Chairman's Statement

Chairman's Statement

I would like to express my heartfelt gratitude to the shareholders and the community for your great support and encouragement to Sinopharm over time. 2017 was a year full of challenges for the Company, but the Board, the management and all the staff took “new thought, new structure, new momentum, new target” as strategic guidance, overcame various difficulties and attributed to the shareholders with sustained and stable growth in operation again for their support and caring for the growth of the Company.

Stable economy with upward trend and industry growth faced with challenges

In 2017, the Chinese economy moved forward with stability, moved upward with stability and was better than expected, the development of economy and society remained stable and healthy. It is expected that the Chinese economy would still be able to maintain medium-to-high-speed growth during the “13th Five-Year” period and continue to be an important driver to the growth of the world economy.

In 2017, the Chinese government continued to release various healthcare policies, continued to push forward the healthcare reform, continued to increase investments in the healthcare industry and continued to enhance healthcare quality, aiming to establish a “Healthy China” that can satisfy the basic healthcare needs of the masses. The pharmaceutical distribution industry’s sales growth dropped slightly on a year-on-year basis, but was still better than GDP growth, the rigid demand continued to be seen, the industry concentration ratio continued to increase, the whole industry still faced challenges from policies, payment collection and working capital, etc.

Sustained and Stable Growth in the Results

During the Reporting Period, the Group recorded a revenue of RMB277,717.02 million, representing an increase of RMB19,329.33 million or 7.48% as compared with the corresponding period of last year.

During the Reporting Period, the Group recorded a net profit of RMB7,868.18 million, representing an increase of RMB976.58 million or 14.17% as compared with the corresponding period of last year. Profit attributable to owners of the parent amounted to RMB5,283.09 million, representing an increase of RMB635.75 million or 13.68% as compared with the corresponding period of last year.

During the Reporting Period, basic earnings per share of the Company amounted to RMB1.91, representing an increase of 13.69% as compared with the corresponding period of last year.

Compared to 2016, total assets of the Group increased from RMB157,711.59 million to RMB169,539.03 million, net assets increased from RMB44,532.44 million to RMB51,269.65 million, and gearing ratio decreased from 71.76% to 69.76%.

For the year of 2017, total capital expenditure of the Group amounted to RMB2,563.49 million, which was primarily used for the expansion and development of distribution channels, upgrading the logistic delivery system and improving the level of informatisation, so as to increase the Group’s market share and improve delivery efficiency.

Awards-winning and highly recognized in the market

In 2017, the Company ranked 22nd in the list of Chinese listed companies by brand value, ranked 1st among pharmaceutical companies on the list, the brand value reached RMB23.342 billion. The Company ranked 22nd in the 2017 “Fortune” China’s 500 list, and received “The Best Investor Relation Award” from “China Financial Market”. These awards demonstrated the market’s high recognition for the Company’s brand and strength.

Prospects

Looking to the future, the healthcare industry will maintain a stable growth which is attributable to factors such as the aging population, urbanization, increase in chronic diseases, increase in healthcare investments as well as the continuous deepening of healthcare reform, etc. The business opportunities brought by various innovative business models will also drive the future growth in the industry. The healthcare industry is still one of the industries with the highest growth potential. We believe that the healthcare reform being deepened continuously and various policies being released will accelerate the survival of the fittest in the industry and bring about further compliance and consolidation. The prospect of the industry will become better and better.

As the largest and most powerful pharmaceutical distributor and retailer, Sinopharm will continue to conform to the “New Normal” of the development of healthcare industry, seize the opportunities brought by supply-side structural reforms, further stimulate corporate vitality and creativity, and take “new thought, new structure, new momentum, new target” as strategic guidance to achieve a new leap-forward development with more adamant faith, broader views and more actionable endeavors.

Finally, I would like to express heartfelt gratitude once again to all the shareholders, directors, strategic partners, members of management of the Company and all my fellow colleagues. Let us continue to make great efforts hand in hand to advance the transformation of Sinopharm from distinction to excellence as well as from a traditional pharmaceutical distribution company to a smart healthcare service ecosystem.

Li Zhiming Chairman
Shanghai, the People’s Republic of China 23 March 2018
EN
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