feasible in technology with clear objective, controllable risks and probable future economic benefits can be capitalized. Therefore, most of R&D costs of the Group were recognized as expenses as incurred. During the Reporting Period, the Group is actively promoting the progress of R&D projects, and the clinical, material and outsourcing R&D expenses have increased in this period, which is due to the increase of investment for the progress of R&D projects. The ratio of R&D expenses to revenue for this period was 23% (the same period of 2019: 13%). For more details, please refer to note 5(36)" in "Financial Report".
  Reasons for changes in net cash flows generated from operating activities: The decrease in net cash flows generated from operating activities is mainly due to the decrease of sales revenue caused by the Epidemic situation.
  Reasons for changes in net cash flows generated from investing activities: The increase in net cash flows generated from investing activities is mainly due to the increased investment in Changzhou BVCF Investment Management Partnership (Limited Liability Partnership) ("BVCF Fund") during the Reporting Period.
  Reasons for changes in net cash flows generated from financing activities: The increase in net cash flows generated from financing activities is mainly due to the Company's receipt of RMB996 million from initial public offering and over allotment in the first half of this year.

Discussion and Analysis on Business Operations

OPERATION RESULT FOR THE REPORTING PERIOD (continued)
1. Analysis of main businesses (continued)
  2. Others
2. 1. Detailed explanations on significant changes in the composition of profits or the source of profits of the Company
    Not applicable.
  2. Other
    Not applicable.

Explanation on significant changes in profit resulting from non-core businesses Not applicable.

Analysis on assets and liabilities 1. Assets and liabilities

						Unit: RMB
					Change
					ratio of the
					amount at
		Percentage		Percentage	the end of
		of amount		of amount	the current
		at the end of		at the end	period to
		the current		of the same	that of the
	Amount as	period to	Amount as	period of last	same period
	at 30 June	total asset	at 30 June	year to total	of last year
Accounts	2020	(%)	2019	asset (%)	(%)	Explanation
Cash at bank and	1,529,302,256	63.66	489,387,063	31.95	212.49	During the Reporting Period, the Group
on hand Note(1)						issued A shares on the STAR Market, and
						the receipt of the proceeds leads to the
						increase.
Other receivables	8,880,898	0.37	13,828,778	0.90	-35.78	The amount as at 30 June 2019 included
						part of the equity transfer funds of Derma
						Clinic received by the Group.
Long-term equity	61,438,432	2.56	34,455,182	2.25	78.31	It's mainly due to the increase of investment
investments						in BVCF Fund during the Reporting Period
Construction in	268,000	0.01	94,340	0.01	184.08	It is mainly caused by the renovation of the
progress						right-of-use assets of the Group during the
						Reporting Period.
Right-of-use assets	4,911,023	0.20	7,487,478	0.49	-34.41	It is mainly caused by the amortization of the
						right-of-use assets confirmed according to
						the lease contract of the marketing center
						during the Reporting Period.

Discussion and Analysis on Business Operations

OPERATION RESULT FOR THE REPORTING PERIOD (continued)
1. Analysis on assets and liabilities (continued) 1. Assets and liabilities (continued)

					Change
					ratio of the
					amount at
		Percentage		Percentage	the end of
		of amount		of amount	the current
		at the end of		at the end	period to
		the current		of the same	that of the
	Amount as	period to	Amount as	period of last	same period
	at 30 June	total asset	at 30 June	year to total	of last year
Accounts	2020	(%)	2019	asset (%)	(%)	Explanation
Long-term prepaid	1,852,195	0.08	3,324,738	0.22	-44.29	It is mainly caused by the normal
expenses						amortization of the improvement of the
						right to use assets during the Reporting
						Period.
Deferred tax assets	59,452,127	2.47	40,906,875	2.67	45.34	It is mainly caused by the increase of
						deductible temporary differences during
						the Reporting Period.
Other non-current	5,134,285	0.21	179,971,411	11.75	-97.15	It was mainly due to that the payment for
assets						the transfer of minority shareholders'
						equity of Taizhou Pharmaceutical Co., Ltd.
						has been made in the same period of last
						year, while the equity transfer was not
						completed in the same period of last year.
Short-term	160,000,000	6.66	140,000,000	9.14	14.29
borrowingsNote(2)
Accounts payables	5,355,544	0.22	8,030,384	0.52	-33.31	It is mainly caused by changes in business
						activities during the Reporting Period.
Contract liabilities	4,388,337	0.18	19,900,702	1.30	-77.95	The amount as at 30 June 2019 included the
						recognition of income from technology
						transfer funds and cooperative R&D funds
						received in advance.
Employee benefits	8,674,603	0.36	24,741,415	1.62	-64.94	This is mainly due to the adjustment of
payable						annual bonus and salary due to the impact
						of Epidemic during the Reporting Period.
Taxes payable	2,077,752	0.09	20,668,331	1.35	-89.95	It is mainly resulting from the decrease of
						revenue and total profit due to the impact
						of the Epidemic during the Reporting
						Period.
Lease liabilities	788,051	0.03	3,999,970	0.26	-80.30	It is mainly due to the payment of the rent of
						the marketing center during the Reporting
						Period.
Capital surplus	1,200,120,029	49.95	412,293,387	26.92	191.08	This change is mainly due to the fact that the
						share premium of the Group's initial public
						offering of A shares on STAR Market was
						included in the capital reserve.

Discussion and Analysis on Business Operations

OPERATION RESULT FOR THE REPORTING PERIOD (continued)
1. Analysis on assets and liabilities (continued)
  1. Assets and liabilities (continued)
  Notes：
2. 1. Liquidity and financial resources
    The Group generally finances its operations and investing activities with internally generated financial resources, proceeds from the listing of the Company's shares on the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited ("the Hong Kong Stock Exchange"), proceeds from H share placing and issue of A shares on STAR Market, grants from the municipal government authorities and commercial loans.
    As at 30 June 2020, the Group had cash and cash equivalents of approximately RMB1,529,302,256.
    Being consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including bank borrowings and loans from government authorities) less cash and cash equivalents. Total capital is calculated as total equity, as shown in the consolidated balance sheet, plus net debt. As at 30 June 2020 and 31 December 2019, cash and cash equivalents is much more than total balance of bank loans of the Group, therefore, the gearing ratio is not applicable.
    The Group adopts a conservative treasury policy in cash and financial management. To achieve better risk control and to minimize the finance costs, the Group's treasury activities are centralized. The Group's liquidity and financing arrangements are reviewed regularly.
  2. Banking borrowings
    As at 30 June 2020, the outstanding amount of the loans of the Group was RMB160,000,000, which includes:
    As at 29 July 2019, an unsecured short-term bank borrowing of RMB32,928,487 was taken by the Company, bore a floating interest rate at 3.915% per annum (as at 30 June 2020) and was due for repayment on 29 July 2020;
    As at 27 September 2019, an unsecured short-term bank borrowing of RMB27,071,513 was taken by the Company, bore a floating interest rate at 3.915% per annum (as at 30 June 2020) and was due for repayment on 29 July 2020;
    As at 28 November 2019, an unsecured short-term bank borrowing of RMB48,942,573 was taken by the Company, bore a floating interest rate at 3.870% per annum (as at 30 June 2020) and was due for repayment on 28 November 2020;
    As at 10 March 2020, an unsecured short-term bank borrowing of RMB38,928,595 was taken by the Company, bore a floating interest rate at 3.770% per annum (as at 30 June 2020) and was due for repayment on 27 November 2020;
    As at 30 March 2020, an unsecured short-term bank borrowing of RMB12,128,832 was taken by the Company, bore a floating interest rate at 3.770% per annum (as at 30 June 2020) and was due for repayment on 27 November 2020.
  3. Charge on assets
    For the six months ended 30 June 2020, the Group had no charge on assets.

Discussion and Analysis on Business Operations

OPERATION RESULT FOR THE REPORTING PERIOD (continued)
1. Analysis on assets and liabilities (continued)
  1. Assets and liabilities (continued)
2. 1. Notes： (continued)
    1. Future plans for material investments or capital assets
      Taizhou Fudan-Zhangjiang, a subsidiary of the Company, will build new production plants as and when appropriate according to the R&D progress of the Group to meet future production needs.
      Saved as disclosed above, the Group had no other material capital expenditure plan for the moment.
  2. Major assets restriction at the end of the Reporting Period Not applicable.
  3. Other explanations Not applicable.

(IV) Analysis of investment

1. Overall analysis on external equities investment

By the end of the Reporting Period, the Company's long-term equity investment was RMB61 million, an increase of RMB33 million or 118.80% over the beginning of the year. It is mainly additional investment in the joint venture BVCF Fund. For details, please refer to note 5(9) in "Financial Report".

Significant equity investment Not applicable.
Significant non-equity investment Not applicable.

Discussion and Analysis on Business Operations

OPERATION RESULT FOR THE REPORTING PERIOD (continued) (IV) Analysis of investment (continued)
1. Overall analysis on external equities investment (continued)
1. Financial assets measured at fair value
  On 9 June 2020, Adgero Biopharmaceuticals Holdings, Inc ("Adgero") entered into an Agreement and Plan of Merger and Reorganization with DelMar Phamarceuticals, Inc (Nasdaq Code： DPMI，"DelMar") and its wholly owned subsidiary, and Adgero will become a wholly-owned subsidiary of DelMar after the merger. A registration statement on registering the shares of common stock of DelMar to be issued to the Adgero security holders filed by DelMar was declared effective by the Securities and Exchange Commission. Consummation of the Merger is subject to approval by the stockholders of DelMar and Adgero and the relevant listing reuqirements of Nasdaq. As at the date of the interim report, obtaining the written approval of Adgero stockholders is underway.
  In 2017, Fernovelty (Hong Kong) Holding Co., Ltd ("Fernovelty Holding"), a subsidiary of the Company, entered into the subscription agreement with Adgero to purchase ordinary shares and warrants. The Group holds 400,000 ordinary shares of Adgero as at 30 June 2020.

Disposal of major assets and equities Not applicable.

(VI) Analysis on companies under control or in which the company has shares
			Registered		Total Assets	Net Assets	Revenue	Net Rrofit
No.	Company Name	Main Business	Capital	Equity Ratio	(RMB)	(RMB)	(RMB)	(RMB)
1	Taizhou Fudan-	Production for the material and	86,000,000	100.00%	262,644,199	92,691,500	24,121,355	4,196,388
	Zhangjiang	injection of Hemoporfin
2	Fernovelty Holding	Drug development and overseas	HKD10,000	100.00%	3,519,934	3,519,934	-	-701
		medical projects investment	(Equity)
3	Tracing Bio-	R&D, production and sales of	24,800,000	84.68%	17,222,521	-11,429,770	4,069,934	1,866,356
	technology Co.,Ltd	medical diagnostic products
4	Shanghai Lead	Screening of new drugs in China	20,400,000	35.29%	25,376,890	-3,648,436	-	-51,557
	Discovery Limited	and development of "me-too"
	Company	drug
5	BVCF Fund	Investment in early drug	201,000,000	22.54%	171,505,849	170,945,307	-	-2,045,293
		research and development
6	Derma Clinic	Skin health management,	55,000,000	20.00%	18,000,028	-32,000,819	2,526,725	-10,681,045
		medical cosmetology

Shanghai Baosu Pharmaceutical Technology Co.,Ltd ("Shanghai Baosu") was once a holding subsidiary of the Company. It mainly undertakes the related work of nationwide sales promotion of LIBOd®, one of the Company's products. Considering that the market promotion service of LIBOd® has been undertaken by Huizheng (Shanghai) Pharmaceutical Technology Co., Ltd., ("Huizheng"), Shanghai Baosu has no actual operation. Relevant proposals on cancellation of Shanghai Baosu was approved on the 12th meeting of the 6th session of the board of directors of the Company (the "Board"). On 27 April 2020, the Market Regulation Bureau of China (Shanghai) Pilot Free Trade Zone issued no.41000001202004260018 notice of approval of cancellation of registration, approving the cancellation of registration of Shanghai Baosu.

Discussion and Analysis on Business Operations

OPERATION RESULT FOR THE REPORTING PERIOD (continued) (VII) The structural entity controlled by the company

Not applicable.

IV. OTHER DISCLOSURES

Warning and explanation on the forecast of a probable loss or a significant change as compared with that of the corresponding period of previous year in the accumulated net profit from the beginning of the year to the end of the next reporting period

Not applicable.

Other disclosures Not applicable.

Significant Events

I.	GENERAL MEETING
			Query index
			on designated	Disclosure
			website	date of
		Date of	for publishing	publication of
	Meeting session	convening	resolutions	the resolutions
	2020 First Extraordinary General Meeting, 2020	24 February 2020	www.hkex.com.hk	24 February 2020
	First Class Meeting of Holders of H Shares,
	2020 First Class Meeting of Holders of
	Domestic Shares
	2019 Annual General Meeting, 2020 Second Class	30 March 2020	www.hkex.com.hk	30 March 2020
	Meeting of Holders of H Shares, 2020 Second
	Class Meeting of Holders of Domestic Shares

PLAN FOR PROFIT DISTRIBUTION OR CONVERSION OF CAPITAL RESERVE FUND INTO SHARE CAPITAL

The interim proposed profit distribution plan or plan for the conversion of capital reserve fund into share capital for the half year

Whether to allocate or convert to increment	No
Bonus share for every 10 shares (shares)	N/A
Dividend for every 10 shares (yuan) (tax inclusive)	N/A
Conversion into share capital for every 10 shares (shares)	N/A

Explanation on profit distribution plan or plan for the conversion of capital reserve fund into share capital

Not applicable

The Board did not recommend the payment of any interim dividend for the six months ended 30 June 2020 (Six months ended 30 June 2019: Nil).

Significant Events

THE PERFORMANCE OF UNDERTAKINGS
1. Undertakings during or carried forward to the Reporting Period by the Company's actual controller, shareholders, related parties, acquirers and the Company and other relevant parties
2. - Applicable □Not applicable

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
Undertakings associated with the	Restricted shares	Shanghai	Shanghai Pharmaceuticals has made the following	19 June 2020-	Yes	Yes	Not applicable	Not applicable
initial public offering		Pharmaceuticals	commitments in respects of shares lock-up:	18 June 2023
			(1) within thirty-six months from the date when
			Fudan-Zhangjiang's A shares upon initial public
			offering are listed on the Shanghai Stock Exchange,
			shall not transfer or entrust to others to manage
			Fudan-Zhangjiang's domestic shares issued prior to
			the initial listing directly or indirectly held by it, nor
			shall Fudan-Zhangjiang repurchase such shares; (2)
			within six months from the initial listing of Fudan-
			Zhangjiang, if the closing prices of Fudan-Zhangjiang's
			shares for twenty consecutive trading daysare lower
			than the issue price, or the closing price at the end of
			six months after initial listing is lower than the issue
			price, the lock-up period of Fudan-Zhangjiang's A
			shares held by it will be automatically extended for
			at least six months after the expiration of the above
			lock-up period.
	Restricted shares	China New	China New Enterprise II has made the following	19 June 2020-	Yes	Yes	Not applicable	Not applicable
		Enterprise II	commitments in respects of shares lock-up:	18 June 2023
			Within thirty-six months from the date when Fudan-
			Zhangjiang's A shares upon initial public offering
			are listed on the Shanghai Stock Exchange, shall
			not transfer or entrust to others to manage Fudan-
			Zhangjiang's domestic shares issued prior to the initial
			listing directly or indirectly held by it, nor shall Fudan-
			Zhangjiang repurchase such shares.
	Restricted shares	Yang Zong Meng	Yang Zong Meng has made the following	19 June 2020-	Yes	Yes	Not applicable	Not applicable
			commitments in respects of shares lock-up:	18 June 2023
			Within thirty-six months from the date when Fudan-
			Zhangjiang's A shares upon initial public offering
			are listed on the Shanghai Stock Exchange, shall
			not transfer or entrust to others to manage Fudan-
			Zhangjiang's domestic shares issued prior to the
			initial listing directly or indirectly held by him, nor shall
			Fudan-Zhangjiang repurchase such shares.

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Restricted shares	Wang Hai Bo	Wang Hai Bo has made the following commitments	19 June 2020-	Yes	Yes	Not applicable	Not applicable
			in respects of shares lock-up:	18 June 2023
			(1) Within thirty-six months from the date when
			Fudan-Zhangjiang's A shares upon initial public
			offering are listed on the Shanghai Stock Exchange,
			shall not transfer or entrust to others to manage
			Fudan-Zhangjiang's domestic shares issued prior to
			the initial listing directly or indirectly held by him, nor
			shall Fudan-Zhangjiang repurchase such shares; (2)
			within six months from the initial listing of Fudan-
			Zhangjiang, if the closing prices of Fudan-Zhangjiang's
			shares for twenty consecutive trading days are lower
			than the issue price, or the closing price at the end of
			six months after initial listing is lower than the issue
			price, the lock-up period of Fudan-Zhangjiang's A
			shares held by him will be automatically extended for
			at least six months after the expiration of the above
			lock-up period.
	Restricted shares	Su Yong, Zhao Da	Su Yong, Zhao Da Jun, Li Jun, Gan Yi Min, Yang	19 June 2020-	Yes	Yes	Not applicable	Not applicable
		Jun, Li Jun, Gan Yi	Xiao Lin and Xue Yan have made the following	18 June 2021
		Min, Yang Xiao Lin	commitments in respects of shares lock-up:
		and Xue Yan
			(1) Within twelve months from the date when Fudan-
			Zhangjiang's A shares upon initial public offering
			are listed on the Shanghai Stock Exchange, shall
			not transfer of entrust to others to manage Fudan-
			Zhangjiang's domestic shares issued prior to the
			initial listing directly or indirectly held by him/her, nor
			shall Fudan-Zhangjiang repurchase such shares; (2)
			within six months from the initial listing of Fudan-
			Zhangjiang, if the closing prices of Fudan-Zhangjiang's
			shares for twenty consecutive trading days are lower
			than the issue price, or the closing price at the end of
			six months after initial listing is lower than the issue
			price, the lock-up period of Fudan-Zhangjiang's A
			shares held by him/her will be automatically extended
			for at least six months after the expiration of the
			above lock-up period.

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Restricted shares	Pudong Science	Pudong Science and Technology, Zhiyuan Investment,	19 June 2020-	Yes	Yes	Not applicable	Not applicable
		and Technology,	Chengyuan Investment and Dayuan Investment have	18 June 2021
		Zhiyuan Investment,	made the following commitments in respects of
		Chengyuan	shares lock-up:
		Investment and
		Dayuan Investment	Within twelve months from the date when Fudan-
			Zhangjiang's A shares upon initial public offering are
			listed on the Shanghai Stock Exchange, shall not
			transfer or entrusted to others to manage Fudan-
			Zhangjiang's domestic shares issued prior to the initial
			listing directly or indirectly held by it, nor shall Fudan-
			Zhangjiang repurchase such shares.
	Restricted shares	Fudan Asset	Fudan Asset has made the following commitments in	19 June 2020-	Yes	Yes	Not applicable	Not applicable
			respects of shares lock-up:	18 June 2021
			Within twelve months from the date when Fudan-
			Zhangjiang's A shares upon initial public offering
			are listed on the Shanghai Stock Exchange, shall
			not transfer or entrust to others to manage Fudan-
			Zhangjiang's domestic shares issued prior to the
			initial listing directly or indirectly held by it, nor shall
			Fudan-Zhangjiang repurchase such shares (Except for
			the changes in the Fudan-Zhangjiang's shares held by
			Fudan Asset in order to comply with the requirements
			of the then effective laws and regulations or national
			policies).
	Restricted shares	Lu Rong, Zhou Ming,	Lu Rong, Zhou Ming, Zhang Man Juan, Fang Jing,	19 June 2020-	Yes	Yes	Not applicable	Not applicable
		Zhang Man Juan,	Wang Luo Chun, Yu Dai Qing, Zhang Wen Bo, Tao Ji	18 June 2021
		Fang Jing, Wang Luo	Ning, Jiang Jian Ping and Shen Yi Jun have made the
		Chun, Yu Dai Qing,	following commitments in respects of shares lock-up:
		Zhang Wen Bo, Tao
		Ji Ning, Jiang Jian	Within twelve months from the date when Fudan-
		Ping, Shen Yi Jun	Zhangjiang's A shares upon initial public offering
			are listed on the Shanghai Stock Exchange, shall
			not transfer or entrust to others to manage Fudan-
			Zhangjiang's domestic shares issued prior to the
			initial listing directly or indirectly held by him/her, nor
			shall Fudan-Zhangjiang repurchase such shares.

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
Other Undertakings	Non-competition	Shanghai	Shanghai Pharmaceuticals has the made following	Long-term	Yes	Yes	Not applicable	Not applicable
	undertakings	Pharmaceuticals	commitments in respects of the non-competition
			undertakings in the future:

Shanghai Pharmaceuticals undertakes that, from the date of the issuance of this letter of undertakings:

Shanghai Pharmaceuticals and enterprises directly or indirectly controlled by Shanghai Pharmaceuticals shall not take the initiative to increase their shareholdings in Fudan-Zhangjiang, nor seek control over Fudan-Zhangjiang through accepting proxy, collecting voting rights, signing concerted action agreements, increasing director seats in Fudan-Zhangjiang or other ways. (2) For related transactions related to the operating activities of Fudan-Zhangjiang, Shanghai Pharmaceuticals will continue to strictly abide by relevant requirements of laws and regulations on related transactions, strictly comply with the decision-making procedures of the Board and shareholders' meeting of Fudan- Zhangjiang to ensure fair and reasonable pricing, and cooperate with Fudan-Zhangjiang to perform information disclosure obligations in a timely manner.

Shanghai Pharmaceuticals will continue to respect the independence of Fudan-Zhangjiang in terms of personnel, assets, business, finance and institutions, use its best endeavour to avoid unfair competitions or transfer of benefits with Fudan-Zhangjiang, and will not mutually or unilaterally transfer business opportunities with Fudan-Zhangjiang. This letter of undertakings shall continue to be in effect during the period when Shanghai Pharmaceuticals holds shares of Fudan-Zhangjiang. If Shanghai Pharmaceuticals or enterprises directly or indirectly controlled by Shanghai Pharmaceuticals violates the aforementioned undertakings and causes losses to Fudan-Zhangjiang and its other shareholders, corresponding compensation liabilities shall be borne by Shanghai Pharmaceuticals.

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
Other Undertakings	Related Transactions	Shanghai	Shanghai Pharmaceuticals has made the following	Long-term	Yes	Yes	Not applicable	Not applicable
		Pharmaceuticals	commitments in respects of regulating and reducing
			related transaction:
			"For related transactions related to the operating
			activities of Fudan-Zhangjiang, the Company will
			continue to strictly abide by relevant requirements of
			laws and regulations on related transactions, strictly
			comply with the decision-making procedures of the
			Board and shareholders' meeting of Fudan-Zhangjiang
			to ensure fair and reasonable pricing, and cooperate
			with Fudan-Zhangjiang to perform information
			disclosure obligations in a timely manner.
			This letter of undertakings shall continue to be in
			effect during the period when the Company holds
			shares of Fudan-Zhangjiang. If the Company or
			enterprises directly or indirectly controlled by the
			company violates the aforementioned undertakings
			and causes losses to Fudan-Zhangjiang and its other
			shareholders, corresponding compensation liabilities
			shall be borne by the Company. "

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
Other Undertakings	Related Transactions	Zhiyuan Investment,	Zhiyuan Investment, Chengyuan Investment and	Long-term	Yes	Yes	Not applicable	Not applicable
		Chengyuan	Dayuan Investment have made the following
		Investment and	commitments in respects of regulating and reducing
		Dayuan Investment	related transaction:
			"On the premise of not adversely affecting
			the interests of Fudan-Zhangjiang and its other
			shareholders, the Enterprise and subsidiaries directly
			or indirectly controlled by the Enterprise will minimise
			related transactions with Fudan-Zhangjiang.
			For related transactions related to the operating
			activities of Fudan-Zhangjiang, the Enterprise will
			continue to strictly abide by relevant requirements of
			laws and regulations on related transactions, strictly
			comply with the decision-making procedures of the
			Board and shareholders' meeting of the issuer to
			ensure fair and reasonable pricing, and cooperate
			with the issuer to perform information disclosure
			obligations in a timely manner; The Enterprise
			guarantees not to use related transaction with Fudan-
			Zhangjiang to harm the interests of Fudan-Zhangjiang
			and its other shareholders, nor use related transaction
			to bear costs and expenses for Fudan-Zhangjiang
			or transfer benefits to Fudan-Zhangjiang. This letter
			of undertakings shall be effective since the date of
			issuance, and continue to be in effect during the
			period when the Enterprise holds shares of Fudan-
			Zhangjiang. In the event of breach of the above
			undertakings, corresponding legal liabilities shall be
			borne by the Enterprise. "

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
Others		Wang Hai Bo, Su	Wang Hai Bo, Su Yong, Zhao Da Jun, Fang Jing, Li	Long-term	Yes	Yes	Not applicable	Not applicable
		Yong, Zhao Da Jun,	Jun, Zhang Man Juan, Lu Rong and Zhou Ming have
		Fang Jing, Li Jun,	made the following commitments in respects of
		Zhang Man Juan, Lu	regulating and reducing related transaction:
		Rong, Zhou Ming
			"On the premise of not adversely affecting
			the interests of Fudan-Zhangjiang and its other
			shareholders, I and subsidiaries directly or indirectly
			controlled by myself will minimise related transactions
			with Fudan-Zhangjiang. For related transactions
			related to the operating activities of Fudan-
			Zhangjiang, I will continue to strictly abide by relevant
			requirements of laws and regulations on related
			transactions, strictly comply with the decision-making
			procedures of the Board and shareholders' meeting
			of Fudan-Zhangjiang to ensure fair and reasonable
			pricing, and cooperate with Fudan-Zhangjiang to
			perform information disclosure obligations in a timely
			manner; I guarantee not to use related transaction
			with Fudan-Zhangjiang to harm the interests of Fudan-
			Zhangjiang and its other shareholders, nor use related
			transaction to bear costs and expenses for Fudan-
			Zhangjiang or transfer benefits to Fudan-Zhangjiang.
			This letter of undertakings shall be effective since the
			date of issuance, and continue to be in effect during
			the period when I hold shares of Fudan-Zhangjiang.
			In the event of breach of the above undertakings,
			corresponding legal liabilities shall be borne by me. "

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Others	Shanghai	Shanghai Pharmaceuticals has made the following	Long-term	Yes	Yes	Not applicable	Not applicable
		Pharmaceuticals	commitment in respects of shareholding reduction:
			(1) If Shanghai Pharmaceuticals reduces its
			shareholding in Fudan-Zhangjiang after the expiration
			of share restriction period stated in the initial listing
			prospectus of Fudan-Zhangjiang and the letter of
			undertakings issued by Shanghai Pharmaceuticals,
			Shanghai Pharmaceuticals shall earnestly abide by the
			relevant regulations of securities regulatory authority
			in relation to the share reduction, prudently formulate
			the shareholding reduction plan, and the number
			of shares to be reduced every year by Shanghai
			Pharmaceuticals shall not exceed 5% of the total
			share capital of the Fudan-Zhangjiang within 2 years
			after the expiration of share restriction period. (2)
			Shanghai Pharmaceuticals' method of reducing its
			shareholding of Fudan-Zhangjiang shall comply with
			the then applicable requirements of relevant laws,
			regulations and rules, including but not limited to
			rules about non-public transfer, bidding transactions
			in the second market, block transactions and agreed
			transfer, etc. (3) The transaction price of shares
			of Fudan-Zhangjiang held and to be reduced by
			Shanghai Pharmaceuticals shall not be lower than
			the issue price at the initial listing; if ex-dividend and
			ex-rights events such as distribution of dividend,
			bonus shares, conversion from capital reserves to
			share capital, occurred in Fudan-Zhangjiang before
			the shareholding reduction of Fudan-Zhangjiang, the
			price of shareholding reduction shall be adjusted
			correspondingly. (4) If Shanghai Pharmaceuticals
			conducts shareholding reduction through centralised
			bidding transaction, it shall report the shareholding
			reduction plan to the Shanghai Stock Exchange 15
			trading days before the first sale of shares, and make
			an announcement (Except when the shareholding
			held by Shanghai Pharmaceuticals is less than
			5% shares of Fudan-Zhangjiang). When Shanghai
			Pharmaceuticals reduces its shareholding in Fudan-
			Zhangjiang through other methods, it shall make an
			announcement 3 trading days in advance, and perform
			information disclosure obligation in accordance with
			the then applicable rules of the securities regulatory
			authority in a timely and accurate manner. "

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Others	China New	China New Enterprise II has made the following	Long-term	Yes	Yes	Not applicable	Not applicable
		Enterprise II	commitment in respects of share reduction:
			(1) If China New Enterprise II reduces its shareholding
			in Fudan-Zhangjiang after the expiration of share
			restriction period stated in the initial listing prospectus
			of Fudan-Zhangjiang and the letter of undertakings
			issued by China New Enterprise II, China New
			Enterprise II shall earnestly abide by the relevant
			regulations of securities regulatory authority in
			relation to the shareholding reduction, prudently
			formulate the shareholding reduction plan, and the
			number of shares to be reduced every year shall
			not exceed 100% of the total shares of Fudan-
			Zhangjiang held by China New Enterprise II within 2
			years after the expiration of shares restriction period;
			(2) China New Enterprise II's method of reducing its
			shareholding of Fudan-Zhangjiang's shall comply with
			the then applicable requirements of relevant laws,
			regulations and rules, including but not limited to
			rules about non-public transfer, bidding transactions
			in the second market, block transactions and agreed
			transfer, etc.; (3) The transaction price of shareholding
			reduction shall not be lower than the issue price at
			the initial listing, if ex-dividend and ex-rights events
			such as distribution of dividend, bonus shares, capital
			reserves to increase share capital, occurred in Fudan-
			Zhangjiang before the shareholding reduction of
			Fudan-Zhangjiang, the price of shareholding reduction
			shall be adjusted correspondingly; (4) If China New
			Enterprise II conducts shareholding reduction through
			centralised bidding transaction, it shall report the
			shareholding reduction plan to the Shanghai Stock
			Exchange 15 trading days before the first sale of
			shares, and make an announcement (Except when
			the shareholding held by China New Enterprise II is
			less than 5% shares of Fudan-Zhangjiang). When
			China New Enterprise II reduces its shareholding in
			Fudan-Zhangjiang through other methods, it shall
			make an announcement 3 trading days in advance,
			and perform information disclosure obligation in
			accordance with the then applicable rules of the
			securities regulatory authority and the Shanghai Stock
			Exchange in a timely and accurate manner.

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Others	Yang Zong Meng	Yang Zong Meng has made the following	Long-term	Yes	Yes	Not applicable	Not applicable
			commitment in respects of share reduction:
			(1) If I reduces my shareholding in Fudan-Zhangjiang
			after the expiration of share restriction period stated
			in the initial listing prospectus of Fudan-Zhangjiang
			and the letter of undertakings issued by me, I
			shall earnestly abide by the relevant regulations
			of securities regulatory authority in relation to the
			shareholding reduction, prudently formulate the
			shareholding reduction plan, and the number of
			shares to be reduced every year shall not exceed 5%
			of the total shares capital of Fudan-Zhangjiang within
			2 years after the expiration of shares restriction
			period; (2) The method of reducing my shareholding
			of Fudan-Zhangjiang shall comply with the then
			applicable requirements of relevant laws, regulations
			and rules, including but not limited to rules about non-
			public transfer, bidding transactions in the second
			market, block transactions and agreed transfer, etc.;
			(3) The transaction price of shareholding reduction
			of Fudan-Zhangjiang held by myself shall not be
			lower than the issue price at the initial listing, if ex-
			dividend and ex-rights events such as distribution of
			dividend, bonus shares, capital reserves to increase
			share capital, occurred in Fudan-Zhangjiang before
			the shareholding reduction of Fudan-Zhangjiang, the
			price of shareholding reduction shall be adjusted
			correspondingly; (4) If I conduct shareholding
			reduction through centralised bidding transaction, I
			shall report the share reduction plan to the Shanghai
			Stock Exchange 15 trading days before the first
			sale of shares, and make an announcement (Except
			when the shareholding held by myself is less than
			5% shares of Fudan-Zhangjiang). When I reduce
			the shares in Fudan-Zhangjiang through other
			methods, I shall make an announcement 3 trading
			days in advance, and perform information disclosure
			obligation in accordance with the then applicable rules
			of the securities regulatory authority and the Shanghai
			Stock Exchange in a timely and accurate manner.

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Others	Wang Hai Bo	Wang Hai Bo has made the following commitment in	Long-term	Yes	Yes	Not applicable	Not applicable
			respects of shareholding reduction:
			(1) After the expiration of share restriction period
			and lock-up period of shares, during my tenure as a
			director/member of senior management in Fudan-
			Zhangjiang, I will promptly declare the shares of
			Fudan-Zhangjiang held by myself and the changes
			thereto, and the annual transfer of shares of Fudan-
			Zhangjiang shall not exceed 25% of the total shares
			of Fudan-Zhangjiang held by myself. At the same
			time, within four years following the expiration of
			the above-mentionedlock-up period, I, as a core
			technician of Fudan-Zhangjiang, shall not transfer
			annually the shares of Fudan-Zhangjiang before the
			initial listing exceeding 25% of the total number of
			shares of Fudan-Zhangjiang before its initial listing
			directly and indirectly held by myself (The proportion
			of shareholding reduction shall be used cumulatively).
			When I reduce my shareholding of Fudan-Zhangjiang
			directly or indirectly held by myself, I will strictly
			abide by relevant laws and regulations as well as
			rules of the Shanghai Stock Exchange, and perform
			information disclosure obligations in a timely and
			accurate manner. I will not transfer the shares of
			Fudan-Zhangjiang directly or indirectly held by myself
			within half year after my resignation. (2) If I reduce my
			shareholding in Fudan-Zhangjiang after the expiration
			of share restriction period stated in the initial listing
			prospectus of Fudan-Zhangjiang and the letter of
			undertakings issued by myself, I shall earnestly abide
			by the relevant regulations of securities regulatory
			authority in relation of the share reduction, prudently
			formulate the share reduction plan, and the number
			of share reduction on shares held by myself shall
			not exceed 5% of the total share capital of Fudan-
			Zhangjiang after 2 years of expiration of share
			restriction period. (3) The method of reducing the
			shareholding of Fudan-Zhangjiang shall comply with
			the then applicable requirements of relevant laws,
			regulations and rules, including but not limited to
			rules about non-public transfer, bidding transactions
			in the second market, block transactions and agreed
			transfer, etc. (4) The transaction price of shareholding
			reduction of Fudan-Zhangjiang held by myself shall
			not be lower than the issue price at the initial listing, if
			ex-dividend and ex-rights events such as distribution
			of dividend, bonus shares, capital reserves to increase

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
			share capital, occurred in Fudan-Zhangjiang before
			shareholding reduction of Fudan-Zhangjiang, the price
			of share reduction shall be adjusted correspondingly.
			(5) If I conduct shareholding reduction through
			centralised bidding transaction, I shall report the
			shareholding reduction plan to the Shanghai Stock
			Exchange 15 trading days before the first sale of
			shares, and make an announcement (Except when
			the shareholding held by myself is less than 5%
			shares of Fudan-Zhangjiang). When I reduce the
			shares in Fudan-Zhangjiang through other methods,
			I shall make an announcement 3 trading days
			in advance, and perform information disclosure
			obligation in accordance with the then applicable rules
			of the securities regulatory authority in a timely and
			accurate manner. "
	Others	Su Yong	Su Yong has made the following commitment in	Long-term	Yes	Yes	Not applicable	Not applicable
			respects of shareholding reduction:
			"After the expiration of share restriction period and
			lock-up period of shares, during my tenure as a
			director/member of senior management in Fudan-
			Zhangjiang, I will promptly declare the shares of
			Fudan-Zhangjiang held by myself and the changes
			thereto, and the annual transfer of shares of Fudan-
			Zhangjiang shall not exceed 25% of the total shares
			of Fudan-Zhangjiang held by myself. At the same
			time, within four years following the expiration of
			the above-mentioned share restriction period and
			lock-up period, I, as a core technician of Fudan-
			Zhangjiang, shall not annually transfer of shares of
			Fudan-Zhangjiang before the initial listing exceeding
			25% of the total number of shares before the initial
			listing of Fudan-Zhangjiang directly and indirectly held
			by myself (The proportion of shareholding reduction
			shall be used cumulatively). When I reduce the
			shareholding of Fudan-Zhangjiang directly or indirectly
			held by myself, I will strictly abide by relevant laws
			and regulations as well as rules of the Shanghai
			Stock Exchange, and perform information disclosure
			obligations in a timely and accurate manner. I will
			not transfer the shares of Fudan-Zhangjiang directly
			or indirectly held by myself within half year after my
			resignation. "

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Others	Zhao Da Jun and	Zhao Da Jun and Li Jun have the made following	Long-term	Yes	Yes	Not applicable	Not applicable
		Li Jun	commitment in respects of shareholding reduction:
			"During my tenure as a director/member of senior
			management in Fudan-Zhangjiang, the annual transfer
			of shares shall not exceed 25% of the total shares
			of Fudan-Zhangjiang directly or indirectly held by
			myself. When I reduce the shareholding of Fudan-
			Zhangjiang directly or indirectly held by myself, I will
			strictly abide by relevant laws and regulations as
			well as rules of the Shanghai Stock Exchange, and
			perform information disclosure obligations in a timely
			and accurate manner. I will not transfer the shares of
			Fudan-Zhangjiang directly or indirectly held by myself
			within half year after my resignation. "
	Others	Wang Luo Chun	Wang Luo Chun has made the following commitment	Long-term	Yes	Yes	Not applicable	Not applicable
			in respects of shareholding reduction:
			"After the expiration of share restriction period and
			lock-up period of shares, during my tenure as a
			supervisor in Fudan-Zhangjiang, I will promptly declare
			the shares of Fudan-Zhangjiang held by myself and
			the changes thereto, and the annual transfer of shares
			of Fudan-Zhangjiang shall not exceed 25% of the
			total shares of Fudan-Zhangjiang directly or indirectly
			held by myself. At the same time, within four years
			following the expiration of the above-mentioned lock-
			up period, I, as a core technician of Fudan-Zhangjiang,
			shall not transfer annually shares of Fudan-Zhangjiang
			before the initial listing exceeding 25% of the total
			number of shares before the initial listing of Fudan-
			Zhangjiang directly and indirectly held by myself
			(The proportion of share reduction shall be used
			cumulatively). When I reduce my shareholding of
			Fudan-Zhangjiang directly or indirectly held by myself,
			I will strictly abide by relevant laws and regulations
			as well as rules of the Shanghai Stock Exchange, and
			perform information disclosure obligations in a timely
			and accurate manner. I will not transfer the shares of
			Fudan-Zhangjiang directly or indirectly held by myself
			within half year after my resignation. "

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Others	Yu Dai Qing	Yu Dai Qing has made following commitment in	Long-term	Yes	Yes	Not applicable	Not applicable
			respects of shareholding reduction:
			"During my tenure as a supervisor in Fudan-
			Zhangjiang, the annual transfer of shares shall not
			exceed 25% of the total shares of Fudan-Zhangjiang
			directly and indirectly held by myself. When I reduce
			the shareholding of Fudan-Zhangjiang directly or
			indirectly held by myself, I will strictly abide by
			relevant laws and regulations as well as rules of the
			Shanghai Stock Exchange, and perform information
			disclosure obligations in a timely and accurate
			manner. I will not transfer the shares of Fudan-
			Zhangjiang directly or indirectly held by myself within
			half year after my resignation. "
	Others	Gan Yi Min	Gan Yi Min has made the following commitment in	Long-term	Yes	Yes	Not applicable	Not applicable
			respects of shareholding reduction:
			"After the expiration of share restriction period and
			lock-up period of shares, during my tenure as a
			member of senior management in Fudan-Zhangjiang,
			I will promptly declare the shares of Fudan-Zhangjiang
			held by myself and the changes thereto, and the
			annual transfer of shares of Fudan-Zhangjiang
			shall not exceed 25% of the total shares of Fudan-
			Zhangjiang directly or indirectly held by myself. At the
			same time, within four years following the expiration
			of the above-mentionedlock-up period, I, as a core
			technician of Fudan-Zhangjiang, shall not transfer
			annually the shares of Fudan-Zhangjiang before the
			initial listing exceeding 25% of the total number of
			shares before the initial listing of Fudan-Zhangjiang
			directly and indirectly held by myself (The proportion
			of share reduction shall be used cumulatively). When
			I reduce the shareholding of Fudan-Zhangjiang directly
			or indirectly held by myself, I will strictly abide by
			relevant laws and regulations as well as rules of the
			Shanghai Stock Exchange, and perform information
			disclosure obligations in a timely and accurate
			manner. I will not transfer the shares of Fudan-
			Zhangjiang directly or indirectly held by myself within
			half year after my resignation. "

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Others	Yang Xiao Lin and	Yang Xiao Lin and Xue Yan have made the following	Long-term	Yes	Yes	Not applicable	Not applicable
		Xue Yan	commitment in respects of shareholding reduction:
			"During my tenure as a member of senior
			management in Fudan-Zhangjiang, the annual transfer
			of shares shall not exceed 25% of the total shares
			of Fudan-Zhangjiang directly and indirectly held by
			myself. When I reduce the number shares of Fudan-
			Zhangjiang directly or indirectly held by myself, I will
			strictly abide by relevant laws and regulations as
			well as rules of the Shanghai Stock Exchange, and
			perform information disclosure obligations in a timely
			and accurate manner. I will not transfer the shares of
			Fudan-Zhangjiang directly or indirectly held by myself
			within half year after my resignation. "
	Others	Zhang Wen Bo, Tao	Zhang Wen Bo, Tao Ji Ning, Jiang Jian Ping and	Long-term	Yes	Yes	Not applicable	Not applicable
		Ji Ning, Jiang Jian	Shen Yi Jun have made the following commitment in
		Ping and Shen Yi Jun	respects of shareholding reduction:
			"Within four years from the date of expiration of
			the share restriction period before the issuer's initial
			listing, the annual transfer of shares held by me
			before the issuer's initial listing shall not exceed 25%
			of the total number of shares before the issuer's
			initial listing directly and indirectly held by myself
			at the time of initial listing (The proportion of share
			reduction shall be used cumulatively). "
	Others	Fudan-Zhangjiang	Fudan-Zhangjiang and Shanghai Pharmaceuticals	Long-term	Yes	Yes	Not applicable	Not applicable
		and Shanghai	have made the following commitment in respects of
		Pharmaceuticals	repurchase of the shares listed by fraudulent means:
			"If Fudan-Zhangjiang obtains registration of the
			issuance by fraud when it does not meet the
			conditions for issuance and listing, Fudan-Zhangjiang
			shall start the share repurchase procedures to
			repurchase all new shares of Fudan-Zhangjiang under
			such public issuance within 5 working days after
			being confirmed by the China Securities Regulatory
			Commission ("CSRC") and other competent
			departments. "

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Others	Zhiyuan Investment,	Zhiyuan Investment, Chengyuan Investment, Dayuan	Long-term	Yes	Yes	Not applicable	Not applicable
		Chengyuan	Investment, Wang Hai Bo, Su Yong, Zhao Da Jun,
		Investment, Dayuan	Li Jun, Fang Jing, Zhang Man Juan, Lu Rong and
		Investment, Wang	Zhou Ming have made the following commitment in
		Hai Bo, Su Yong,	respects of truthfulness, accuracy and completeness
		Zhao Da Jun, Li Jun,	of the prospectus:
		Fang Jing, Zhang
		Man Juan, Lu Rong	"After the shares issued by the issuer are listed
		and Zhou Ming	for trading, if the false and misleading statement or
			material omission in the prospectus has a significant
			and substantial impact on deciding whether the issuer
			meets the issue conditions required by the laws,
			the company/person or entities controlled by the
			company/person shall repurchase the issued shares
			held by the company/person or entities controlled by
			the company/person before the issuer's initial listing
			that have been transferred after being confirmed by
			relevant authorities, such as the CSRC, Shanghai
			Stock Exchange or the judicial authorities. The
			repurchase price is the higher of: (1) the secondary
			market price of the issuer's shares; (2) the issue
			price at the time of the initial public offering of the
			issuer (if ex-rights or ex-dividend events of the
			issuer, such as profit distribution, increase of share
			capital by conversion of capital reserves, additional
			issue and placing of shares, occurred, the closing
			price shall be adjusted according to the relevant
			provisions of the Shanghai Stock Exchanges),
			together with the interest calculated at the deposit
			rate of People's Bank of China for the period from
			the date of payment of the stock subscription fees to
			the repurchase implementation date. The company/
			person guarantees to urge the issuer to actively
			implement the decision-making procedures for
			the share repurchase matters, and to vote for it at
			relevant meetings. "
	Others	Shen Bo, Yu Xiao	Shen Bo, Yu Xiao Yang, Zhou Zhong Hui, Lam Yiu Kin,	Long-term	Yes	Yes	Not applicable	Not applicable
		Yang, Zhou Zhong	Xu Qing, Yang Chun Bao, Tang Yu Kuan, Wang Luo
		Hui, Lam Yiu Kin,	Chun, Liu Xiao Long, Huang Jian, Yu Dai Qing, Yang
		Xu Qing, Yang Chun	Xiao Lin, Gan Yi Min and Xue Yan have made the
		Bao, Tang Yu Kuan,	following commitment in respects of truthfulness,
		Wang Luo Chun, Liu	accuracy and completeness of the prospectus:
		Xiao Long, Huang
		Jian, Yu Dai Qing,	"If the false and misleading statement or material
		Yang Xiao Lin, Gan Yi	omission in the prospectus has a significant and
		Min and Xue Yan	substantial impact on deciding whether the issuer
			meets the issue conditions required by the laws, I
			shall urge the issuer to, abide by the law, repurchase
			its shares issued in the initial listing after being
			confirmed by relevant authorities, such as the CSRC,
			Shanghai Stock Exchange or the judicial authorities."

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Others	Directors and senior	The directors and senior management of the	Long-term	Yes	Yes	Not applicable	Not applicable
		management	Company made the following commitments in
			respects of the measures to make remedies for
			immediate returns:
			"(1) I guarantee not to transfer benefits to other
			entities or individuals for no consideration or with
			unfair conditions, and not to adopt other means to
			damage the issuer's interests; (2) I guarantee to
			constrain position-related expenses; (3) I guarantee
			not to utilise the issuer's assets to engage in
			investment and consumption activities that are not
			related to the performance of duties; (4) I guarantee
			to link the remuneration system formulated by the
			Board or the Remuneration Committee with the
			implementation of the issuer's measures to make
			remedies for returns; (5) If the issuer subsequently
			launches the equity incentive policy, I guarantee to
			link the conditions of the exercise of the issuer's
			equity incentives to be announced with the
			implementation of the issuer's measures to make
			remedies for returns; (6) After the CSRC and the
			Shanghai Stock Exchange have separately issued the
			relevant opinions and implementation rules on the
			remedial measures and their undertakings in relation
			to the dilution of immediate returns, I guarantee to
			make supplemental undertakings immediately in
			accordance with the requirements of the CSRC and
			the SSE, and actively promote the issuer to develop
			new regulations to meet the requirements of the
			CSRC and the SSE, if the relevant regulations of
			the issuer and the above undertakings are not in
			compliance with the requirements; (7) I guarantee
			to fulfill the remedial measures formulated by the
			Company in relation to the dilution of immediate
			returns and any undertakings made by the issuer with
			respect to the remedial measures in relation to the
			dilution of immediate returns in a full, complete and
			timely manner; and (8) In case of any breach of the
			above undertakings or refusal to perform the above
			undertakings, I agree to accept the penalties and
			relevant regulatory measures imposed pursuant to the
			relevant regulations issued by the securities regulatory
			authorities such as the CSRC and the SSE. "

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step
	Others	The Company,	The Company, directors and senior management	19 June 2020 to	Yes	Yes	Not applicable	Not applicable
		directors and senior	made following commitments in respect of the share	18 June 2023
		management	price stabilisation after the listing:
			If, within three years after the initial listing by the
			Company, the daily closing prices of A Shares of the
			Company for 20 consecutive trading days are lower
			than the latest audited (which means audited in
			accordance with the PRC Accounting Standards for
			Business Enterprises) net assets value per Share (in
			case of any changes in the net assets or total number
			of Shares of the Company due to ex-rights or ex-
			dividend events such as profit distribution, conversion
			of capital reserve into share capital, placing of shares,
			etc. after the base date of the latest auditing, the net
			assets value per Share shall be adjusted accordingly),
			the Company, the Directors and the senior
			management will strictly comply with the Share Price
			Stabilization Plan within Three Years After the Issue
			of A Shares And the Listing on the STAR Market,
			and perform share price stabilization obligations in
			accordance with the requirements of such plan.
			Restraint measures for failure of the Company to
			perform undertakings for stabilising share price: "If the
			Company fails to perform undertakings for stabilising
			share price of the Company, the Company shall be
			required to publicly provide specific reasons at the
			Shareholders' general meeting and through the media
			for disclosure designated by the securities regulatory
			authority, and make an apology to Shareholders and
			general public investors. Where loss is caused to
			investors and it is not attributable to events of force
			majeure, the Company will be liable for compensating
			investors, and assume corresponding responsibilities
			in accordance with the requirements of laws,
			regulations and relevant regulatory authorities. Where
			the loss is attributable to events of force majeure,
			proposals for handling the situation to minimize the
			loss of the interest of investors shall be studied
			as soon as possible and submitted to the general
			meeting for consideration in order to protect the
			interest of investors to the fullest extent possible."

Significant Events

							If the
							undertaking	If the
							fails to be	undertaking
							fulfilled timely,	fails to be
							please explain	fulfilled timely,
					Is there	Is the	the specific	please state
	Category of	Party providing		Date and term of	a term for	undertaking	reasons	the plan in
Background of undertakings	undertakings	undertakings	Content of undertakings	undertakings	performance	fulfilled timely	for the failure	the next step

Restraint measures for failure of directors and senior management to perform undertakings for stabilising share price: "If I fail to perform or fail to perform in time undertakings for stabilizing share price, I shall be required to publicly provide specific reasons at the general meeting and through the media for disclosure designated by the securities regulatory authority, and make an apology to shareholders of the issuer and general public investors. Where the loss is not attributable to events of force majeure, the remuneration or allowances of the directors and senior management, if any, shall be reduced or suspended, and where loss is caused to investors, and the investors shall be compensated in accordance with the law. Where the loss is attributable to events of force majeure, proposals for handling the situation to minimize the loss of the interest of investors shall be studied as soon as possible in order to protect the interest of investors to the fullest extent possible."

Significant Events

IV. APPOINTMENT AND DISMISSAL OF ACCOUNTING FIRMS

Explanation on appointment and dismissal of accounting firms

Considering that the Company has changed the basis for preparing its overseas financial statements to China Accounting Standards for Business Enterprises, as approved by the extraordinary general meeting of the Company held on 24 February 2020, the Company changed its overseas auditor from PricewaterhouseCoopers to PricewaterhouseCoopers Zhong Tian LLP. PricewaterhouseCoopers Zhong Tian LLP became the only auditor auditing the financial statements of the Company in accordance with the Chinese Accounting Standards for Business Enterprises, and undertook the role of the overseas auditor in accordance with the The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ("Listing Rules"). PricewaterhouseCoopers Zhong Tian LLP audited the financial statements of the Company for the year ended 31 December 2019 in accordance with the Chinese Accounting Standards for Business Enterprises. For more details, please refer to the announcement of the Company dated 10 January 2020, and the circular of the Company dated 20 January 2020.

As approved by the annual general meeting of the Company held on 30 March 2020, the Company continued to appoint PricewaterhouseCoopers Zhong Tian LLP as the domestic and overseas auditor of the Group for the year 2020. For more details, please refer to the circulars of the Company dated 4 March 2020 and the announcement of the Company dated 30 March 2020 posted on HKEX website (www.hkex.com.hk).

Explanation on change in the accounting firms during the auditing period

Not applicable.

Statement of the Company on the "Non-Standard Auditing Report" prepared by the accounting firms

Not applicable.

Explanation of the Company on issuance of a "Non-Standard Auditing Report" by the certified public accountant for the financial report in the last year's annual report

Not applicable.

ISSUES RELEVANT TO INSOLVENCY AND RESTRUCTURING

Not applicable.

VI. MATERIAL LITIGATION AND ARBITRATION

During the Reporting Period, the Group has no material litigations and arbitrations.

VII. PUNISHMENTS AND RECTIFICATIONS OF THE LISTED COMPANY AND ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING SHAREHOLDERS, DE FACTO CONTROLLER AND ACQUIRERS

Not applicable.

Significant Events

VIII. STATEMENTS ON THE INTEGRITY OF THE COMPANY AND ITS CONTROLLING SHAREHOLDERS AND DE FACTO CONTROLLER DURING THE REPORTING PERIOD

Not applicable.

IX. EQUITY INCENTIVE PLANS, EMPLOYEE SHARE SCHEMES AND OTHER INCENTIVE SCHEMES OF THE COMPANY AND THEIR IMPACT

1. Relevant incentives disclosed in the announcements without subsequent development or change during implementation
  Not applicable.
2. Incentives not disclosed in the announcements or with subsequent development
  During the Reporting Period, the Company has no equity incentive plans, employee share schemes or other incentive schemes.
SIGNIFICANT RELATED TRANSACTIONS

The related transactions in relation to daily operations
1. Events disclosed in the temporary announcements without subsequent development or changes during implementation

Overview of events

Continuing Connected Transactions-Sales and Distribution Agreement with Shanghai Pharmaceuticals

Query index

For more details, please refer to the circular of the Company dated 11 October 2019 posted on HKEX website (www.hkex.com.hk).

1. Events disclosed in the temporary announcements with subsequent development or changes during implementation
  Not applicable.
2. Events not disclosed in the temporary announcements Not applicable.
Related transactions relating to acquisition and disposal of assets and equity
1. Events disclosed in the temporary announcements without subsequent development or changes during implementation
  Not applicable.
2. Events disclosed in the temporary announcements with subsequent development or changes during implementation
  Not applicable.
3. Events not disclosed in temporary announcements Not applicable.
4. Performance with agreed target shall be disclosed during the Reporting Period Not applicable.

Significant Events

Significant related transactions relating to joint external investment
1. Events disclosed in the temporary announcements without subsequent development or changes during implementation
  Not applicable.
2. Events disclosed in the temporary announcements with subsequent development or changes during implementation
  Not applicable.
3. Events not disclosed in temporary announcements Not applicable.

(IV) Claims and liabilities with related parties

1. Events disclosed in the temporary announcements without subsequent development or changes during implementation
  Not applicable.
2. Events disclosed in the temporary announcements with subsequent development or changes during implementation
  Not applicable.
3. Events not disclosed in temporary announcements Not applicable.
Other material related transactions Not applicable.

(VI) Others

Not applicable.

XI. MATERIAL CONTRACTS AND PERFORMANCE THEREOF

Trusteeship, contracting and leasing Not applicable.
Guarantees Not applicable.
Other Material Contracts Not applicable.

Significant Events

XII. THE WORK OF THE LISTED COMPANY ON POVERTY ALLEVIATION

Not applicable.

XIII. CONVERTIBLE CORPORATE BONDS

Not applicable.

XIV. INFORMATION ON ENVIRONMENT

Description of the environment protection work performed by the Company and its significant subsidiaries which are key pollutant discharging units announced by the national environmental protection authorities

Not applicable.

Environmental information of companies other than those falling under key pollutant discharging units
As a listed company, the Company has been active to fulfill its social responsibilities, and focused on environmental protection for many years. We take into account this responsibility as an important factor in all aspect. This means that the Companynot only focus on daily production, but also focus on all the other aspect ranging from procurement to administration. The Group will adopt the best practice measures as far as possible and reasonable. The relevant functional departments will consider the environmental management by assessing the policy, strategies, objectives, implementation and measurement method in terms of the pollution of water, air, noise and solid wastes.
During the Reporting Period, the Group has always followed the environment policy, strictly complied with national laws and regulations and emission standards. The Group has been inspected many times by relevant government institutions on sewage discharge during the Reporting Period and no violation of laws, regulations has been found. In addition, the Company also appointed a third party professional institution to assess the environmental indicators including noise, air and water regularly. Our objective is to control environment risks effectively and ensure the pollutant can reach the standard of discharge.
In order to ensure that the suppliers of the Group have reduced environmental pollution in the production and storage process, and complied with relevant requirements of social responsibility, the Group formulated Regulations on Environmental and Social Responsibility of Suppliers, and imposed strict requirements of environmental responsibility on suppliers. For instance, it is required that the pollutant discharged by suppliers should comply with relevant standards, and priority selection should be given to environmental- friendly and energy saving technologies. During storage and transportation process, the suppliers should ensure that the discharge meets relevant standards and the process is safe. In addition, for the suppliers' social responsibility, the Group requires all suppliers to prevent child and forced labour, ensure employees' health and safety, and strictly fulfil the responsibilities to their products.

Explanation of reasons for non-disclosure of environmental information of companies other than those falling under key pollutant discharging units

Not applicable.

(IV) Description of the subsequent progress or changes in the disclosure of environmental information during the Reporting Period

Not applicable.

Significant Events

XV. INFORMATION ABOUT OTHER SIGNIFICANT EVENTS

Situations, causes and impacts of the change in accounting policies, estimates and methods compared with the previous accounting period

Not applicable.

Situations, corrected amounts, cases and the impact of significant accounting errors incurred during the Reporting Period whose correction needed retrospective restatement

Not applicable.

Others
Not applicable.

Changes in Ordinary Shares and Particulars of Shareholders

I.	THE CHANGES IN SHARE CAPITAL
	(I)	Table of changes in shares
		1.	Table of changes in shares
													Unit: Share
				Before the changes	Changes for the period (+,-)	After the changes
				Number								Number
				of shares		Percentage (%)	New shares	Subtotal	of shares		Percentage (%)
			I Shares subject to trading moratorium	583,000,000	63.17	28,940,475	28,940,475	611,940,475	58.67
			1.State-owned shares	-		-	-	-	-		-
			2.State-owned legal person shares	30,636,286	3.32	-	-	30,636,286	2.94
			3.Other domestic shares	552,363,714	59.85	28,940,475	28,940,475	581,304,189	55.74
			Of which held by: Domestic non-state-
			owned legal person	357,563,854	38.74	28,940,475	28,940,475	386,504,329	37.06
			Domestic natural
			persons	194,799,860	21.11	-	-	194,799,860	18.68
			4.Foreign ownership	-		-	-	-	-		-
			Of which held by: Overseas
			non-state-owned
			legal person	-		-	-	-	-		-
			Overseas natural
			persons	-		-	-	-	-		-
			II Circulating shares not subject to trading
			moratorium	340,000,000	36.84	91,059,525	91,059,525	431,059,525	41.33
			1.RMB ordinary shares	-		-	91,059,525	91,059,525	91,059,525	8.73
			2.Domestic listed foreign shares	-		-	-	-	-		-
			3.Overseas listed foreign shares	340,000,000	36.84	-	-	340,000,000	32.60
			4.Others	-		-	-	-	-		-
			IIITotal number of ordinary shares	923,000,000	100.00	120,000,000	120,000,000	1,043,000,000	100.00

2. Description of changes in ordinary shares

In order to further broaden the Company's funding channels and enhance its competitiveness, on 14 May 2020, the Company obtained the reply on approving the registration of the Company's initial public offering (regulatory permission [2020] no. 912) issued by CSRC. The A Shares of the Company have been listed and commenced trading on the STAR Market of the Shanghai Stock Exchange since 19 June 2020 (Stock code: 688505).The number of shares issued this time is 120,000,000 A shares (par value of RMB0.1 per share), and the Company's original 583,000,000 domestic shares were converted into A shares at the same time. The issue price of the Shares is RMB8.95 per share, and the A Shares were issued under the special mandate granted by Shareholders to the Board at the annual general meeting on 26 April 2019 and extended at the annual general meeting on 30 March 2020. The total share capital of the Company was 923,000,000 shares before the issue of A shares, and after the issue, the total share capital of the Company increased to 1,043,000,000 shares, among which the A shares were 703,000,000 shares and the H shares were 340,000,000 shares.

USE OF PROCEEDS

The total proceeds of the issue of A share are RMB1,074,000,000 and the net proceeds are RMB974,323,900 after deducting the issue fees of this offering. The net proceeds raised from the issue of A Shares shall be used in accordance with the plan items described in the circular of the Company dated 4 April 2019 and the announcement of the Company dated 26 April 2019.

Changes in Ordinary Shares and Particulars of Shareholders

Particulars of the proceeds raised were used as follows:

				Unaudited
				Amount that
				has been	Unaudited
				utilized	Remaining
				for the six	balance
			months ended	as at
Investment Projects	Budget		30 June 2020	30 June 2020	Notes
		RMB'000		RMB'000	RMB'000
-	The Registration Project of
	Hemoporfin in the United
	States	23,000.00	1,274.79	21,725.21
-	The Innovational Research and
	Sustainable Development
	Project in Relation to Biological
	Medicine	24,000.00	3,716.40	20,283.60
-	The Project in Relation to
	Acquisition of Minor Equity
	Interests in Taizhou Fudan-
	Zhagnjiang	18,000.00	17,839.30	160.70
Over-raised funds	-		-	32,432.39	Note 1

Total		65,000.00	22,830.49	74,601.90
Notes:

1. The actual amount of proceeds raised from the issue of A Shares exceeding the needs of the investment projects listed above will be used to supplement the working capital related to the principal business of the Company in accordance with relevant requirements of CSRC and The Shanghai Stock Exchange ("SSE") and subject to the approval of the Board and the Shareholders' meeting. The Company will disclose relevant updates in due course.
2. The unaudited amount that has been utilized for the six months ended 30 June 2020 included the amount which is used after the listing for replacing the self-owned fund of the Company previously invested in such projects during the Reporting Period.
3. The Company confirms that the use of proceeds from the issue of A share conforms to the disclosure of the circular of the Company dated 4 April 2019, and that the Company will use the proceeds from the issue of A share in strict accordance with the relevant regulations. The remaining amount of proceeds to be invested is expected to be utilised by 31 December 2023. The expected timeline for the remaining amount of proceeds to be invested is subject to future adjustments if required, and the Company will comply with relevant interanl approval procedures and disclousre obligations in due course.
The impacts of changes in shares on financial indicators such as earnings per share and net asset per share from the end of the Reporting Period to the disclosure date of the interim report (if any)
Not applicable.
Other discloseable contents that the Company deems necessary or the securities regulators require disclosing
Not applicable.

Changes in Ordinary Shares and Particulars of Shareholders

Changes in trade-restricted shares

		Number of
	trade-restricted								Number of
		shares held		Number of	Number of new	trade-restricted
		at the	shares released	trade-restricted		shares		Date of release
		beginning	from restriction		shares		at the end		from trading
Name of shareholder		of the period		for the period		for the period		of the period	Reason for trading restriction	restriction
China New Enterprise Investment	0		0	156,892,912	156,892,912		subject to trading restriction	18 June 2023
Fund II											under the initial public offering
Shanghai Pharmaceuticals	0		0	139,578,560	139,578,560	subject to trading restriction	18 June 2023
											under the initial public offering
Yang Zong Meng	0	0	80,000,000	80,000,000	subject to trading restriction	18 June 2023
											under the initial public offering
Wang Hai Bo	0	0	57,886,430	57,886,430	subject to trading restriction	18 June 2023
											under the initial public offering
Shanghai Fudan Asset	0		0	30,636,286	30,636,286	subject to trading restriction	18 June 2021
Management Co., Ltd.											under the initial public offering
Shanghai Zhiyuan Investment	0		0	26,160,000	26,160,000	subject to trading restriction	18 June 2021
Center LP											under the initial public offering
Su Yong	0		0	22,312,860	22,312,860	subject to trading restriction	18 June 2021
											under the initial public offering
Zhao Da Jun	0	0	19,260,710	19,260,710	subject to trading restriction	18 June 2021
											under the initial public offering
Shanghai Dayuan Investment	0		0	15,900,000	15,900,000	subject to trading restriction	18 June 2021
Center LP											under the initial public offering
Shanghai Chengyuan Investment	0		0	12,470,000	12,470,000	subject to trading restriction	18 June 2021
Center LP											under the initial public offering
Haitong Assets Management	0		0	11,934,962	11,934,962	subject to trading restriction	18 June 2021
Huixiang FDZJ Employee											under the strategic allotment
Strategic Allotment Collective											of the initial public offering
Assets Management Plan
Li Jun	0		0	7,215,260	7,215,260	subject to trading restriction	18 June 2021
											under the initial public offering
Zhejiang Hisun Pharmaceutical	0		0	7,000,000	7,000,000	subject to trading restriction	18 June 2021
Co., Ltd											under the strategic allotment
											of the initial public offering
Shanghai Pudong Technology	0		0	6,562,382	6,562,382	subject to trading restriction	18 June 2021
Investment Co., Ltd.											under the initial public offering
Haitong Innovation Securities	0	0	4,800,000	4,800,000	Initial public offering of restricted	18 June 2022
Investment Co., Ltd											for shares strategic allotment
Fang Jing	0	0	5,654,600	5,654,600	subject to trading restriction	18 June 2021
											under the initial public offering
Zhang Man Juan	0	0	870,000	870,000	subject to trading restriction	18 June 2021
											under the initial public offering
Zhou Ming	0	0	800,000	800,000	subject to trading restriction	18 June 2021
											under the initial public offering
Lu Rong	0	0	800,000	800,000	subject to trading restriction	18 June 2021
											under the initial public offering
Offline restricted shares	0	0	5,205,513	5,205,513	subject to trading restriction	18 December
											under the offline allotment	2020
											of the initial public offering

Total	0		0	611,940,475	611,940,475

Changes in Ordinary Shares and Particulars of Shareholders

II. PARTICULARS OF SHAREHOLDERS
(I) Total number of shareholders:
Total number of ordinary shareholders as at the end of the Reporting Period (account)	38,363
Total number of preference shareholders with restored voting rights as at the
end of the reporting period (account)	Not applicable

As at the end of the Reporting Period, the Company had 38,363 Shareholders, including 38,228 A Share Shareholders and 135 registered H Share Shareholders.

Number of depositary receipt holders

Not applicable.

Top 10 shareholders and top 10 sharehoders for shares in circulation (or without trade restrictions) and their shareholdigns as at the end of the Reporting Period

								Unit: Share
			Shareholdings of the top 10 Shareholders
					Number
					of restricted
	Change of	Number of			shares
	shareholding	shares held		Number of	including
	during the	as at the		trade-	shares	Shares pledged or frozen
Name of shareholder	Reporting	end of	Percentage	restricted	lent by	Status	Number	Nature of
(full name)	Period	the period	(%)	shares held	refinancing	of shares	of shares	shareholders
HKSCC NOMINEES LIMITEDNote 1	101,000	268,797,900	25.77	0	Unknown	Unknown	Unknown	Overseas legal person
Shanghai PharmaceuticalsNote 1	0	210,142,560	20.15	139,578,560	139,578,560	Nil	0	Domestic non-state-
								owned legal person
China New Enterprise	0	156,892,912	15.04	156,892,912	156,892,912	Nil	0	Other
Investment Fund II
Yang Zong Meng	0	80,000,000	7.67	80,000,000	80,000,000	Nil	0	Domestic natural
								person
Wang Hai Bo	0	57,886,430	5.55	57,886,430	57,886,430	Nil	0	Domestic natural
								person
Shanghai Fudan Asset	0	30,636,286	2.94	30,636,286	30,636,286	Nil	0	Domestic non-state-
Management Co., Ltd.								owned legal person
Investco Hong Kong LimitedNote 1	0	27,313,000	2.62	0	Unknown	Unknown	Unknown	Overseas legal person
Shanghai Zhiyuan Investment	0	26,160,000	2.51	26,160,000	26,160,000	Nil	0	Other
Center LP
Su Yong	0	22,312,860	2.14	22,312,860	22,312,860	Nil	0	Domestic natural
								person
Zhao Da Jun	0	19,260,710	1.85	19,260,710	19,260,710	Nil	0	Domestic natural
								person

Changes in Ordinary Shares and Particulars of Shareholders

Shareholdings of the top 10 Shareholders without trade restrictions
	Number of
	shares
	without trade	Type and number of shares
Name of shareholder	restrictions	Type	Number
HKSCC NOMINEES LIMITED Note 1	268,797,900	Overseas listed foreign shares	339,361,900
Shanghai Pharmaceuticals Note 1	70,564,000	Overseas listed foreign shares	70,564,000
Investco Hong Kong Limited Note 1	27,313,000	Overseas listed foreign shares	27,313,000
Li Ning	2,371,404	RMB ordinary shares	2,371,404
Haitong Securities Co., Ltd	923,557	RMB ordinary shares	923,557
Fu Hua	530,000	RMB ordinary shares	530,000
Henan Yiluo Investment Management	500,008	RMB ordinary shares	500,008
Co., Ltd.-Huazhong No.3 Yiiluo private
equity investment fund
Xia Guo Qing	418,183	RMB ordinary shares	418,183
Dai Jian Ting	336,130	RMB ordinary shares	336,130
Zou Rong	320,000	RMB ordinary shares	320,000

Note on the related relations or concerted Shanghai Zhiyuan Investment Center LP, Shanghai Dayuan

actions of the above shareholders	Investment Center LP, and Shanghai Chengyuan Investment
	Center LP are employee stock holding platforms of the
	Company. The Company is not aware whether the other
	Shareholders have related party relationship or acting-in-concert
	arrangement.
Note on the preference shareholders	Not applicable.
with voting rights restored and
number of shares held

Note 1: Shares held by HKSCC NOMINEES LIMITED are held on behalf of its clients and the number of Shares it holds as shown in the table above excludes the 70,564,000 H Shares held by Shagnhai Pharmaceuticals and 27,313,000 H Shares held by Investco Hong Kong Limited. As the relevant rules of the Hong Kong Stock Exchange do not require clients to report whether the shares that they hold are pledged or frozen, HKSCC NOMINEES LIMITED is unable to provide statistics on the number of shares that have been pledged or frozen;

Changes in Ordinary Shares and Particulars of Shareholders

Number of and the trade restrictions on Top 10 shareholders holding trade-restricted shares

			Unit: share
		The listing and trading of
		trade-restricted shares
			Number of
			additional
Name of	Number of	Time	shares
shareholders	trade-	available for	available for
holding trade-	restricted	listing and	listing and
No. restricted shares	shares	trading	trading Trading restrictions

China New Enterprise Investment Fund II
Shanghai Pharmaceuticals
Yang Zong Meng
Wang Hai Bo
Shanghai Fudan Asset Management Co., Ltd.
Shanghai Zhiyuan Investment Center LP
Su Yong
Zhao Da Jun
Shanghai Dayuan Investment Center LP
Shanghai Chengyuan Investment Center LP

Note on related relations or concerted actions of the above shareholders

156,892,912	2023-06-19	0	36 months from the date
			when the Company's
			shares are listed at the SSE
139,578,560	2023-06-19	0	36 months from the date
			when the Company's
			shares are listed at the SSE
80,000,000	2023-06-19	0	36 months from the date
			when the Company's
			shares are listed at the SSE
57,886,430	2023-06-19	0	36 months from the date
			when the Company's
			shares are listed at the SSE
30,636,286	2021-06-19	0	12 months from the date
			when the Company's
			shares are listed at the SSE
26,160,000	2021-06-19	0	12 months from the date
			when the Company's
			shares are listed at the SSE
22,312,860	2021-06-19	0	12 months from the date
			when the Company's
			shares are listed at the SSE
19,260,710	2021-06-19	0	12 months from the date
			when the Company's
			shares are listed at the SSE
15,900,000	2021-06-19	0	12 months from the date
			when the Company's
			shares are listed at the SSE
12,470,000	2021-06-19	0	12 months from the date
			when the Company's
			shares are listed at the SSE

Shanghai Zhiyuan Investment Center LP, Shanghai Dayuan Investment Center LP, and Shanghai Chengyuan Investment Center LP are employee stock holding platforms of the Company.The Company is not aware whether the other shareholders have related party relationship or acting-in-concert arrangement.

Top 10 domestic depositary receipts holders of the Company as at the end of the Reporting Period

Not applicable.

Number of and trade restrictions on Top 10 holders of trade-restricted depository receipts

Not applicable.

Changes in Ordinary Shares and Particulars of Shareholders

Top 10 Shareholders with Voting Rights as at the End of the Reporting Period Not applicable.

(IV) Strategic Investors or General Legal Persons becoming Top 10 Shareholders because of the New Share Placing/Depositary Receipts

Not applicable.

Interests and short positions of substantial shareholders in shares and underlying shares of the Company
So far as the Directors are aware, as at 30 June 2020, the persons other than a Director, Supervisor or chief executive of the Company who have interests and/or short positions in the shares or underlying shares of the Company subject to disclosure under Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) ("SFO"), or as recorded in the register maintained under Section 336 of the SFO, or as notified to the Company and the Hong Kong Stock Exchange were as follows (the interests in shares and/or short positions, if any, disclosed herein are in addition to those disclosed in respect of the Directors, Supervisors and chief executive):

Name of substantial	Class of	Number of
shareholders	shares	shares held	Capacity
Shanghai Industrial Investment	A Shares	139,578,560	(L)	Interest of controlled
(Holdings) Co., Ltd.	H Shares	70,564,000	(L)	corporation
Shanghai Pharmaceuticals	A Shares	139,578,560	(L)	Beneficial owner
	H Shares	70,564,000	(L)

China New Enterprise	A Shares	156,892,912	(L)	Beneficial owner
Investment Fund II
Yang Zong Meng	A Shares	80,000,000	(L)	Beneficial owner
Invesco Hong Kong Limited	H Shares	27,313,000	(L)	Investment manager

Note: The letter "L" stands for long position.

	Percentage	Percentage
	in the	in total
	respective	number
Type of	class of	of issued
interest	shares	shares
Corporate	19.85%	20.15%
20.75%

Corporate	19.85%	20.15%
20.75%

Corporate	22.32%	15.04%
Personal	11.38%	7.67%
Corporate	8.03%	2.62%

CHANGES IN THE CONTROLLING SHAREHOLDER OR DE FACTO CONTROLLER

Not applicable.

IV. IMPLEMENTATION AND CHANGES OF ARRANGEMENTS RELATED TO DEPOSITARY RECEIPTS DURING THE REPORTING PERIOD

Not applicable.

SHARES WITH SPECIAL VOTING RIGHTS Not applicable.

Particulars of Preference Shares

Not applicable

Directors, Supervisors and Senior Management

CHANGES IN SHAREHOLDING
1. Changes in shareholding of existing and resigned Directors, Supervisors and Senior Management During the Reporting Period
  As approved at the Board meeting held on 26 April 2019 and the extraordinary general meeting held on 21
  June 2019 by the Company, in accordance with the Company Law, the Implementation Measures for Issue and Underwriting of Shares on the Sci-Tech Innovation Board of Shanghai Stock Exchange 《( 上海證券交易所科創板股票發行與承銷實施辦法》), the Guidelines for Issue and Underwriting of Shares on the Sci-Tech Innovation Board of Shanghai Stock Exchange 《( 上海證券交易所科創板股票發行與承銷業務指引》) and the provisions of other relevant laws, regulations and regulatory documents, and the Articles of association of the Company ("Articles of Association"), the Company formulated the strategic allotment plan ("Strategic Allotment Plan"). The participants of the Strategic Allotment Plan shall be the senior management and core employees of the Company, who may participate in a speical assets management plan ("Speical Assets Management Plan") under the issue of A Shares to subscribe for the approved number of A Shares upon the consideration and approval by the Board meeting and/or the general meeting of the Company. The details of the participation in the Strategic Allotment Plan are as follows. For more details, please refer to the announcements of the Company dated 26 April 2019, 21 June 2019 and 9 June 2020, and the circulars of the Company dated 6 June 2019.
  Indirect shareholding through the Strategic Allotment Plan of existing and resigned Directors, Supervisors, senior management, and core technicians during the Reporting Period

		Number of shares
Name	Position	indirectly held
		(shares '0,000)
Wang Hai Bo	Executive Director	99.42
Su Yong	Executive Director	79.61
Zhao Da Jun	Executive Director	79.61
Shen Bo	Non-executive Director	0
Yu Xiao Yang	Non-executive Director	0
Zhou Zhong Hui	Independent Non-executive Director	0
Lam Yiu Kin	Independent Non-executive Director	0
Xu Qing	Independent Non-executive Director	0
Yang Chun Bao	Independent Non-executive Director	0
Tang Yu Kuan	Shareholder Representitative Supervisor	0
Zhou Xi	Shareholder Representitative Supervisor (Resigned)	0
Liu Xiao Long	Independent Supervisor	0
Huang Jian	Independent Supervisor	0
Wang Luo Chun	Employee Representative Supervisor	29.84
Yu Dai Qing	Employee Representative Supervisor	23.87
Li June	Senior Management	59.67
Yang Xiao Lin	Senior Management	59.67
Gan Yi Min	Senior Management	59.67
Xue Yan	Senior Management	59.67
Zhang Wen Bo	Core Technicians	45.71
Tao Ji Ning	Core Technicians	21.84
Jiang Jian Ping	Core Technicians	42.73
Shen Yi Jun	Core Technicians	17.90

Note: The "Number of shares indirectly held" in the above table is calculated based on their respective percentage of interests in the Special Assets Management Plan. The arithmetic differences arise from the rounding adjustments of the figures to two decimal places.

Equity incentives granted to Directors, Supervisors and Senior Management during the Reporting Period
Not applicable.

Directors, Supervisors and Senior Management

CHANGES IN DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF THE COMPANY

		Information
Name	Position held	on the change
Wang Hai Bo	Executive Director, the Chairman of the Board	Elected
Su Yong	Executive Director	Elected
Zhao Da Jun	Executive Director	Elected
Shen Bo	Non-Executive Director	Elected
Yu Xiao Yang	Non-Executive Director	Elected
Zhou Zhong Hui	Independent Non-Executive Director	Elected
Lam Yiu Kin	Independent Non-Executive Director	Elected
Xu Qing	Independent Non-Executive Director	Elected
Yang Chun Bao	Independent Non-Executive Director	Elected
Tang Yu Kuan	Shareholder Representative Supervisor, the Chairman of the	Elected
	Supervisory Committee
Liu Xiao Long	Independent Supervisor	Elected
Huang Jian	Independent Supervisor	Elected
Wang Luo Chun	Employee Representative Supervisor	Elected
Yu Dai Qing	Employee Representative Supervisor	Elected
Zhou Xi	Shareholder Representative Supervisor, the Chairman of the	Resigned
	Supervisory Committee
Wang Hai Bo	General Manager	Appointed
Su Yong	Vice General Manager	Appointed
Zhao Da Jun	Vice General Manager	Appointed
Li June	Vice General Manager	Appointed
Yang Xiao Lin	Vice General Manager	Appointed
Gan Yi Min	Vice General Manager	Appointed
Xue Yan	Secretary to the Board/Company Secretary, Chief financial officer	Appointed

Information on changes in Directors, Supervisors and Senior Management of the Company：

As approved by the Shareholders at the annual general meeting held on 30 March 2020, the term of the seventh session of the Board and the Supervisory Committee shall become effective from the date of being elected at the annual general meeting, until the conclusion of the annual general meeting of the Company in 2023 (except for re- election).

Directors, Supervisors and Senior Management

OTHER EXPLANATIONS
1. Directors', supervisors' and chief executive's interests in shares of the company
  As at 30 June 2020, the interests (if any) of the Directors, Supervisors and chief executive of the Company and their respective associates in the shares or debentures (including interests in shares and/or short positions) of the Company and its associated corporations, (a) as notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) as recorded in the register maintained by the Company under Section 352 of the SFO; or (c) as notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers under Appendix 10 of the Listing Rules (the "Model Code") were as follows:

								Percentage
								in total
			Number of			Percentage	number
		Class of	shares held		Type of	in Domestic	of issued
Name	Position	shares	(0'000)	Capacity	interest	Shares	shares
Wang Hai Bo	Director	A Shares	5,888.06	(L)	Beneficial owner	Personal	8.38%	5.65%
Su Yong	Director	A Shares	2,310.89	(L)	Beneficial owner	Personal	3.29%	2.22%
Zhao Da Jun	Director	A Shares	2,005.68	(L)	Beneficial owner	Personal	2.85%	1.92%
Wang Luo Chun	Supervisor	A Shares	140.87	(L)	Beneficial owner	Personal	0.20%	0.14%
Yu Dai Qing	Supervisor	A Shares	109.84	(L)	Beneficial owner	Personal	0.16%	0.11%

Note:

1. The letter "L" stands for long position;
2. The nubmer of shares held by the Directors and Supervisors in above table included the approximate nunmber of shares calculated based on their respective interests in the Special Assets Management Plan (around 994,200 A Shares, 796,100 A Shares, 796,100 A Shares, 238,700 A Shares and 298,400 A Share being allotted to Mr. Wang Hai Bo, Mr. Su Yong, Mr. Zhao Da Jun, Mr. Wang Luo Chun and Ms. Yu Dai Qing, respectively). For more details, please refer to the announcements of the Company dated 26 April 2019, 21 June 2019 and 9 June 2020, and the circular of the Company dated 6 June 2019.
Directors' and Supervisor's securities transactions
The amended "Code of transactions in the Company's securities", which was passed on 11 August 2009 by the Board meeting of the Company, has terms no less strict than the required standard of dealings set out in the Model Code. Directors and relevant employees shall comply with this code. A copy of the code is sent to each Director upon his appointment and thereafter, a notification not to deal in the securities of the Company until after the half-year results have been published would be sent to the Directors 60 days immediately preceding the date of the Board meeting in which the annual results will be approved or, if shorter, the period from the end of the relevant financial year up to the publication date of the results; and 30 days immediately preceding the date of the Board meeting in which the half-year results will be approved half-year results or, if shorter, the period from the end of the relevant quarterly or half-year period up to the publication date of the results.
Under this code, the Directors are required to notify the Chairman and receive a dated written acknowledgement before dealing in the securities and derivatives of the Company and, in the case of the Chairman himself, he must notify the delegated directors and receive a dated written acknowledgement before any dealing.
Supervisors' securities transactions should comply with the code for the Directors. All the relevant employees, if any, having any price-sensitive information of the Group which is not yet disclosed should also comply with the code for the Directors.
For the six months ended 30 June 2020, all Directors, Supervisors and relevant employees have complied with the relevant requirements. The previous year has not found the Directors, the Supervisors and the relevant employees violating the above regulations.

Directors, Supervisors and Senior Management

Corporate governance
1. Audit committee
  The audit committee of the Company (the "Audit Committee") is responsible for reviewing the financial reporting, monitoring risk management, reviewing internal control systems and corporate governance issues and making relevant recommendations to the Board. The Audit Committee comprises two independent non-executive Directors and one non-executive Director who are Mr. Lam Yiu Kin, Mr. Xu Qing and Mr. Shen Bo. Mr. Lam Yiu Kin was appointed as the chairman of the Audit Committee.
  The Audit Committee reviews the accounting principles and practices adopted by the Group as well as the internal controls to check whether they comply with the Listing Rules, and reviews issues regarding auditing, internal controls, risk management and financial reporting. The Audit Committee reviewed the Group's unaudited interim results for the six months ended 30 June 2020 before proposing to the Board for approval.
2. Corporate governance practice
  The Company's corporate governance structure is as follows:

Shareholders

Supervisory

Committee

Board

Company Secretary/

Board Secretary

External Auditors		Audit		Remuneration		Nomination		Stretegy
	Committee		Committee		Committee		Committee

The Company's corporate governance code includes but is not limited to the following documents:

Articles of Association;
Rules of Procedure for the Audit Committee;
Rules of Procedure for the Remuneration Committee;
Rules of Procedure for Nomination Committee;
Rules of Procedure for the Strategy Committee;
Principles regarding transactions in the Company's securities;
Regulations for information disclosure;

Directors, Supervisors and Senior Management

Regulations for internal control management;
Daily management documents of the Company.

The Audit Committee and the Board have reviewed the documents relating to corporate governance policies adopted by the Company and considered that it had complied with most of the principles and codes set out in the Corporate Governance Code (the "Code") contained in Appendix 14 of the Listing Rules.

Major aspects which deviate from the provisions as set out in the Code:

- The positions of the chairman and the general manager rest on the same person. Although the Articles of Association contains specific requirements on the responsibilities of the chairman and the general manager (chief executive), such being the responsibilities of managing the operation of the Board and managing the daily operation of the Company, respectively, the two positions are still taken by one person. Considering that the scale of the Company is relatively small with its businesses mainly focused in the areas of research, production and sales of innovative drugs, and for the sake of management efficiency, the Board takes the view that the positions of chairman and chief executive being taken by one person is beneficial for the Company's development at the present stage. Along with the development of the Company, the Board will consider to segregate duties of the chairman and the chief executive.
Employees and salaries
As at 30 June 2020, the Group had a total of 618 employees, as compared to 584 employees as at 30 June 2019. Staff costs including Directors' remuneration for the six months ended 30 June 2020 were approximately RMB46,141,106, compared with approximately RMB64,723,009 for the same period in 2019. The salaries and benefits of employees provided by the Group are kept at a competitive level and employees are rewarded on a performance related basis within the general framework of the Group's salary and bonus system which is reviewed annually. A wide range of benefits, including statutory social welfare plans, are also provided to employees by the Group.
Purchase, sale or redemption of listed securities
Neither the Company nor its subsidiaries purchased, sold or redeemed any of the Company's listed securities during the six months ended 30 June 2020.

Particulars of Corporate Bonds

Not applicable.

Consolidated Balance Sheet

As at 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

		30 June	31 December
ASSETS	Note	2020	2019
		Consolidated	Consolidated
Current assets
Cash at bank and on hand	5(1)	1,529,302,256	576,799,410
Notes receivables	5(2)	76,219,386		127,592,684
Accounts receivables	5(3)、9(6)	294,647,710		377,006,911
Advances to suppliers	5(4)	10,743,785		16,411,027
Other receivables	5(5)	8,880,898		8,250,226
Inventories	5(6)	41,209,929		31,869,051
Other current assets	5(7)	252,773		310,035

Total current assets		1,961,256,737		1,138,239,344
Non-current assets

Other equity instruments	5(8)	-	-
Long-term equity investments	5(9)	61,438,432		28,078,902
Fixed assets	5(10)	233,249,055		254,359,522
Construction in progress	5(11)	268,000		329,602
Right-of-use assets	5(12)	4,911,023		5,517,981
Intangible assets	5(13)	57,404,549		60,460,278
Development costs	5(13)	17,501,033		14,970,803
Goodwill	5(14)	-	-
Long-term prepaid expenses	5(15)	1,852,195		2,414,319
Deferred tax assets	5(16)	59,452,127		58,181,130
Other non-current assets	5(17)	5,134,285		2,272,672

Total non-current assets		441,210,699		426,585,209

TOTAL ASSETS		2,402,467,436		1,564,824,553

Consolidated Balance Sheet

As at 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

		30 June	31 December
LIABILITIES AND OWNERS' EQUITY	Note	2020	2019
		Consolidated	Consolidated
Current liabilities
Short-term borrowings	5(19)	160,000,000	148,942,573
Accounts payables	5(20)	5,355,544		6,827,902
Contract liabilities	5(21)、9(6)	4,388,337		2,042,726
Employee benefits payable	5(22)	8,674,603		48,123,497
Taxes payable	5(23)	2,077,752		36,301,432
Other payables	5(24)、9(6)	293,503,837		325,079,482
Current portion of non-current liabilities	5(25)	4,614,556		4,031,927

Total current liabilities		478,614,629		571,349,539
Non-current liabilities

Lease liabilities	5(25)	788,051		2,121,534
Deferred income	5(26)	54,446,674		58,205,366
Total Non-current liabilities		55,234,725		60,326,900

Total liabilities		533,849,354		631,676,439
Owners' equity

Share capital	5(27)	104,300,000		92,300,000
Capital surplus	5(28)	1,200,120,029		237,796,134
Other comprehensive income	5(29)	(13,898,864)	(13,950,235)
Surplus reserve	5(30)	46,150,000		46,150,000
Undistributed profits	5(31)	533,698,354		569,229,480

Total equity attributable to equity owners of the Company		1,870,369,519		931,525,379

Minority interests		(1,751,437)	1,622,735
Total owners' equity		1,868,618,082		933,148,114

TOTAL LIABILITIES AND OWNERS' EQUITY		2,402,467,436		1,564,824,553

The accompanying notes form an integral part of these financial statements.

Legal representative: Wang Haibo

Principal in charge of accounting: Xue Yan

Head of accounting department: Zhang Wen

Company Balance Sheet

As at 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

		30 June	31 December
ASSETS	Note	2020	2019
		Company	Company
Current assets
Cash at bank and on hand		1,477,274,854	524,036,350
Notes receivables	15(1)	76,219,386	127,592,684
Accounts receivables	15(2)	273,097,851		348,545,015
Advances to suppliers		9,903,939		16,297,676
Other receivables	15(3)	157,805,777		157,685,608
Inventories		26,272,152		21,272,140
Other current assets		7,518		-

Total current assets		2,020,581,477		1,195,429,473
Non-current assets

Long-term equity investments	15(4)	312,773,135		285,677,396
Fixed assets		113,351,951		120,166,184
Construction in progress		-	329,602
Right-of-use assets	15(5)	3,712,011		5,517,981
Intangible assets		8,914,391		9,752,170
Long-term prepaid expenses		940,638		1,390,576
Deferred tax assets		68,078,897		67,197,900
Other non-current assets		4,316,289		2,120,672
Total non-current assets		512,087,312		492,152,481

TOTAL ASSETS		2,532,668,789		1,687,581,954

Company Balance Sheet

As at 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

		30 June	31 December
LIABILITIES AND OWNERS' EQUITY	Note	2020	2019
		Company	Company
Current liabilities
Short-term borrowings		160,000,000	148,942,573
Accounts payables		3,803,978		5,494,686
Contract liabilities		4,124,712		1,622,099
Employee benefits payable		7,975,201		44,442,590
Taxes payable		394,485		33,190,001
Other payables		285,931,268		313,542,721
Current portion of non-current liabilities	15(6)	4,203,595		4,031,927

Total current liabilities		466,433,239		551,266,597
Non-current liabilities

Lease liabilities	15(6)	-	2,121,534
Deferred income		44,387,659		46,846,675
Total Non-current liabilities		44,387,659		48,968,209

Total liabilities		510,820,898		600,234,806
Owners' equity

Share capital		104,300,000	92,300,000
Capital surplus		1,278,310,385	315,986,490
Surplus reserve		46,150,000	46,150,000
Undistributed profits		593,087,506	632,910,658

Total owners' equity		2,021,847,891		1,087,347,148
TOTAL LIABILITIES AND OWNERS' EQUITY		2,532,668,789		1,687,581,954

The accompanying notes form an integral part of these financial statements.

Legal representative: Wang Haibo

Principal in charge of accounting: Xue Yan

Head of accounting department: Zhang Wen

Consolidated Income Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

		For the	For the
		six months	six months
		ended	ended
		30 June	30 June
	Note	2020	2019
		Consolidated	Consolidated
Revenue	5(32)	235,614,896	390,693,485
Less: Cost of sales	5(32)、5(38)	(17,970,463)	(37,078,195)
Taxes and surcharges	5(33)	(2,079,478)	(2,349,082)
Selling expenses	5(34)、5(38)	(117,516,961)	(192,126,259)
General and administrative expenses	5(35)、5(38)	(16,808,417)	(24,495,339)
Research and development expenses	5(36)、5(38)	(54,373,006)	(51,197,251)
Financial income/(expenses)	5(37)	112,416	(2,345,963)
Including: Interest expenses		(3,329,237)	(3,499,926)
Interest income		4,062,490	1,263,333
Add: Other income	5(39)	13,013,136	2,100,103
Investment income	5(40)	1,703,205	14,431,799
Including: Share of loss of associates and joint ventures		(2,640,470)	(544,818)
Credit impairment losses	5(41)	(17,644,101)	(1,795,818)
Asset impairment losses	5(42)	-	(2,080,480)
Gains on disposals of assets	5(43)	3,652,221	477,399

Operating profit		27,703,448		94,234,399
Add:Non-operating income	5(44)	648,131		30,651
Less:Non-operating expenses	5(45)	(354,857)	(853,205)

Total profit		27,996,722		93,411,845
Less: Income tax expenses	5(46)	1,368,126		(8,339,916)

Net profit		29,364,848		85,071,929
Classified by continuity of operations


Net profit from continuing operations		29,364,848	85,071,929
Net profit from discontinued operations		-	-
Classified by ownership of the equity

Attributable to equity owners of the Company		29,078,874	91,719,590
Minority interests		285,974		(6,647,661)

Consolidated Income Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

		For the	For the
		six months	six months
		ended	ended
		30 June	30 June
	Note	2020		2019
		Consolidated	Consolidated
Other comprehensive income, net of tax
Other comprehensive income that will not be reclassified to profit
or loss
Changes in the fair value of other equity investments		-	-
Other comprehensive income that will be reclassified to profit or
loss
Translation differences on translation of foreign currency financial
statements		51,371	5,718

		51,371		5,718

Total comprehensive income for the half-year		29,416,219		85,077,647

Attributable to equity owners of the Company		29,130,245		91,725,308
Attributable to minority interests		285,974		(6,647,661)

		29,416,219		85,077,647
Earnings per share


Basic and diluted earnings per share	5(47)	0.03		0.10

The accompanying notes form an integral part of these financial statements.

Legal representative: Wang Haibo

Principal in charge of accounting: Xue Yan

Head of accounting department: Zhang Wen

Company Income Statement

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

		For the	For the
		six months	six months
		ended	ended
		30 June	30 June
	Note	2020	2019
		Company	Company
Revenue	15(7)	215,074,259	355,725,477
Less: Cost of sales	15(7)	(15,962,876)	(23,626,898)
Taxes and surcharges		(896,466)	(1,080,885)
Selling expenses		(110,942,605)	(183,275,915)
General and administrative expenses		(12,193,712)	(10,423,035)
Research and development expenses		(51,625,880)	(51,004,956)
Financial income/(expenses)		8,366	(2,010,614)
Including: Interest expenses		(3,329,237)	(3,128,099)
Interest income		3,941,281	1,187,271
Add: Other income		9,925,384	378,240
Investment income	15(8)	7,509,402	11,106,480
Including: Share of loss of joint ventures		(504,261)	-
Credit impairment losses		(17,521,308)	(3,039,112)
Asset impairment losses		-	(9,600,000)
Gains on disposals of assets		315,735	477,399

Operating profit		23,690,299		83,626,181
Add:Non-operating income		410,084		25,450
Less:Non-operating expenses		(291,661)	(841,103)

Total profit		23,808,722		82,810,528

Less: Income tax expenses		978,126		(8,339,916)
Net profit		24,786,848		74,470,612
Classified by continuity of operations

Net profit from continuing operations		24,786,848	74,470,612
Net profit from discontinued operations		-	-
Other comprehensive income, net of tax		-	-

Total comprehensive income for the half-year		24,786,848		74,470,612

The accompanying notes form an integral part of these financial statements.

Legal representative: Wang Haibo

Principal in charge of accounting: Xue Yan

Head of accounting department: Zhang Wen

Consolidated Cash Flow Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

		For the		For the
		six months		six months
		ended		ended
		30 June		30 June
	Note	2020		2019
		Consolidated		Consolidated
1. Cash flows from operating activities
Cash received from sales of goods or rendering of services		370,948,618	432,010,919
Cash received relating to other operating activities	5(48)(a)	15,918,428		17,280,740

Sub-total of cash inflows		386,867,046			449,291,659

Cash paid for goods and services		(176,955,920)	(166,731,041)
Cash paid to and on behalf of employees		(88,712,578)	(88,485,742)
Payments of taxes and surcharges		(36,782,419)	(53,646,677)
Cash paid relating to other operating activities	5(48)(b)	(23,597,084)	(39,765,948)

Sub-total of cash outflows		(326,048,001)	(348,629,408)

Net cash flows from operating activities	5(48)(f)	60,819,045		100,662,251
2. Cash flows from investing activities
Net cash received from disposal of fixed assets		10,626,506	1,297,083
Net cash received from disposal of subsidiaries		-	3,269,840
Cash received relating to other investing activities	5(48)(c)	534,344,657			1,136,826,183

Sub-total of cash inflows		544,971,163			1,141,393,106
Cash paid to acquire fixed assets, intangible assets and other

long-term assets		(11,176,240)	(18,722,689)
Net cash paid to acquire joint venture		(36,000,000)		-
Cash paid relating to other investing activities	5(48)(d)	(530,000,000)	(1,130,000,000)

Sub-total of cash outflows		(577,176,240)	(1,148,722,689)

Net cash flows from investing activities		(32,205,077)	(7,329,583)

Consolidated Cash Flow Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

				For the	For the
				six months	six months
				ended	ended
				30 June	30 June
		Note		2020		2019
				Consolidated	Consolidated
3. Cash flows from financing activities
Cash received from capital contributions			996,190,000	-
Cash received from borrowings				51,057,427	42,625,000

Sub-total of cash inflows				1,047,247,427		42,625,000

Cash repayments of borrowings				(40,000,000)	(50,000,000)
Cash payments for distribution of dividends, profits or interest
expenses				(67,831,620)	(2,936,741)
Cash payments relating to other financing activities	5(48)(e)	(15,578,300)	(181,860,998)

Sub-total of cash outflows				(123,409,920)	(234,797,739)

Net cash flows from financing activities			923,837,507		(192,172,739)
4. Effect of foreign exchange rate changes on cash and cash
equivalents				51,371		5,718
5. Net increase/(decrease) in cash and cash equivalents	5(48)(g)	952,502,846		(98,834,353)
Add: Cash and cash equivalents at beginning of the half-year	5(48)(g)	576,799,410		588,221,416
6. Cash and cash equivalents at end of the half-year	5(48)(g)	1,529,302,256		489,387,063
The accompanying notes form an integral part of these financial statements.

Legal representative: Wang Haibo	Principal in charge of accounting: Xue Yan	Head of accounting department: Zhang Wen

Company Cash Flow Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

	For the		For the
	six months		six months
	ended		ended
	30 June		30 June
Note	2020		2019
	Company		Company
1. Cash flows from operating activities
Cash received from sales of goods or rendering of services	339,955,186	392,621,010
Cash received relating to other operating activities	58,817,846	2,152,514

Sub-total of cash inflows	398,773,032			394,773,524

Cash paid for goods and services	(173,811,177)	(161,630,530)
Cash paid to and on behalf of employees	(77,217,076)	(76,390,111)
Payments of taxes and surcharges	(31,583,597)	(48,869,458)
Cash paid relating to other operating activities	(63,951,273)	(28,452,455)

Sub-total of cash outflows	(346,563,123)	(315,342,554)

Net cash flows from operating activities	52,209,909		79,430,970
2. Cash flows from investing activities
Net cash received from disposal of fixed assets	196,892		1,118,779
Net cash received from disposal of subsidiaries	8,389,985		3,956,600
Cash received relating to other investing activities	538,023,678		1,140,501,137

Sub-total of cash inflows	546,610,555		1,145,576,516
Cash paid to acquire fixed assets, intangible assets and other

long-term assets	(7,080,595)	(11,294,772)
Net cash paid to acquire joint venture	(36,000,000)		-
Cash paid relating to other investing activities	(530,000,000)	(1,308,953,000)

Sub-total of cash outflows	(573,080,595)	(1,320,247,772)

Net cash flows from investing activities	(26,470,040)	(174,671,256)

Company Cash Flow Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

			For the	For the
			six months	six months
			ended	ended
			30 June	30 June
	Note	2020		2019
			Company	Company
3. Cash flows from financing activities
Cash received from capital contributions	996,190,000	-
Cash received from borrowings		51,057,427	40,000,000

Sub-total of cash inflows			1,047,247,427		40,000,000

Cash repayments of borrowings			(40,000,000)	(50,000,000)
Cash payments for distribution of dividends, profits or interest
expenses		(67,831,620)	(2,936,741)
Cash payments relating to other financing activities	(11,917,172)	(2,177,968)

Sub-total of cash outflows		(119,748,792)	(55,114,709)

Net cash flows from financing activities	927,498,635		(15,114,709)
4. Effect of foreign exchange rate changes on cash and cash
equivalents			-		-
5. Net increase/(decrease) in cash and cash equivalents	953,238,504		(110,354,995)
Add: Cash and cash equivalents at beginning of the half-year		524,036,350		554,560,168
6. Cash and cash equivalents at end of the half-year	1,477,274,854		444,205,173
The accompanying notes form an integral part of these financial statements.

Legal representative: Wang Haibo	Principal in charge of accounting: Xue Yan	Head of accounting department: Zhang Wen

Consolidated Statement of Changes in Owners' Equity

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

			Attributable to equity owners of the Company
							Other
	Paid-in		Capital	comprehensive	Surplus	Undistributed	Minority		Total
Item	capital		surplus		income	reserves		profits	interests	owners' equity
Balance at 1 January 2019	92,300,000	412,293,387	(14,006,416)	46,150,000		406,481,497	11,213,505	954,431,973
Movements for the six months
ended 30 June 2019
Total comprehensive income
Net profit	-		-		-	-	91,719,590	(6,647,661)	85,071,929
Other comprehensive income	-		-	5,718	-		-	-	5,718
Capital contribution and withdrawal by
owners
Capital contribution by owners
Profit distribution
Profit distribution to equity owners	-		-		-	-	(64,610,000)	-	(64,610,000)
Others	-		-		-	-		-	615,865	615,865

Balance at 30 June 2019	92,300,000		412,293,387	(14,000,698)	46,150,000		433,591,087	5,181,709	975,515,485

Balance at 1 January 2020	92,300,000		237,796,134	(13,950,235)	46,150,000		569,229,480	1,622,735	933,148,114
Movements for the six months

ended 30 June 2020
Total comprehensive income
Net profit	-		-		-	-	29,078,874	285,974	29,364,848
Other comprehensive income	-		-	51,371	-		-	-	51,371
Capital contribution and withdrawal by
owners
Capital contribution by owners	12,000,000		962,323,895		-	-		-	-	974,323,895
Profit distribution
Profit distribution to equity owners	-		-		-	-	(64,610,000)	-	(64,610,000)
Others	-		-		-	-		-	(3,660,146)	(3,660,146)

Balance at 30 June 2020	104,300,000		1,200,120,029	(13,898,864)	46,150,000		533,698,354	(1,751,437)	1,868,618,082

The accompanying notes form an integral part of these financial statements.

Legal representative: Wang Haibo

Principal in charge of accounting: Xue Yan

Head of accounting department: Zhang Wen

Company Statement of Changes in Owners' Equity

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

	Share		Capital	Surplus	Undistributed		Total
Item	capital		surplus	reserves	profits	owners' equity
Balance at 1 January 2019	92,300,000	315,986,490		46,150,000	522,005,897		976,442,387
Movements for the six months

ended 30 June 2019
Total comprehensive income
Net profit	-		-	-	74,470,612		74,470,612
Profit distribution
Profit distribution to equity owners	-		-	-	(64,610,000)	(64,610,000)
Balance at 30 June 2019	92,300,000	315,986,490	46,150,000	531,866,509		986,302,999

Balance at 1 January 2020	92,300,000	315,986,490		46,150,000	632,910,658		1,087,347,148
Movements for the six months

ended 30 June 2020
Total comprehensive income
Net profit	-		-	-	24,786,848		24,786,848
Capital contribution and withdrawal by owners
Capital contribution by owners	12,000,000	962,323,895	-	-	974,323,895
Profit distribution
Profit distribution to equity owners	-		-	-	(64,610,000)	(64,610,000)

Balance at 30 June 2020	104,300,000	1,278,310,385		46,150,000	593,087,506		2,021,847,891

The accompanying notes form an integral part of these financial statements.

Legal representative: Wang Haibo

Principal in charge of accounting: Xue Yan

Head of accounting department: Zhang Wen

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

GENERAL INFORMATION
Shanghai Fudan-ZhangjiangBio-Pharmaceutical Co., Ltd. (the "Company") was established in the People's Republic of China ("PRC") on 11 November 1996 as a limited liability company with an initial registered capital of RMB 5,295,000.
Pursuant to a series of capital injections on 10 November 1997, 11 May 2000 and 12 September 2000 from the existing or the then shareholders of the Company and the capitalisation of reserves of the Company on 11 December 1997 and 20 October 2000, the registered capital of the Company was increased from RMB 5,295,000 to RMB 53,000,000.
On 8 November 2000, the Company was transformed into a joint stock company with limited liability. The share capital of the company was RMB 53,000,000, divided into 53,000,000 ordinary shares, with a par value of RMB 1.00 each.
On 20 January 2002, all of the shares of the Company, being 53,000,000 ordinary shares with a par value of RMB 1.00 each, were subdivided into 530,000,000 ordinary shares ("Domestic Shares") with a par value of RMB 0.10 each.
On 13 August 2002, the trading of the newly issued 198,000,000 ordinary shares ("H Shares") of RMB 0.10 each of the Company commenced on the Growth Enterprise Market ("GEM") of The Stock Exchange of Hong Kong Limited (the "Stock Exchange"), including 18,000,000 H Shares converted from Domestic Shares. Therefore, the share capital of the Company was increased to RMB 71,000,000.
On 4 February 2013, the Company completed a placing of 142,000,000 H Shares with a par value of RMB 0.10 each at a price of HKD 1.70, and the share capital of the Company was increased to RMB 85,200,000.
On 29 June 2012, the Company adopted a restricted share scheme. Pursuant to the scheme, the Company granted a total of 71,000,000 Domestic Shares as restricted shares to directors, senior management, mid-level management and key research staff of the Group on 24 June 2013 and 21 October 2013 at a price of RMB 0.51 with a par value of RMB 0.10 each. Upon completion of the grants, the share capital of the Company was increased to RMB 92,300,000.
On 16 December 2013, the Company transferred its H Shares listing from GEM to the Main Board of the Stock Exchange.
On 12 June, 2020, the Company completed a placing of 120,000,000 A Shares with a par value of RMB 0.10 each, and was listed on the Shanghai Stock Exchange on June 19,2020. After the completion of the issuance, the Company's registered capital and share capital increased to 104,300,000 yuan, divided into 1,043,000 shares, each with a par value of 0.10 yuan.
The Company and its subsidiaries (collectively referred as the "Group") research, develop and transfer self-developed bio- pharmaceutical know-how, carry out contracted research for customers, manufacture and sell medical products and provide other medical services in the PRC.
Subsidiaries comprised in the consolidated financial statements as of 30 June 2020 are set out in Note 7.
These financial statements are authorised for issue by the Board of Directors of the Company on 25 August 2020.
SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES
The Group applies the accounting policies and accounting estimates based on its business operating characteristics, including measurement of financial instruments(Note2(8)), valuation of inventories(Note 2(9)), depreciation of fixed assets and amortization of intangible assets(Note 2(11)(13)), judgments to the criteria for capitalization of development expenditures (Note2 (13)), recognition and measurement of revenue (Note 2(18)), etc.
Significant judgements to determine the critical accounting policies are disclosed in Note 2(24).

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Basis of preparation
The financial statements are prepared in accordance with the Accounting Standard for Business Enterprises-Basic Standard, the specific accounting standards and other relevant regulations issued by the Ministry of Finance on 15 February 2006 and in subsequent periods (hereafter collectively referred to as "the Accounting Standard for Business
Enterprises" or "CAS") and the disclosure requirements in the Preparation Convention of Information Disclosure by Companies Offering Securities to the Public No.15 - General Rules on Financial Reporting issued by the China Securities Regulatory Commission.
The financial statements are prepared on a going concern basis.
The new Hong Kong Companies Ordinance has come into force since 3 March 2014. Certain disclosures in the financial statements have been included to reflect the requirements under the new Hong Kong Companies Ordinance.
Statement of compliance with the Accounting Standard for Business Enterprises
The financial statements of the Company for the six months ended 30 June 2020 are in compliance with the Accounting Standards for Business Enterprises, and truly and completely present the consolidated and the Company's financial position of the Company as at 30 June 2020 and of their financial performance, cash flows and other information for the six months then ended.
Accounting year
The Company's accounting year starts on 1 January and ends on 31 December.
Recording currency
The Company's recording currency is Renminbi (RMB). The recording currency of the Company's subsidiaries is determined based on the primary economic environment in which they operate. The financial statements are presented in RMB.
Preparation of consolidated financial statements
The consolidated financial statements comprise the financial statements of the Company and all of its subsidiaries.
Subsidiaries are consolidated from the date on which the Group obtains control and are de-consolidated from the date that such control ceases.
In preparing the consolidated financial statements, where the accounting policies and the accounting periods of the Company and subsidiaries are inconsistent, the financial statements of the subsidiaries are adjusted in accordance with the accounting policies and the accounting period of the Company. For subsidiaries acquired from business combinations involving enterprises not under common control, the individual financial statements of the subsidiaries are adjusted based on the fair value of the identifiable net assets at the acquisition date.
All significant intra-group balances, transactions and unrealised profits are eliminated in the consolidated financial statements. The portion of subsidiaries' owners' equity and the portion of subsidiaries' net profits and losses and comprehensive incomes for the period not attributable to the Company are recognised as minority interests, net profit attributed to minority interests and total comprehensive incomes attributed to minority interests, and presented separately in the consolidated financial statements under owners' equity, net profits and total comprehensive income respectively. Unrealised profits and losses resulting from the sale of assets by the Company to its subsidiaries are fully eliminated against net profit attributable to owners of the parent. Unrealised profits and losses resulting from the sale of assets by a subsidiary to the Company are eliminated and allocated between net profit attributable to owners of the parent and net profit attributed to minority interests in accordance with the allocation proportion of the parent in the subsidiary. Unrealised profits and losses resulting from the sale of assets by one subsidiary to another are eliminated and allocated between net profit attributable to owners of the parent and net profit attributed to minority interests in accordance with the allocation proportion of the parent in the subsidiary.
If the accounting treatment of a transaction is inconsistent in the financial statements at the Group level and at the Company or its subsidiary level, adjustment will be made from the perspective of the Group.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, deposits that can be readily drawn on demand, and short-term and highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Foreign currency translation
1. Foreign currency transactions
  Foreign currency transactions are translated into recording currency using the exchange rates prevailing at the dates of the transactions.
  At the balance sheet date, monetary items denominated in foreign currencies are translated into recording currency using the spot exchange rates on the balance sheet date. Exchange differences arising from these translations are recognised in profit or loss for the current period, except for those attributable to foreign currency borrowings that have been taken out specifically for acquisition or construction of qualifying assets, which are capitalised as part of the cost of those assets. Non-monetary items denominated in foreign currencies that are measured at historical costs are translated at the balance sheet date using the spot exchange rates at the date of the transactions. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
2. Translation of foreign currency financial statements
  The asset and liability items in the balance sheets for overseas operations are translated at the spot exchange rates on the balance sheet date. Among the owners' equity items, the items other than "undistributed profits" are translated at the spot exchange rates of the transaction dates. The income and expense items in the income statements of overseas operations are translated at the spot exchange rates of the transaction dates. The differences arising from the above translation are presented in other comprehensive income. The cash flows of overseas operations are translated at the spot exchange rates on the dates of the cash flows. The effect of exchange rate changes on cash is presented separately in the cash flow statement.
Financial instruments

A financial instrument refers to any contract that gives rise to a financial asset of one party and a financial liability or equity instrument of another party. The Group recognises a financial asset or a financial liability when the Group becomes a party to the contractual provisions of financial instrument.

Financial asset
1. Classification and measurement
  The financial assets of the Group are classified on initial recognition based on the business model of the Group's financial asset management and the characteristics of the financial assets' contractual cash flows: 1) financial assets at amortised cost; 2) financial assets at fair value through OCI; and 3) financial assets at fair value through profit or loss.
  Financial assets are measured at fair value on initial recognition. In the case of financial assets at fair value through profit or loss, the relevant transaction costs are directly charged to profit or loss of the current period; transaction costs relating to financial assets of other categories are included in the amount initially recognised. Notes receivable and accounts receivables derived from sales of goods or rendering of services, which do not contain or consider significant financing components are recognised at the amount that the Group is entitled to collect.
  Debt instruments
  Debt instruments held by the Group are instruments that meet the definition of financial liabilities from the issuers' perspective, and are measured by the following three ways:

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Financial instruments (continued)
1. Financial asset (continued)
2. 1. Classification and measurement (continued) Debt instruments (continued)
    Amortised cost:
    The objective of the Group's business model for managing the financial assets is to collect contractual cash flow. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Interest income from these financial assets is included in finance income using the effective interest rate method. Such financial assets mainly include cash at bank and on hand, notes receivables, accounts receivables, other receivables.
    Fair value through OCI:
    The objective of the Group's business model for managing the financial assets are both collecting contractual cash flow and selling financial asset. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The assets are measured at fair value. Interest income, foreign exchange revaluation and impairment losses or reversals are recognised in the income statement. Other fair value changes are recognised in OCI. Such financial assets are presented as financing receivables, other debt investments. The debt investments with maturity within 1 year (inclusive) since the balance sheet date are presented in current portion of non-current assets; debts investments with maturity within 1 year (inclusive) when they are acquired are presented in other current assets.
    Fair value through profit or loss:
    Except for the financial assets at amortised cost and financial assets at fair value through OCI, the Group has classified the remaining financial assets as financial assets at fair value through profit or loss. They are presented in financial assets held for trading. In order to eliminate or significantly reduce accounting mismatch on initial recognition, the Group designates part of financial assets as financial assets at fair value through profit or loss. The assets with maturity more than 1 year and expected to be held for more than 1 year are presented in other non-current financial assets.
    Equity instruments
    Investments in equity instruments over which the Group exerts no control, joint control or significant influence, are presented as financial assets held for trading and measured at fair value through profit or loss. The assets expected to be held for more than 1 year are presented in other non-current financial assets.

In addition, the Group designates part of financial assets which are not held for trading as financial assets at fair value through OCI, presented in other equity instrument investment. The dividend income is recognised in profit or loss.

Impairment
On the basis of expected credit losses, the Group recognises impairment of financial assets at amortised cost, debt instrument investments, contract assets, lease receivables and financial guarantee contracts at fair value through OCI and other financial assets.
The measurement of expected credit loss reflects the probability-weighted amount of the present value of the difference between contractual cash flows receivable and expected cash flows. Also, the Group consider reasonable and supportable information about past events, current situation and forecasts of future economic conditions as well as take default risk as the weight when measuring expected credit loss.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Financial instruments (continued)
1. Financial asset (continued)
2. 1. Impairment (continued)
    The Group assesses the expected credit losses at different phases respectively at each balance sheet date. At phase 1: in the case that the credit risk on a financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance of the financial instrument at an amount equal to 12-month expected credit losses; At phase 2: in the case that the credit risk on that financial instrument has increased significantly since initial recognition, but a credit impairment has not occurred, the Group measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses; At phase 3: in the case that the impairment loss has incurred since initial recognition, the Group measures the loss allowance for a financial instrument at an amount equal to the lifetime expected credit losses.
    For financial instruments with low credit risk as at balance sheet date, the Group assumes the credit risk has not increased significantly since initial recognition, and measures the loss allowance for the financial instrument at an amount equal to 12-month expected credit losses.
    For the financial instruments at phase 1 and phase 2, and those with low credit risk, interest income is calculated based on gross carrying amount without deduction of impairment provision and the effective interest rate. For the financial instruments at phase 3, interest income is calculated based on amortised cost (gross carrying amounts less the impairment provision) and the effective interest rate.
    Regarding notes receivables, accounts receivables, receivables financing and contract assets formed as a result of daily operations such as sales of goods and provision of labor services, regardless of whether there is a significant financing component, the Group will use the expected credit losses throughout its lifetime to measure loss reserves. For lease receivables, the Group also chooses to measure loss provisions based on expected credit losses throughout its lifetime.
    When the expected credit loss information could not be assessed at reasonable cost. The Group classifies receivables into multiple groups of receivables. The criteria of classification of groups are based on the credit risk characteristics, as follows:

Group of notes receivables Group of accounts receivables Group of other receivables 1 Group of other receivables 2 Group of other receivables 3 Group of other receivables 4 Group of other receivables 5

Bank acceptance notes All trade receivables Amounts due from subsidiaries Amounts due from related parties Deposits and guarantees

Staff advances Others

For groups of notes receivables, the Group calculates the expected credit loss by referring to historical credit loss experience, current situation and forecasts of economic conditions and based on the exposure at default and lifetime expected credit loss ratio.

For groups of accounts receivables, the Group calculates the expected credit loss by referring to historical credit loss experience, current situation and forecasts of economic conditions and based on the comparison table between accounts receivables' aging and lifetime expected credit loss ratio.

For groups of other receivables, the Group calculates the expected credit loss by referring to historical credit loss experience, current situation and forecasts of economic conditions and based on default risk exposure and expected credit loss rate over the next 12 months or the entire duration.

The Group recognizes provision for losses or reversal of losses in profit or loss for the current period. For debt instruments at fair value through OCI, the Group recognizes impairment losses or gains into profit or loss for the current period and adjusts OCI in the meanwhile.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Financial instruments (continued)
1. 1. Financial asset (continued)
  2. 1. De-recognition
      A financial asset is derecognised when any of the following criteria is met: (1) the contractual rights to receive the cash flows from the financial asset expire; or (2) the financial asset has been transferred and all the risks and rewards of ownership of the financial asset have substantially been transferred to the transferee; or (3) although the Group neither transfers nor substantially retains all the risks and rewards of ownership of the financial asset, the financial asset has been transferred and the Group has not retained control of the financial asset.
      On de-recognition of other equity instrument investments, the difference between the carrying amount and the sum of the consideration received and the cumulative changes in fair value that have been recognised directly in equity, shall be transferred to retained earnings. On de-recognition of other financial assets, the difference between the carrying amount and the sum of the consideration received and the cumulative changes has been recognised in OCI, shall be recognised in profit or loss.
2. Financial liability
3. Financial liabilities are classified into financial liabilities at amortised cost and financial liabilities at fair value through profit or loss at initial recognition.
  The financial liabilities of the Group mainly promise financial liabilities at amortised cost, including notes payable and accounts payable, other payables and borrowings, etc. The financial liabilities are initially measured at fair value exclusive transaction costs and are subsequently measured at effective interest rate method. Financial liabilities with maturities within 1 year (inclusive) are presented in current liabilities. Financial liabilities with maturities more than 1 year but are due within 1 year (inclusive) at the balance sheet date are presented in current portion of non-current liabilities. Others are presented in non-current liabilities.
  A financial liability is derecognised or partly derecognised when the current obligation is discharged or partly discharged. The difference between the carrying amount of the derecognised part of the financial liability and the consideration paid is recognised in profit or loss.
4. Determination of fair value of financial instruments
5. The fair value of a financial instrument that is traded in an active market is determined at the quoted price in the active market. The fair value of a financial instrument that is not traded in an active market is determined by using a valuation technique when it is applicable under current conditions and there are enough available data and other information to support. Those inputs should be consistent with the inputs a market participant would use when pricing the asset or liability, and should maximize the use of relevant observable inputs. When related observable inputs can't be acquired or are not feasible to be acquired, then use unobservable inputs.
Inventories
1. Classification
2. Inventories include raw materials, work in progress, finished goods and turnover materials, and are stated at the lower of cost and net realisable value.
3. Costing of inventories
4. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprise raw materials, direct labour and systematically allocated production overhead based on the normal production capacity.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Inventories (continued)
1. Basis for determining net realizable values of inventories and method for making provision for decline in the value of inventories
  Provision for decline in the value of inventories is determined at the excess amount of the carrying amounts of the inventories over their net realizable value. Net realizable value is determined based on the estimated selling price in the ordinary course of business, less the estimated costs to completion and estimated costs necessary to make the sale and related taxes.
2. The Group adopts the perpetual inventory system.
3. Amortization method of low value consumables and packaging materials.
  Turnover materials include low value consumables and packaging materials. Low value consumables are amortised by installments, and the packaging materials are expensed when issued.
Long-termequity investments
Long-term equity investments comprise the Company's long-term equity investments in its subsidiaries, and the Group's long-term equity investments in its joint ventures and associates.
Subsidiaries are the investees over which the Company is able to exercise control. A joint venture is a joint arrangement which is structured through a separate vehicle over which the Group has joint control together with other parties and only has rights to the net assets of the arrangement based on legal forms, contractual terms and other facts and circumstances; An associate is the investee over which the Group has significant influence on its financial and operating policy decisions.
Investments in subsidiaries are presented in the Company's financial statements using the cost method, and are adjusted to the equity method when preparing the consolidated financial statements. Investments in joint ventures and associates are accounted for using the equity method.
1. Determination of investment cost
  For long-term equity investment acquired through a business combination involving enterprises not under common control, the investment cost shall be the combination cost.
  For long-term equity investments acquired not through a business combination: for long-term equity investment acquired by payment in cash, the initial investment cost shall be the purchase price actually paid; for long-term equity investments acquired by issuing equity securities, the initial investment cost shall be the fair value of the equity securities issued.
2. Subsequent measurement and recognition of related profit and loss
  Long-term equity investments accounted for using the cost method are measured at initial investment cost, and cash dividends or profit distributions declared by the investees are recognised as investment income in profit or loss.
  For long-term equity investments accounted for using the equity method, where the initial investment cost of a long-term equity investment exceeds the Group's share of the fair value of the investee's identifiable net assets at the acquisition date, the long-term equity investment is measured at the initial investment cost; where the initial investment cost is less than the Group's share of the fair value of the investee's identifiable net assets at the acquisition date, the difference is included in profit or loss and the cost of the long-term equity investment is adjusted upwards accordingly.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Long-termequity investments (continued)
1. Subsequent measurement and recognition of related profit and loss
  For long-term equity investments accounted for using the equity method, the Group recognises the investment income according to its share of net profit or loss of the investee. The Group discontinues recognising its share of net losses of an investee after the carrying amount of the long-term equity investment together with any long-term interests that, in substance, form part of the investor's net investment in the investee are reduced to zero. However, if the Group has obligations for additional losses and the criteria with respect to recognition of provisions under the accounting standards on contingencies are satisfied, the Group continues recognising the investment losses and the provisions. For changes in shareholders' equity of the investee other than those arising from its net profit or loss, the Group records its proportionate share directly into capital surplus, OCI, and profit distribution. The carrying amount of the investment is reduced by the Group's share of the profit distribution or cash dividends declared by an investee. The unrealised profit or loss arising from the intra-group transactions amongst the Group and its investees is eliminated in proportion to the Group's equity interests in the investees, and then based on which the investment income is recognised. For the loss on the intra-group transaction amongst the Group and its investees attributable to asset impairment, any unrealised loss is not eliminated.
2. Basis for determining existence of control, joint control and significant influence over investees
  Control is the power to govern an investee, so as to obtain variable returns from its involvement with the investee, and has the ability to use its power over the investee to affect the amount of the investor's returns.
  Joint control is a contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.
  Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
3. Impairment of long-term equity investments
  The carrying amounts of long-term equity investments in subsidiaries, joint ventures and associates are reduced to the recoverable amounts when the recoverable amounts are below their carrying amounts (Note 2(15)).
4. Disposal part of the equity investment and loss control of the subsidiary
  Disposed of the equity investment in the Company's financial statements is charged to profit or loss of the current period according to the difference between its book value and actual obtained price; Meanwhile, the residual equity is recognized as long-term equity investment or other related financial assets according to its book value. Relevant accounting treatment, which specifies the conversion from the cost method to the equity method, will be carried out if the residual equity after disposal has material impacts on original subsidiary company.
  In the consolidated financial statements, the residual equity is remeasured at fair value at the date of losing control. The difference between sum of the consideration from equity disposal and the fair value of residual equity, and sum of the portion of net assets calculated according to the original shareholding ratio on a continuously basis from the purchase date and goodwill, is charged to investment income of losing control of the current period. Additionally, the changes of other owners' equity and other comprehensive income, relating with the equity investment of the original subsidiary, will transfer to the current profit or loss when losing control. However, other comprehensive income arising from the re-measurement of net liabilities or changes in net assets of the benefit plan by the invested party will all be excluded.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Fixed assets
1. Recognition and initial measurement of fixed assets
  Fixed assets comprise buildings, machinery and equipment, computer and electronic equipment, motor vehicles.
  Fixed assets are recognised when the economic benefits associated with them are very likely to flow into the Group and their costs can be measured reliably. Fixed assets purchased or constructed by the Group are initially measured at cost at the time of acquisition.
  Subsequent expenditures incurred for a fixed asset are included in the cost of the fixed asset when it is probable that the associated economic benefits will flow to the Group and the related cost can be reliably measured. The carrying amount of the replaced part is derecognised. All the other subsequent expenditures are recognised in profit or loss for the period in which they are incurred.
2. Depreciation method of fixed assets
  Fixed assets are depreciated using the straight-line method to allocate the cost of the assets to their estimated residual values over their estimated useful lives. For the fixed assets that have been provided for impairment loss, the related depreciation charge is prospectively determined based upon the adjusted carrying amounts over their remaining useful lives.
  The estimated useful lives, the estimated residual values expressed as a percentage of cost and the annual depreciation rates of fixed assets are as follows:

		Estimated net	Annual
	Estimated useful lives	residual values	depreciation rates
Buildings	10 to 20 years	0%-10%	4.50% to 9.00%
Machinery and equipment	3 to 10 years	0%-10%	9.00% to 33.33%
Computers and electronic
equipment	5 to 8 years	0%-10%	11.25% to 20.00%
Motor vehicles	5 years	0%-10%	18.00% to 20.00%

The estimated useful life and the estimated net residual value of a fixed asset and the depreciation method applied to the asset are reviewed, and adjusted as appropriate at each year-end.

1. When the recoverable amount of a fixed asset is lower than its book value, the book value is written down to the recoverable amount (Note 2 (15)).
2. Disposal of fixed assets
  A fixed asset is derecognised on disposal or when no future economic benefits are expected from its use or disposal. The amount of proceeds from disposals on sale, transfer, retirement or damage of a fixed asset net of its carrying amount and related taxes and expenses is recognised in profit or loss for the current period.
Construction in progress
Construction in progress is measured at actual cost. Actual cost comprises construction costs, installation costs, borrowing costs that are eligible for capitalisation and other costs necessary to bring the fixed assets ready for their intended use. Construction in progress is transferred to fixed assets when the assets are ready for their intended use, and depreciation is charged starting from the following month. When the recoverable amount of a project under construction is lower than its book value, the book value is written down to the recoverable amount (Note 2 (15)).

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Intangible assets
Intangible assets include land use rights, proprietary technologies, research and development technology (capitalized development expenditures of the Group's internal research and development projects), licenses and software, etc., and are measured at cost.
1. Land use rights
  Land use rights acquired and land use rights acquired by way of payment of land transfer payments are recorded at the actual payment and are amortized on a straight-line basis over a useful life of 47-50 years. Where it is difficult to reasonably allocate the land and building purchase price between the land use right and the building, all of them shall be regarded as fixed assets.
2. Proprietary technology
  Proprietary technology is accounted for at the price actually paid, and is amortized on average over the estimated useful life of 5-10 years.
3. Research and development technology
  The research and development technology will be amortized according to the estimated benefit period of 5-10 years from the time when the technology is ready for its intended use.
4. License
  The license is amortized on the basis of an estimated useful life of 27 years.
5. Software
  Software and is amortized on average over the estimated useful life of 3-10 years.
6. Periodical review of useful life and amortisation method
  For an intangible asset with a finite useful life, review of its useful life and amortisation method is performed at each year-end, with adjustment made as appropriate.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Intangible assets (continued)
1. Research and development
  The expenditure on an internal research and development project is classified into expenditure on the research phase and expenditure on the development phase based on its nature and whether there is material uncertainty that the research and development activities can form an intangible asset at the end of the project.
  Expenditure on the research phase is recognised in profit or loss in the period in which it is incurred. Expenditure on the development phase is capitalised only if all of the following conditions are satisfied:
2. - it is technically feasible to complete the intangible asset so that it will be available for use or sale;
  - management intends to complete the intangible asset, and use or sell it;
  - it can be demonstrated how the intangible asset will generate economic benefits;
  - there are adequate technical, financial and other resources to complete the development and the ability to use or sell the intangible asset; and
  - the expenditure attributable to the intangible asset during its development phase can be reliably measured.

Other development expenditures that do not meet the conditions above are recognised in profit or loss in the period in which they are incurred. Development costs previously recognised as expenses are not recognised as an asset in a subsequent period. Capitalised expenditure on the development phase is presented as development costs in the balance sheet and transferred to intangible assets at the date that the asset is ready for its intended use. At the end of the period, the Group reviews the capitalized development expenditures and recognizes the development expenditures of related development projects that no longer meet the capitalization conditions in the current profit and loss.

1. Impairment of intangible assets
  When the recoverable amount of an intangible asset is lower than its book value, the book value is written down to the recoverable amount (Note 2 (15)).
Long-termprepaid expenses
Long-term prepaid expenses include expenditures that have been incurred but should be recognised as expenses over more than one year in the current and subsequent periods. Long-term prepaid expenses are amortised on the straight-line basis over the expected beneficial period and are presented at actual expenditure net of accumulated amortisation.
Impairment of long-term assets
Fixed assets, construction in progress, right of use asset, intangible assets with finite useful lives, development cost and long-term equity investments in subsidiaries, joint ventures and associates are tested for impairment if there is any indication that the assets may be impaired at the balance sheet date; intangible assets that are not yet available for their intended use are tested for impairment at least annually, irrespective of whether there is any indication of impairment. If the result of the impairment test indicates that the recoverable amount of an asset is less than its carrying amount, a provision for impairment and an impairment loss are recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and the present value of the future cash flows expected to be derived from the asset. Provision for asset impairment is determined and recognised on the individual asset basis. If it is not possible to estimate the recoverable amount of an individual asset, the recoverable amount of a group of assets to which the asset belongs is determined. A group of assets is the smallest group of assets that is able to generate independent cash inflows.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Impairment of long-term assets (continued)
Goodwill that is separately presented in the financial statements is tested at least annually for impairment, irrespective of whether there is any indication that it may be impaired. In conducting the test, the carrying value of goodwill is allocated to the related asset group or groups of asset groups which are expected to benefit from the synergies of the business combination. If the result of the test indicates that the recoverable amount of an asset group or a group of asset groups, including the allocated goodwill, is lower than its carrying amount, the corresponding impairment loss is recognised. The impairment loss is first deducted from the carrying amount of goodwill that is allocated to the asset group or group of asset groups, and then deducted from the carrying amounts of other assets within the asset group or group of asset groups in proportion to the carrying amounts of assets other than goodwill.
Once the above asset impairment loss is recognised, it will not be reversed for the value recovered in the subsequent periods.
Employee benefits
Employee benefits refer to all forms of remuneration or compensation given by the Group in exchange for service rendered by employees or for termination of employment relationship, which include short-term employee benefits, post- employment benefits, termination benefits and other long-term employee benefits.
1. Short-termemployee benefits
  Short-term employee benefits include wages or salaries, bonus, allowances and subsidies, staff welfare, premiums or contributions on medical insurance, work injury insurance and maternity insurance, housing funds, union running costs and employee education costs and etc. The short-term employee benefits actually occurred are recognised as a liability in the accounting period in which the service is rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets.
2. Post-employmentbenefits
  The Group classifies post-employment benefit plans as either defined contribution plans or defined benefit plans. Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into a separate fund and will have no obligation to pay further contributions; and defined benefit plans are post- employment benefit plans other than defined contribution plans. During the reporting period, the Group's post- employment benefits mainly include the premiums or contributions on basic pensions and unemployment insurance, both of which belong to defined contribution plans.
  Basic pensions
  The Group's employees participate in the basic pension plan set up and administered by local authorities of Ministry of Human Resource and Social Security. Monthly payments of premiums on the basic pensions are calculated according to the bases and percentage prescribed by the relevant local authorities. When employees retire, the relevant local authorities are obliged to pay the basic pensions to them. The amounts based on the above calculations are recognised as liabilities in the accounting period in which the service has been rendered by the employees, with a corresponding charge to the profit or loss for the current period or the cost of relevant assets.
Profit distribution
Cash Dividend is recognised as a liability in the period in which it is approved by the shareholders' meeting.
Revenue
On the contract start date, the Group evaluates the contract, and identifies the individual performance obligations contained in the contract, and determines whether the individual performance obligations are performed within a certain period of time or at a certain point in time. Revenue is recognised separately for performance obligations.
When the customer obtains control of the related goods or services, the Group recognizes revenue based on the amount of consideration expected to be received. The part of that the Group has obtained unconditional collection rights is recognized as accounts receivable, and the provision for loss of receivables is recognized on the basis of expected credit loss corresponding loss recognition is based on expected credit losses (Note 2 (8)).

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Revenue (continued)
1. Sales of goods
  The Group recognizes revenue when delivers the pharmaceutical and diagnostic products to the carrier designated by the customer, or after the customer's acceptance or after control transfer to customer. The credit period granted to customers by the Group is determined based on the characteristics of customers' credit risk, which is consistent with industry practice and there is no significant financing component. The Group's obligations to transfer goods to customers for consideration received or receivable from customers are shown as contract liabilities.
2. Technology transfer
  The revenue from technology transfer is recognized when the contract execution clause is completed and and control related to the technology is transferred.
  Under the terms of the technology transfer contract, after the purchaser successfully commercializes the transferred technology, the Group can collect additional concessionary revenue or revenue sharing in the future. When the right to receive relevant revenue is established, concession revenue or revenue share will be recognized.
3. Cooperative development, technical services and labor services
  Revenue from the provision of cooperative development, technical services and labor services is recognised during the period of service provision. The Group will recognize the incremental costs incurred in obtaining labor contracts as contract acquisition costs. Contract acquisition costs with an amortization period of no more than one year are charged to profit or loss of the current period when occured.
Government grants
Government grants refer to the monetary or non-monetary assets obtained by the Group from the government, including tax return, financial subsidy and etc.
Government grants are recognised when the grants can be received and the Group can comply with all attached conditions. If a government grant is a monetary asset, it will be measured at the amount received or receivable. If a government grant is a non-monetary asset, it will be measured at its fair value. If it is unable to obtain its fair value reliably, it will be measured at its nominal amount.
Government grants related to assets refer to government grants which are obtained by the Group for the purposes of purchase, construction or acquisition of the long-term assets. Government grants related to income refer to the government grants other than those related to assets.
Government grants related to assets are either deducted against the carrying amount of the assets, or recorded as deferred income and recognised in profit or loss on a systemic basis over the useful lives of the assets. Government grants related to income that compensate the future costs, expenses or losses are recorded as deferred income and recognised in profit or loss, or deducted against related costs, expenses or losses in reporting the related expenses; government grants related to income that compensate the incurred costs, expenses or losses are recognised in profit or loss, or deuducted against related costs, expenses or losses directly in current period. The Group applies the presentation method consistently to the similar government grants in the financial statements.
Government grants that are related to ordinary activities are included in operating profit, otherwise, they are recorded in non-operating income or expenses.
Deferred income
For the amounts obtained from third parties and subsequent benefit periods, including government subsidies and amounts obtained under long-term agreements, the Company records them into deferred income when obtained, and amortizes them into the current profit and loss systematically according to the expected income period.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Deferred tax assets and deferred tax liabilities
Deferred tax assets and deferred tax liabilities are calculated and recognised based on the differences arising between the tax bases of assets and liabilities and their carrying amounts (temporary differences). Deferred tax asset is recognised for the deductible losses that can be carried forward to subsequent years for deduction of the taxable profit in accordance with the tax laws. No deferred tax liability is recognised for a temporary difference arising from the initial recognition of goodwill. No deferred tax asset or deferred tax liability is recognised for the temporary differences resulting from the initial recognition of assets or liabilities due to a transaction other than a business combination, which affects neither accounting profit nor taxable profit (or deductible loss). At the balance sheet date, deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled.
Deferred tax assets are only recognised for deductible temporary differences, deductible losses and tax credits to the extent that it is probable that taxable profit will be available in the future against which the deductible temporary differences, deductible losses and tax credits can be utilised.
Deferred tax liabilities are recognised for taxable temporary differences arising from investments in subsidiaries, associates and joint ventures, except where the Group is able to control the timing of reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future. When it is probable that the temporary differences arising from investments in subsidiaries, associates and joint ventures will be reversed in the foreseeable future and that the taxable profit will be available in the future against which the deductible temporary differences can be utilised, the corresponding deferred tax assets are recognised.
Deferred tax assets and liabilities are offset when:
- the deferred taxes are related to the same tax payer within the Group and the same taxation authority; and,
- that tax payer within the Group has a legally enforceable right to offset current tax assets against current tax liabilities.
Lease
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Group as the lessee
At the commencement date, the Company shall recognise the right-of-use asset and measure the lease liability at the present value of the lease payments that are not paid at that date. Lease payments include fixed payments, the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and payments of penalties for terminating the lease if the lessee exercises an option to terminate the lease. Lease liabilities that are due within one year (inclusive) as from the balance sheet date are included in the current portion of non-current liabilities.
Right-of-use assets of the Company include buildings. Right-of-use assets are measured initially at cost which comprises the amount of the initial measurement of lease liabilities, any lease payments made at or before the commencement date and any initial direct costs, less any lease incentives received. If there is reasonable certainty that the Company will obtain ownership of the underlying asset by the end of the lease term, the asset is depreciated over its remaining useful life; otherwise the asset is depreciated over the shorter of the lease term and its remaining useful life. The carrying amount of the right-of-use asset is reduced to the recoverable amount when the recoverable amount is below the carrying amount.
For short-term leases with a term of 12 months or less and leases of an individual asset (when new) of low value, the Company may, instead of recognising right-of-use assets and lease liabilities, include the lease payments in the cost of the underlying assets or in the profit or loss for the current period on a straight-line basis over the lease term.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Segment information
The Group identifies operating segments based on the internal organisation structure, management requirements and internal reporting system, and discloses segment information of reportable segments which is determined on the basis of operating segments.
An operating segment is a component of the Group that satisfies all of the following conditions: (1) the component is able to earn revenues and incur expenses from its ordinary activities; (2) whose operating results are regularly reviewed by the Group's management to make decisions about resources to be allocated to the segment and to assess its performance, and (3) for which the information on financial position, operating results and cash flows is available to the Group. Two or more operating segments that have similar economic characteristics and satisfy certain conditions can be aggregated into one single operating segment.
Critical accounting estimates and judgements
The Group continually evaluates the critical accounting estimates and key judgements applied based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
1. Critical accounting judgements
  The critical accounting estimates and key assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are outlined below:
2. 1. Development costs
    The Group's management determines the capitalisation of development costs based on their commercial and technological feasibility. It could change significantly as a result of technological innovations and the change of estimated profit projections.
    Management will write off or write down deferred development costs when there are adverse changes in technological innovations or profit projections.
  2. Government grants
    When government grants are recognised, management determines whether they relate to past expenses, future costs or assets based on the nature of the grants and their purpose intended to compensate, and applies relevant accounting policies accordingly.
    Government grants relating to costs are deferred, and management determines a proper calculation method and a relevant time period to recognise each of the grants in the consolidated statement of comprehensive income according to the intention of the grants and nature, duration and progression of the related projects so as to match the grants with costs they are intended to compensate. The calculation method and time period are reviewed and adjusted if appropriate, at the end of each reporting period.
3. Critical accounting estimates and key assumptions
4. 1. Useful life of fixed assets
    The management of the Group determines the estimated useful lives of fixed assets. This estimate is based on experience with the actual useful lives of fixed assets of similar nature and function. This estimate may change significantly due to technological innovation or competitors taking action against severe industry cycles.
    Management will increase the depreciation rate for assets with shorter useful lives than previously estimated, or give up and write off technically obsolete assets, or sell non-essential assets.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

2 SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES (continued)

Critical accounting estimates and judgements (continued)
1. Critical accounting estimates and key assumptions (continued)
2. 1. Impairment of receivables
    The management of the Group tests the impairment of trade and other receivables and makes provisions for bad debts. This estimate is based on the customer's credit history and existing market conditions. Management will re-evaluate relevant impairment provisions at each balance sheet date.
  2. Fair value of other equity instruments
    The management of the Group uses valuation techniques to estimate the fair value of other equity instruments that are not traded in an active market. Management uses judgement to select simulated liquidation valuation models and assumptions to evaluate the fair value of other equity instruments at the end of the reporting period.
  3. Impairment for investments in subsidiaries, joint ventures and associates
    The Group need to make significant judgement when assessing whether subsidiaries, joint ventures and associates have been impaired. In making this judgment, the Group evaluates various factors, including the duration and amount of the fair value of an investment below its cost, the financial situation and short-term business prospects of the investee, industry performance, technological changes, cash flow from operating and financing activities and so on.
  4. Income tax and deferred income tax assets
    The Group is subject to income taxes in numerous jurisdictions. There are some transactions and events for which the ultimate tax determination is uncertain during the ordinary course of business. Significant judgement is required from the Group in determining the provision for income taxes in each of these jurisdictions. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.
    Management estimates that deductible temporary differences and deductible losses will recognized as deferred income tax assets when they are likely to be offset against taxable income in the future, but the actual application results may be different.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

3 TAXATION

The main categories and rates of taxes applicable to the Group are set out below:

Category	Taxation basis	Tax rate
Enterprise income tax (a)	Taxable income	15%, 16.5% and 25%
Value-added tax ("VAT") (b)	Taxable value-added amount (Tax payable	16%, 13%, 6% and 3%
	is calculated using the taxable sales
	amount multiplied by the applicable tax
	rate less deductible VAT input of the
	current period)
City maintenance and construction tax	The payment amount of VAT and business	7% and 1%
	tax paid

In 2017, the Company obtained the Certificate of the High and New Technological Enterprise (Certificate No. GR201731000222), with a term of validity of three years, jointly issued by Science and Technology Commission of Shanghai Municipality, Shanghai Municipal Finance Bureau, State Administration of Tax Shanghai Municipal Office and Shanghai Municipal Bureau of Local Taxation. Under Article 28 of the Enterprise Income Tax Law of the People's Republic of China, the income tax rate applicable to the Company for the six months ended 30 June 2020 was 15%.
In 2019, Shanghai Tracing Bio-technology Co., Ltd. ("Tracing Bio-technology"), a subsidiary of the Company, obtained the Certificate of the High and New Technological Enterprise (Certificate No. GR201931000691), with a term of validity of three years from 2019 to 2021, jointly issued by Science and Technology Commission of Shanghai Municipality, Shanghai Municipal Finance Bureau, State Administration of Tax Shanghai Municipal Office and Shanghai Municipal Bureau of Local Taxation; Under Article 28 of the Enterprise Income Tax Law of the People's Republic of China, the income tax rate applicable to Tracing Biotechnology for the six months ended 30 June 2020 was 15% (for the six months ended 30 June 2019: 15%); Shanghai Tracing Bio-technology had no taxable income for the six months ended 30 June 2020, thus no income tax expense was accured.
In 2018, Taizhou Fudan-Zhangjiang Pharmaceutical Co., Ltd. ("Taizhou Pharmaceutical") was granted the Certificate of the High and New Technological Enterprise (Certificate No. GR201832004505) by Science and Technology Department of Jiangsu Province, Finance Department of Jiangsu Province and State Tax Bureau of Jiangsu Province. The certificate is valid for three years. Under Article 28 of the Enterprise Income Tax Law of the People's Republic of China , the income tax rate applicable to Taizhou Pharmaceutical for the six months ended 30 June 2020 was 15% (for the six months ended 30 June 2019: 15%). For the six months ended 30 June 2019 and 2020, Taizhou Pharmaceutical had no taxable income, thus no income tax expense was accrued.
Fernovelty (Hong Kong) Holding Co., Limited (Fernovelty Holding), a subsidiary of the Company, is a limited liability company incorporated in Hong Kong. From 1 January 2018, Hong Kong adopted the two-tiered profits tax rate, where applicable tax rate for taxable profits within HKD 2,000,000 is 8.25% while that for taxable profits in excess of HKD 2,000,000 is 16.5%. For the six months ended 30 June 2019 and 2020, Fernovelty Holding had no taxable income, thus no income tax expense was accrued.
For the six months ended 30 June 2020, the enterprise income tax rate applicable to the other subsidiaries in the company was 25%.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

TAXATION (continued)
1. The main categories and rates of taxes applicable to the Group are set out below (continued):
  Pursuant to the Notice of the Ministry of Finance and the State Administration of Taxation on Extending the Loss Carryforward Period for High and New Technology Enterprises and Small and Medium-Sized Technological Enterprises (Cai Shui [2018] No. 76) and relevant regulations, since 1 January 2018, high and new technology enterprises or small and medium-sizedtechnological enterprises identified in current year are allowed to carry forward the tax losses incurred and not offset in the preceding five years to subsequent years. The longest carryforward period is extended from 5 years to 10 years. Tracing Biotechnology and Taizhou Pharmaceutical, subsidiaries of the Company, completed the income tax filing of 2018 in May 2019 and are allowed by the State Administration of Taxation to extend their carryforward periods for the tax losses incurred and not offset to 10 years.
2. 1. Pursuant to the Circular on Adjustment of Tax Rate of Value-addedTax (Cai Shui [2018] No. 32) and relevant regulations, jointly issued by the Ministry of Finance and the State Administration of Taxation and relevant regulations, the Group's applicable tax rate of revenue arising from sales of drugs is 16% from 1 May 2018, while it was 17% before then. Pursuant to the Announcement on Relevant Policies for Deepening Value-AddedTax Reform (Announcement No. 39 [2019], by MOF, STA, and GACC) jointly issued by the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs, from 1 April 2019, the Group's applicable tax rate of revenue from sales of drugs is 13%.
    Pursuant to the Notice of the Ministry of Finance, the General Administration of Customs, the State Administration of Taxation and the State Drug Administration on the Value-Added Tax Policies for Anti-Cancer Drugs (Cai Shui [2018] No. 47) and relevant regulations, from 1 May 2018, companies are allowed to elect to apply simple taxation method for VAT for revenue arising from production, sales, wholesale and retail of anti-cancerdrugs. The applicable rate is 3% while it was 17% before then.
    Pursuant to the Announcement on Relevant Policies for Deepening the Value-added Tax Reform (Cai Shui Haiguan [2019] 39) jointly issued by the Ministry of Finance, the State Administration of Taxation and the General Administration of Customs and the Announcement on the Additional Deduction Policies of Value-added Tax for Consumer Service Industry (Cai Shui [2019] 87) jointly issued by the Ministry of Finance and the State Administration of Taxation, the Group's subsidiary Shanghai Baosu Pharmaceutical Technology Co., Ltd. ("Baosu Pharmaceutical"), as a consumer service company, qualifies for additional 10% deduction and 15% deduction of input VAT from output VAT from 1 April 2019 to 30 September 2019 and from 1 October 2019 to 31 December 2021 respectively.
SUBSIDIARIES
See Note 7 for details.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

5	NOTES TO CONSOLIDATED FINANCIAL STATEMENT ITEMS
	(1) Cash at bank and on hand
				30 June	31 December
				2020	2019
		Cash on hand	12,038	15,333
		Cash at bank	1,529,290,218	576,784,077

		Including: cash at bank and on hand overseas	3,519,934		3,469,264

				1,529,302,256		576,799,410
		As at 30 June 2020 and 31 December 2019, no cash at bank was restricted.

	(2) Notes receivables
				30 June	31 December
				2020		2019
	Bank acceptance notes	76,219,386		127,592,684
	Less: Provision for bad debts	-	-

				76,219,386		127,592,684

As at 30 June 2020 and 31 December 2019, the above-mentioned notes of the Group were not subject to collateral or pledge.
As at 30 June 2020 and 31 December 2019, the Group's nots receivables endorsed or discounted but not yet due are as follows:

	30 June 2020	31 Dec 2019

	De-		Not de-	De-	Not de-
	recognized		recognized	recognized	recognized
Bank acceptance notes i)	1,702,154		-	3,256,902	-

1. For the six months ended 30 June 2020, since endorsements or discount transactions that meet the conditions for derecognition occur by accident and the amount is not significant, the Group measures at amortized cost.
Provision for bad debts
The Group's notes receivables are generated from daily business activities such as the sale of goods and the provision of labor services. Regardless of whether there is a significant financing component, loss provisions are measured in accordance with the expected credit losses throughout the lifetime. As at 30 June 2020 and 31 December 2019, the Group considered that the bank dacceptance notes held did not have significant credit risk and would not cause credit losses due to bank defaults, so no provision for bad debt was made.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

5 NOTES TO CONSOLIDATED FINANCIAL STATEMENT ITEMS (continued)

Accounts receivables

	30 June	31 December
	2020		2019
Accounts receivables	315,386,295		380,187,531
Less: Provision for bad debts	(20,738,585)	(3,180,620)

	294,647,710		377,006,911

The Group's accounts receivables are generated from daily business activities such as the sales of pharmaceutical and diagnostic products, with credit periods of 30-120 days.

As at 30 June 2020 and 31 December 2019, there were no significant receivables from shareholders who held more than 5% (including 5%) of the voting shares of the company in the Group's accounts receivables.

The aging analysis of accounts receivables is as follows:

	30 June		31 December
	2020	2019
Within 1 year	315,179,695	379,998,095
1-2 years	130,000	26,700
2-3 years	-	78,425
Above 3 years	76,600	84,311

	315,386,295	380,187,531

As at 30 June 2020, the top five accounts receivables based on the balance of the debtors are summarized and analyzed as follows:

Amount of

Account

bad debt

% of

Balance

provision

total balance

Total top five accounts receivables

162,109,324

(4,129,960)

51.40%

(c)

Provision for bad debts

31 December

Change amount in the period

30 June

2019

Accrual

Reversal

Write-off

2020

Provision for bad debts of accounts receivables

(3,180,620)

(17,644,101)

86,136

(20,738,585)

As at 30 June 2020, for the accounts receivables, regardless of whether there is a significant financing component, the Group calculates loss provisions in accordance with the expected credit losses throughout the lifetime.

As at 30 June 2020 and 31 December 2019, the Group did not make provision for bad debts for individual accounts receivables.

Notes to the Financial Statements

For the six months ended 30 June 2020

(All amounts in RMB Yuan unless otherwise stated)

5 NOTES TO CONSOLIDATED FINANCIAL STATEMENT ITEMS (continued)

Accounts receivables (continued)
1. Provision for bad debts (continued)
2. 1. As at 30 June 2020, the analysis of accounts receivables for the provision of bad debts is as follows: Portfolio - sales receivable：

			30 June 2020

	Accounts Balance		Provision for bad debts

			Life expectancy
	Amount		Credit loss rate	Amount
Not overdue	188,117,820		-	-
Overdue within 120 days	27,460,667	1.43%	(391,597)
Overdue 120 days to 1 year	99,601,208	20.22%	(20,140,388)
Overdue 1-2 years	130,000	100.00%	(130,000)
Overdue more than 3 years	76,600	100.00%	(76,600)

	315,386,295			(20,738,585)

As at 31 December 2019, the analysis of accounts receivables for the provision of bad debts is as follows: Portfolio - sales receivable：

			31 December 2019

	Accounts Balance		Provision for bad debts

			Life expectancy
	Amount		Credit loss rate	Amount
Not overdue	325,207,505		-	-
Overdue within 120 days	40,721,327	0.44%	(177,332)
Overdue 120 days to 1 year	14,069,263	20.00%	(2,813,852)
Overdue 1-2 years	26,700	100.00%	(26,700)
Overdue 2-3 years	78,425	100.00%	(78,425)
Overdue more than 3 years	84,311	100.00%	(84,311)

	380,187,531			(3,180,620)

As at 30 June 2020, the book value of accounts receivables written off was RMB 86,136, and the amount of bad debt provision was RMB 86,136.

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Shanghai Fudan-Zhangjiang Bio-Pharmaceutical Co. Ltd. published this content on 10 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 September 2020 09:04:00 UTC

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Shanghai Fudan-Zhangjiang Bio-Pharmaceutical Co.,Ltd.

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