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Stock Code : 3880
(A joint stock company incorporated in the People’s Republic of China with limited liability)
Medtide Inc.
GLOBAL OFFERING
Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
泰德醫藥 （浙江）股份有限公司


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IMPORTANT: If you are in any doubt about any of the contents of this Prospectus, you should seek independent professional advice.
Medtide Inc.
इᅃᔼᖹ (एϪ )ʮ̡
(A joint stock company incorporated in the People’ s Republic of China with limited liability)
GLOBAL OFFERING
Number of Offer Shares under the Global
Offering
: 16,800,000 H Shares
Number of Hong Kong Offer Shares : 1,680,000 H Shares (subject to adjustment)
Number of International Offer Shares : 15,120,000 H Shares (subject to adjustment)
Maximum Offer Price : HK$30.60 per H Share, plus brokerage of
1.0%, SFC transaction levy of 0.0027%,
AFRC transaction levy of 0.00015% and
Hong Kong Stock Exchange trading fee of
0.00565% (payable in full on application in
Hong Kong dollars and subject to refund)
Nominal value : RMB1.00 per H Share
Stock code : 3880
Joint Sponsors, Overall Coordinators, Joint Global Coordinators, Joint Bookrunners
and Joint Lead Managers
Joint Bookrunners and Joint Lead Managers
(in alphabetical order)
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsib ility for the
contents of this Prospectus, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss h owsoever arising from or
in reliance upon the whole or any part of the contents of this Prospectus.
A copy of this Prospectus, having attached thereto the documents specified in the section headed “Appendix V – Documents Delivered to the Registrar of Companies in Hong
Kong and Available on Display” in this Prospectus, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Comp anies (Winding
Up and Miscellaneous Provisions) Ordinance, Chapter 32 of the Laws of Hong Kong. The Securities and Futures Commission of Hong Kong and the Registrar o f Companies
in Hong Kong take no responsibility as to the contents of this Prospectus or any other documents referred to above.
The Offer Price is expected to be determined by agreement between the Overall Coordinators (for themselves and on behalf of the Underwriters) and the C ompany on the Price
Determination Date. The Price Determination Date is expected to be on or before Thursday, June 26, 2025 (Hong Kong time) and, in any event, not later tha n 12:00 noon on
Thursday, June 26, 2025 (Hong Kong time). The Offer Price will not be more than HK$30.60 per Offer Share and is currently expected to be not less than HK$2 8.40 per Offer
Share. If, for any reason, the Offer Price is not agreed by 12:00 noon on Thursday, June 26, 2025 (Hong Kong time) between the Overall Coordinators (for t hemselves and on
behalf of the Underwriters) and the Company, the Global Offering will not proceed and will lapse. The Overall Coordinators, on behalf of the Underwrit ers, may, where considered
appropriate and with the Company’s consent, reduce the number of Hong Kong Offer Shares and/or the indicative Offer Price range below that is stated in this Prospectus (which
is HK$28.40 to HK$30.60) at any time on or prior to the morning of the last day for lodging applications under the Hong Kong Public Offering. In such case, we will, as soon
as practicable following the decision to make such reduction and in any event not later than the morning of the last day for lodging applications under t he Hong Kong Public
Offering, cause to publish on the website of the Company at medtideinc.com and on the website of the Stock Exchange at www.hkexnews.hk an announcement, and the offer
will be canceled and relaunched at the revised number of Offer Shares and/or the revised Offer Price range and the requirements under Rule 11.13 of the L isting Rules (which
include the issue of a supplemental Prospectus or a new Prospectus (as appropriate)), as soon as practicable following the decision to make such reduc tion, and in any event
not later than the morning of the day which is the last day for lodging applications under the Hong Kong Public Offering. Further details are set forth in the sections headed
“Structure of the Global Offering” and “How to Apply for Hong Kong Offer Shares” in this Prospectus.
The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Overall Coordinators (for themselves and on
behalf of the Underwriters) if certain events occur prior to 8:00 a.m. on the Listing Date. Please see the section headed “Underwriting” in this Prospe ctus.
Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this Prospectus, includin g the risk factors set out in the
section headed “Risk Factors.”
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States, and may not be of fered, sold, pledged
or transferred within the United States, except pursuant to an available exemption from, or in a transaction not subject to, the registration require ments of the U.S. Securities
Act. The Offer Shares are being offered and sold solely outside the United States in offshore transactions in reliance on Regulation S under the U.S. Se curities Act.
ATTENTION
We have adopted a fully electronic application process for the Hong Kong Public Offering. We will not provide printed copies of this Prospectus to the p ublic in relation
to the Hong Kong Public Offering.
This Prospectus is available at the website of the Stock Exchange at www.hkexnews.hk and the Company’s website at medtideinc.com . If you require a printed copy of
this Prospectus, you may download and print from the website addresses above.
IMPORTANT
June 20, 2025


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IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong
Public Offering. We will not provide printed copies of this Prospectus in relation to
the Hong Kong Public Offering.
This Prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “ HKEXnews > New Listings > New Listing Information ”
section, and our website at medtideinc.com . Y ou may download and print from these
website addresses if you want a printed copy of this Prospectus.
To apply for the Hong Kong Offer Shares, you may:
(1) apply online via the White Form eIPO service at www.eipo.com.hk ;o r
(2) apply electronically through the HKSCC EIPO channel and cause HKSCC
Nominees to apply on your behalf by instructing your broker or custodian who
is a HKSCC Participant to give electronic application instructions via
HKSCC’s FINI system to apply for the Hong Kong Offer Shares on your
behalf.
We will not provide any physical channels to accept any application for the Hong
Kong Offer Shares by the public. The contents of the electronic version of this
Prospectus are identical to the printed Prospectus as registered with the Registrar of
Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance.
If you are an intermediary, broker or agent, please remind your customers, clients
or principals, as applicable, that this Prospectus is available online at the website
addresses stated above.
Please see the section headed “ How to Apply for Hong Kong Offer Shares ” in this
Prospectus for further details on the procedures through which you can apply for the
Hong Kong Offer Shares electronically.
IMPORTANT
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Y our application through the White Form eIPO service or the HKSCC EIPO
channel must be made for a minimum of 100 Hong Kong Offer Shares and in multiples
of that number of Hong Kong Offer Shares as set out in the table below. No application
for any other number of Hong Kong Offer Shares will be considered and such an
application is liable to be rejected.
If you are applying through the White Form eIPO service, you may refer to the
table below for the amount payable for the number of Shares you have selected. Y ou
must pay the respective amount payable on application in full upon application for Hong
Kong Offer Shares.
If you are applying through the HKSCC EIPO channel, you are required to
pre-fund your application based on the amount specified by your broker or custodian, as
determined based on the applicable laws and regulations in Hong Kong.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable (2) on
application
HK$ HK$ HK$ HK$
100 3,090.85 2,000 61,817.20 10,000 309,086.01 200,000 6,181,720.20
200 6,181.73 2,500 77,271.50 20,000 618,172.02 250,000 7,727,150.26
300 9,272.58 3,000 92,725.81 30,000 927,258.04 300,000 9,272,580.30
400 12,363.44 3,500 108,180.10 40,000 1,236,344.05 350,000 10,818,010.36
500 15,454.29 4,000 123,634.40 50,000 1,545,430.06 400,000 12,363,440.40
600 18,545.17 4,500 139,088.71 60,000 1,854,516.05 450,000 13,908,870.46
700 21,636.02 5,000 154,543.00 70,000 2,163,602.06 500,000 15,454,300.50
800 24,726.88 6,000 185,451.61 80,000 2,472,688.08 600,000 18,545,160.60
900 27,817.74 7,000 216,360.20 90,000 2,781,774.09 700,000 21,636,020.70
1,000 30,908.61 8,000 247,268.81 100,000 3,090,860.10 840,000
(1) 25,963,224.85
1,500 46,362.90 9,000 278,177.41 150,000 4,636,290.16
(1) Maximum number of Hong Kong Offer Shares you may apply for.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee
and AFRC transaction levy. If your application is successful, brokerage will be paid to the Exchange
Participants (as defined in the Listing Rules) and the SFC transaction levy, the Stock Exchange trading
fee and AFRC transaction levy are paid to the Stock Exchange (in the case of the SFC transaction levy,
collected by the Stock Exchange on behalf of the SFC; and in the case of the AFRC transaction levy,
collected by the Stock Exchange on behalf of the AFRC).
IMPORTANT
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If there is any change in the following expected timetable of the Hong Kong
Public Offering, we will issue an announcement in Hong Kong to be published on the
websites of the Stock Exchange at www.hkexnews.hk and our Company at
medtideinc.com.
Date (1)
Hong Kong Public Offering commences ............ .9:00 a.m. on Friday, June 20, 2025
Latest time to complete electronic applications
under the White Form eIPO service through
the designated website at www.eipo.com.hk (2) . .11:30 a.m. on Wednesday, June 25, 2025
Application lists open (3) ..................... 1 1:45 a.m. on Wednesday, June 25, 2025
Latest time for (a) completing payment of White Form eIPO
applications by effecting internet banking transfer(s)
or PPS payment transfer(s) and (b) applying through the
HKSCC EIPO channel
(4) ................ .12:00 noon on Wednesday, June 25, 2025
If you are instructing your broker or custodian who is a HKSCC Participant will submit
electronic application instructions on your behalf through HKSCC’s FINI system in accordance
with your instruction, you are advised to contact your broker or custodian for the earliest and
latest time for giving such instructions as this may vary by broker or custodian .
Application lists close
(3) ................... .12:00 noon on Wednesday, June 25, 2025
Expected Price Determination Date (5) ....................... o no r before 12:00 noon,
Thursday, June 26, 2025
Announcement of the Offer Price, the level of applications
in the Hong Kong Public Offering; the level of indications
of interest in the International Offering; and the basis of
allocation of the Hong Kong Offer Shares to be published
on our website at medtideinc.com
(6) and the website of
the Stock Exchange at www.hkexnews.hk at or before .........1 1:00 p.m. on Friday,
June 27, 2025
The results of allocations in the Hong Kong Public Offering (with successful applicants’
identification document numbers, where appropriate) to be made available through a variety
of channels, including:
 in the announcement to be posted on our website
and the website of the Stock Exchange at medtideinc.com
(6)
and www.hkexnews.hk , respectively ................ a to r before 11:00 p.m. on
Friday, June 27, 2025
EXPECTED TIMETABLE
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 on the designated results of allocation
at www.iporesults.com.hk (alternatively:
www.eipo.com.hk/eIPOAllotment ) with
a “search by ID” function from ................. 1 1:00 p.m. on Friday, June 27,
2025 to 12:00 midnight on
Thursday, July 3, 2025
 from the allocation results telephone enquiry line
by calling +852 2862 8555 between 9:00 a.m. and
6:00 p.m. from ................................ .Monday, June 30, 2025 to
Friday, July 4, 2025
(excluding Saturday, Sunday and public
holiday in Hong Kong)
For those applying through HKSCC EIPO channel,
you may also check with your broker or custodian from ....... .6:00 p.m. on Thursday,
June 26, 2025
H Share certificates in respect of wholly or partially
successful applications to be dispatched or deposited
into CCASS on or before
(7)(9) ............................ .Friday, June 27, 2025
White Form e-Refund payment instructions/refund
cheques in respect of wholly or partially successful
applications if the final Offer Price is less than the
maximum Offer Price per Offer Share initially paid
on application (if applicable) or wholly or partially
unsuccessful applications to be dispatched on or before
(8)(9) ......... Monday, June 30,
2025
Dealings in the H Shares on the Hong Kong Stock Exchange
expected to commence at 9:00 a.m. on .................... .Monday, June 30, 2025
Notes:
(1) All dates and times refer to Hong Kong local dates and times, except as otherwise stated. Details of the
structure of the Global Offering, including conditions of the Hong Kong Public Offering, are set forth in the
section headed “Structure of the Global Offering” in this Prospectus.
(2) Y ou will not be permitted to submit your application through the designated website at www.eipo.com.hk after
11:30 a.m. on the last day for submitting applications. If you have already submitted your application and
obtained an application reference number from the designated website before 11:30 a.m., you will be permitted
to continue the application process (by completing payment of application monies) until 12:00 noon on the last
day for making applications, when the application lists close.
(3) If there is/are a tropical cyclone warning signal number 8 or above, or a “black” rainstorm warning and/or
Extreme Conditions in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Wednesday,
June 25, 2025, the application lists will not open or close on that day. See “How to Apply for Hong Kong Offer
Shares—E. Severe Weather Arrangements” for details.
EXPECTED TIMETABLE
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(4) If you instruct your broker or custodian who is an HKSCC Participant to give electronic application
instructions via FINI to apply for the Hong Kong Offer Shares on your behalf, you should contact your broker
or custodian for the latest time for giving such instructions which may be different from the latest time as
stated above.
(5) The Price Determination Date is expected to be on or before Thursday, June 26, 2025 and, in any event, not
later than 12:00 noon on Thursday, June 26, 2025. If, for any reason, we do not agree with the Overall
Coordinators (for themselves and on behalf of the Underwriters) on the pricing of the Offer Shares by
12:00 noon on Thursday, June 26, 2025, the Global Offering will not proceed and will lapse.
(6) None of the websites or any of the information contained on the websites forms part of this Prospectus.
(7) The H Share certificates will only become valid evidence of title provided that the Global Offering has become
unconditional in all respects and neither of the Hong Kong Underwriting Agreement nor the International
Underwriting Agreement is terminated in accordance with its respective terms prior to 8:00 a.m. on the Listing
Date. The Listing Date is expected to be on or about Monday, June 30, 2025. Investors who trade the H Shares
on the basis of publicly available allocation details prior to the receipt of H Share certificates or prior to the
H Share certificates becoming valid evidence of title do so entirely at their own risk.
(8) White Form e-Refund payment instructions/refund checks will be issued in respect of wholly or partially
unsuccessful applications.
(9) Applicants who have applied for Hong Kong Offer Shares through the HKSCC EIPO channel should see
“How to Apply for Hong Kong Offer Shares—D. Despatch/Collection of H Share Certificates and Refund of
Application Monies” for details.
Applicants who have applied through the White Form eIPO service and paid their applications monies
through single bank accounts may have refund monies (if any) dispatched to the bank account in the form of
White Form e-Refund payment instructions. Applicants who have applied through the White Form eIPO
service and paid their application monies through multiple bank accounts may have refund monies (if any)
dispatched to the address as specified in their application instructions in the form of refund checks in favor
of the applicant (or, in the case of joint applications, the first-named applicant) by ordinary post at their own
risk.
Further information is set out in the section headed “How to Apply for Hong Kong Offer Shares—D.
Despatch/Collection of H Share Certificates and Refund of Application Monies.”
(10) Applicants who apply for the Offer Shares by giving electronic application instructions to HKSCC via
HKSCC’s FINI system should refer to “How to Apply for Hong Kong Offer Shares—A. Application for Hong
Kong Offer Shares —2. Application Channels” in this prospectus.
The above expected timetable is a summary only. For details of the structure of the
Global Offering, including its conditions, and the procedures for applications for Hong
Kong Offer Shares, please see the sections headed “Structure of the Global Offering” and
“How to Apply for Hong Kong Offer Shares” in this Prospectus, respectively.
If the Global Offering does not become unconditional or is terminated in accordance with
its terms, the Global Offering will not proceed. In such a case, our Company will publish an
announcement as soon as practicable thereafter.
EXPECTED TIMETABLE
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IMPORTANT NOTICE TO INVESTORS
This Prospectus is issued by us solely in connection with the Hong Kong Public
Offering and the Hong Kong Offer Shares and does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the Hong Kong Offer Shares offered
by this Prospectus pursuant to the Hong Kong Public Offering. This Prospectus may not
be used for the purpose of making, and does not constitute, an offer or invitation in any
other jurisdiction or in any other circumstances. No action has been taken to permit a
public offering of the Hong Kong Offer Shares in any jurisdiction other than Hong Kong
and no action has been taken to permit the distribution of this Prospectus in any
jurisdiction other than Hong Kong. The distribution of this Prospectus for purposes of a
public offering and the offering and sale of the Hong Kong Offer Shares in other
jurisdictions are subject to restrictions and may not be made except as permitted under
the applicable securities laws of such jurisdictions pursuant to registration with or
authorization by the relevant securities regulatory authorities or an exemption therefrom.
You should rely only on the information contained in this Prospectus to make your
investment decision. The Hong Kong Public Offering is made solely on the basis of the
information contained and the representations made in this Prospectus. We have not
authorized anyone to provide you with information that is different from what is
contained in this Prospectus. Any information or representation not contained nor made
in this Prospectus must not be relied on by you as having been authorized by us, the Joint
Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Capital Market Intermediaries, any of the Underwriters, any of our or
their respective directors, officers, employees, agents, or representatives of any of them
or any other parties involved in the Global Offering.
Page
EXPECTED TIMETABLE ........................................... i v
CONTENTS ....................................................... v i i
SUMMARY ....................................................... 1
DEFINITIONS ..................................................... 2 6
GLOSSARY OF TECHNICAL TERMS ................................. 3 9
FORW ARD-LOOKING STATEMENTS ................................. 4 8
RISK FACTORS ................................................... 5 0
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL
OFFERING ...................................................... 8 8
CONTENTS
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W AIVERS......................................................... 9 4
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN
THE GLOBAL OFFERING ......................................... 9 9
CORPORATE INFORMATION ....................................... 1 0 4
INDUSTRY OVERVIEW ............................................. 1 0 6
REGULATORY OVERVIEW ......................................... 1 3 5
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE ............. 1 7 3
BUSINESS ........................................................ 1 9 6
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT .............. 2 8 9
CORNERSTONE INVESTORS ........................................ 3 0 7
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS .......... 3 1 3
CONNECTED TRANSACTION ....................................... 3 1 7
SUBSTANTIAL SHAREHOLDERS ..................................... 3 1 9
SHARE CAPITAL .................................................. 3 2 2
FINANCIAL INFORMATION ......................................... 3 2 5
FUTURE PLANS AND USE OF PROCEEDS ............................. 3 7 9
UNDERWRITING .................................................. 3 8 6
STRUCTURE OF THE GLOBAL OFFERING ............................ 4 0 0
HOW TO APPLY FOR HONG KONG OFFER SHARES ................... 4 0 9
APPENDIX I ACCOUNTANTS’ REPORT ........................... I - 1
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION . . II-1
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION ........... III-1
APPENDIX IV STATUTORY AND GENERAL INFORMATION ........... I V - 1
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES IN HONG KONG AND A V AILABLE ON
DISPLAY ........................................ V - 1
CONTENTS
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This summary aims to give you an overview of the information contained in this
Prospectus and should be read in conjunction with the full text of this Prospectus. As it
is a summary, it does not contain all the information that may be important to you. You
should read the whole Prospectus, including our financial statements and the
accompanying notes, before you decide to invest in the Offer Shares. There are risks
associated with any investment. Some of the particular risks in investing in the Offer
Shares are set out in “Risk Factors” in this Prospectus. You should read that section
carefully before you decide to invest in the Offer Shares.
OVERVIEW
We are the third largest peptide-focused CRDMO worldwide in terms of sales revenue
with a market share of 1.5% in 2023, according to Frost & Sullivan. We offer full-cycle
services ranging from early-stage discovery, preclinical research and clinical development to
commercial-stage production. The top two players in the global peptide-focused CRDMO
market accounted for 23.8% of the market share and the remainder of the market is fragmented
and each of the top three to six players (including our Company) only accounted for around 1%
of the market share in 2023.
Our Services
We mainly provide (i) CRO services, namely peptide NCE discovery synthesis; and (ii)
CDMO services, namely peptide CMC development and commercial manufacturing. Our
services primarily focus on providing customers with APIs rather than drug products. Our
customers then mix the APIs with excipients to create the final dosage forms of drug products,
determine the appropriate dosage form, route of administration, and formulation, and then use
the final drug products for their clinical trials or commercial sales. We have established stable
customer relationships and service footprint in over 50 countries, including major markets such
as China, the United States, Japan, Europe, South Korea, and Australia. We provide our
customers with peptide drug development, production, and CMC filing support services that
meet regulatory requirements in major markets worldwide.
SUMMARY
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The following chart sets forth details of our end-to-end services across the peptide drug
lifecycle.
Peptide CRDMO
Research Discovery Preclinical Phase I Phase II Phase III Commercial
CRO CDMO
Discovery Synthesis CMC Development Commercial Manufacturing
• Synthesize peptide NCE
for drug discovery research
• Offer non-GMP production
with numerous purity
standards
• Offer GMP manufacturing of API for
NCE
• Synthesize molecules from
simple to complex structures
and challenging molecules
• Provide on-going stability studies
after commercialization
• Offer GMP manufacturing of API for
generic drugs
• Develop and scale up(1) API manufacturing processes
to ensure stability and control
END-TO-END SERVICES ACROSS THE PEPTIDE DRUG LIFECYCLE
• Develop analytical methods and quality standards to ensure
API quality
• Validate the manufacturing processes with parameters to confirm
that the processes can be performed and reproduced
• Prepare CMC dossier to support global regulatory filing
• Offer generic drug development
Notes:
(1) Scale up refers to the process of transforming a lab-scale product into a commercially viable product by
developing a reliable manufacturing technique. This technique is designed to accommodate various output
volumes, which are typically larger than lab-scale.
(2) Our services primarily focus on providing customers with APIs rather than drug products. We do not produce
drug products that are directly used in clinical trials or commercially.
Our Project Pipeline
We have built an extensive project pipeline. As of December 31, 2024, our project
pipeline included 1,217 ongoing CRO projects and 332 ongoing CDMO projects. We have
strategically focused on the pipeline buildup in the field of GLP-1. We had nine NCE GLP-1
molecule development projects with seven customers in developing oral and/or injectable
GLP-1 molecule products as of the Latest Practicable Date. For details, please see
“Business—Our Services—Peptide CRDMO Services.”
Our Market Opportunities and Competition
We face competition primarily from other leading CRDMO and CDMO companies who
are active in peptide manufacturing. Peptide CRDMO service providers face competition based
on several factors, including growth of the overall pharmaceutical market, the market demand,
quality and breadth of services, specific scientific and regulatory expertise, advanced
technological requirements, high capital expenditure needs, timeliness of delivery,
manufacturing capability and capacities, capable talent, global supply chain solutions and
ability to build/establish capable GMP certified facilities.
In terms of barriers to entry, the peptide CRDMO market generally requires high technical
expertise. We are well-positioned to capture opportunities in the sizable and fast-growing
peptide drug market, with our peptide production technology, strong compliance record and
SUMMARY
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experienced management team. We believe that we can maintain our competitiveness by
leveraging our established position in the global peptide CRDMO market and capitalizing on
the opportunities offered by the fast-growing market.
Peptide Drug Market
According to Frost & Sullivan, the global peptide drug market grew from US$60.7 billion
in 2018 to US$89.5 billion in 2023 as measured by sales revenue, representing a CAGR of
8.1%, and is expected to further grow to US$261.2 billion in 2032, representing a CAGR of
12.6%; the number of non-insulin peptide drugs that had obtained regulatory approvals
globally reached 76 between January 1, 2015 and the Latest Practicable Date.
GLP-1 Drug Market
One particular type of peptide drug product, namely GLP-1, has become a major driver
for the rapid growth of the global peptide drug market. The global GLP-1 drug market grew
from US$9.3 billion in 2018 to US$38.9 billion in 2023 as measured by sales revenue,
representing a CAGR of 33.2%, and is expected to further grow to US$129.9 billion in 2032,
representing a CAGR of 14.3%.
In case semaglutide related patents expire in 2026 in China and 2032 in the United States,
such expiration is expected to lead to an increase in generic drugs, it is possible that this
situation is expected to increase the demand for APIs, as well as to increase the demand for
CRO services and CDMO services for the discovery and development of more advanced NCEs.
Intensified competition could lead to API price decreases, and potentially further affecting our
profit margin. While the expiration of semaglutide patents may also lead to the above increase
in competition, we believe our established technical and operational expertise in peptide
synthesis and the high technical barriers in manufacturing complex peptides put us in a
favorable position to compete against potential competitors. We intend to seize the above
opportunity of semaglutide’s patent expiration by (i) expanding our production capacity to
capture the growth; (ii) enhancing our ability to help customers explore and expand into more
markets; and (iii) strengthening our business development capabilities to obtain new NCE
projects.
For more details, see “Industry Overview” and “Business—Competition” in this
Prospectus.
Peptide CRDMO Market
According to Frost & Sullivan, the percentage of pharmaceutical and biotech companies
that outsourced clinical development and production to third party service providers reached
approximately 70% in the global peptide drug market in 2023, higher than 30%-40% for
biologics. This reliance on third party service providers has led to the rapid growth of the
SUMMARY
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global peptide CRDMO market, which increased from US$1.6 billion in 2018 to US$3.1 billion
in 2023 as measured by sales revenue, representing a CAGR of 14.8%, and is expected to
further grow to US$18.8 billion in 2032, representing a CAGR of 22.0%.
Oligonucleotide CDMO Market
According to Frost & Sullivan, 18 oligonucleotide drugs had obtained regulatory
approvals between January 1, 2015 and the Latest Practicable Date. The global oligonucleotide
drug market grew significantly from approximately US$2.0 billion in 2018 to approximately
US$4.5 billion in 2023 as measured by sales revenue, representing a CAGR of 16.9%, and is
expected to further grow to US$45.9 billion in 2032, representing a CAGR of 29.6%. The
global oligonucleotide CDMO market by sales revenue grew from US$0.5 billion in 2018 to
US$2.3 billion in 2023, representing a CAGR of 33.8%, and is expected to further grow to
US$18.4 billion in 2032, representing a CAGR of 26.0%.
Our Fee Model
FFS Model
During the Track Record Period, we generated fee income substantially on an FFS basis
for the services provided. Revenue under FFS model include revenue from CRO and CDMO
services. We generally receive payments in accordance with a pre-agreed payment schedule
specified in the contract or work order. The payment schedule sets out the fees for services we
provide at relevant discovery, development or manufacturing steps that fall under the scope of
work in the contract or work order. We determine the fee level based on the scope of the
services, the estimated costs and expenses, and the estimated amount of time to deliver our
services, among others. Our service contracts and work orders under the FFS model typically
include a detailed schedule that sets forth specifications of and anticipated time required for
completing each step as well as the corresponding payment. Revenue is recognized at a point
in time when we transfer control of the distinct services or products to our customer upon (i)
receipt for domestic customers and (ii) delivery to designated carriers for overseas customers
in accordance with applicable delivery terms in the FFS contracts.
FTE Model
We also generate income under the FTE model. During the Track Record Period, the FTE
model was only applied to CRO service. Under the FTE model, we allocate employees to our
customer’s projects at a fixed rate per employee per period of time. During this period of time,
the designated employees are dedicated to such customer’s project exclusively. We determine
the level of service fees based on the number of scientists and research technicians and the
amount of time spent on a given project, among other considerations. The term of our FTE
contracts may range from several months to multiple years and are subject to renewal.
Therefore, the performance obligation of FTE services is satisfied over time.
For more details, see “Business—Our Business Model” in this Prospectus.
SUMMARY
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OUR FACILITIES
Our Current Facilities
Our operations in China are conducted through our Qiantang Site, covering a vast cGMP
campus with approximately 26,000 square meters. Within the Qiantang Site, we have
constructed a cGMP facility with GFA of over 15,000 square meters. Our facility holds
ISO9001 and ISO13485 certifications for quality management systems. As of the Latest
Practicable Date, our Qiantang Site housed 19 peptide synthesis production lines ranging from
20L to 1,000L, alongside 16 purification production lines. Our Qiantang Site has an annual API
production capacity of 500kg and per-batch production capacity of 20kg with utilization rate
of 68.2% (average usage of total 19 synthesis line and 16 purification lines) in 2023, capable
of handling multiple 100kg level purchase orders. The Qiantang Site also has the capacity to
manufacture 1-17kg of oligonucleotides per year. Our international operations are based in
Rocklin, California, the United States.
Our Facility Expansion Plans
United States Expansion Plan
We intend to expand our capacity and capabilities across our business in the United States
and China to meet customers’ increasing demand and capture the rapid growth of the peptide
CRDMO market. In 2022, we acquired the California production facility of Rocklin Site, which
occupies approximately 12,000 square meters of land, with a building area of approximately
4,000 square meters. Our Rocklin Site is currently under construction, and upon completion,
is expected to provide GMP-compliant production, analytical development, quality control
release and stability testing services for peptide APIs, accommodating production single batch
capacities ranging from grams to kilograms. We plan to complete the construction of Rocklin
Site (including installation of equipment) in the second half of 2025, which we expect will
increase our annual production capacity by approximately 100-300kg. We believe the
establishment of a production base in the United States enhances our ability to deliver more
convenient, stable and efficient services to our clients and ensures seamless collaboration.
China Expansion Plan
In China, we are constructing our new facility of Hangzhou Biopharma Town Site, which
will be dedicated to research, formulation development, and pilot production of peptide and
oligonucleotide. Spanning an area of approximately 10,000 square meters, with a building
space of approximately 26,700 square meters, the finalized Hangzhou Biopharma Town Site
will embody a pharmaceutical research and production facility, featuring a ten-story main
building and a three-story podium. As of the Latest Practicable Date, the primary structural
construction of Hangzhou Biopharma Town Site has been completed, with interior renovation
set to commence in the second half of 2025. We expect the Hangzhou Biopharma Town Site
to commence operation in the second half of 2025. In addition, we also plan to expand the
SUMMARY
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production capacity of our existing Qiantang site to address the growing demand in the global
peptide CDMO market and improve production efficiency. We expect to add an additional
500kg production capacity at the Qiantang Site by the end of 2025.
Moreover, in addition to Qiantang Site and Hangzhou Biopharma Town Site, within the
next two to three years, we intend to either construct or acquire new production facilities in
China. This strategic move is projected to bolster our annual production capacity by
approximately 2,000kg. This expansion plan is in response to growing existing and potential
customer demand for GLP-1 products, which are approaching advanced stages of clinical and
commercial production.
For more details, see “Business—Facilities” in this Prospectus.
STRENGTHS
We believe the following strengths differentiate us from our competitors:
 Peptide CRDMO, providing full-cycle services with quality, efficiency and cost
advantages
 Well positioned to capture opportunities in the sizable and fast-growing global
TIDES drug market, particularly the GLP-1 drug market
 Sustainable growth driven by a diverse and loyal customer base and a stable and
extensive project pipeline, both in NCE and generic drugs
 Peptide production technology and large-scale production capabilities, creating high
entry barriers
 Experienced management team and an efficient and pragmatic execution team
For more details, see “Business—Our Competitive Strengths” in this Prospectus.
STRATEGIES
We plan to pursue the following significant opportunities and execute our key strategies
accordingly:
 Solidify our position in the global peptide-focused CRDMO industry, and enhance
the stability and reliability of our global peptide-focused CRDMO service capacity
 Strengthen our R&D capabilities and further advance our technologies to maintain
our competitive advantages
 Further build our global sales network to expand our customer base
SUMMARY
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 Strategically grow our oligonucleotide CDMO business and diversify our service
portfolio
 Continue to attract, retain and develop talent
For more details, see “Business—Our Strategies” in this Prospectus.
RESEARCH AND DEVELOPMENT
As of the Latest Practicable Date, our R&D department included 62 employees, nearly
38.7% of whom hold a master’s or doctoral degree. We have consolidated all research and
development activities into CITRI (CPC Innovative & Technology Research Institute). We
have established various R&D units focusing on process development, analytical capabilities,
and specific technological areas such as multiple-cyclic peptides, peptide conjugation
techniques, GLP-1 technologies, green chemistry, formulation studies, and Spray Dry
technologies, among others. The workflow of our R&D activities include several stages such
as project initiation, small-scale research, pilot-scale research, collaboration with process
validation, and regulatory submission.
We incurred research and development expenses of RMB21.0 million, RMB23.1 million,
and RMB28.7 million in 2022, 2023 and 2024, respectively.
For more details, see “Business—Research and Development” in this Prospectus.
OUR CUSTOMERS AND SUPPLIERS
In 2022, 2023 and 2024, the total revenue generated from our five largest customers in
each year during the Track Record Period amounted to RMB157.3 million, RMB162.6 million
and RMB222.3 million, respectively, representing 44.8%, 48.3% and 50.3% of our revenue in
the same year, respectively, and revenue generated from our largest customer in each year
during the Track Record Period accounted for 15.4%, 20.9% and 26.8% of our revenue in the
same year, respectively.
In 2022, 2023 and 2024, purchases from our five largest suppliers in each year during the
Track Record Period amounted to RMB68.1 million, RMB57.3 million and RMB50.5 million,
representing 43.6%, 40.4% and 32.5% of our total purchases in the same year, respectively, and
purchases from our largest supplier in each year during the Track Record Period accounted for
17.0%, 13.1% and 10.7% of our total purchases for the same year, respectively.
To the best of our knowledge, as of the Latest Practicable Date, we were not aware of any
information or arrangement that would lead to termination of our relationships with any of our
five largest customers or suppliers in each year during the Track Record Period. None of our
Directors, their respective associates, or Shareholders who own 5% or more of our issued share
SUMMARY
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capital had any interest in any of our five largest customers or suppliers in each year during
the Track Record Period. During the Track Record Period, none of our five largest
suppliers/customers in each year during the Track Record Period was also our
customer/supplier.
For more details, see “Business—Suppliers” and “Business—Customers” in this
Prospectus.
RISK FACTORS
Our business and the Global Offering involve certain risks, which are set out in the
section headed “Risk Factors” in this Prospectus. Some of the major risk factors that we face
include:
 Our business largely depends on our customers’ spending on and demand for our
discovery, development and manufacturing services for peptide and
oligonucleotides, their budget for R&D expenditure and the clinical and market
success of their products. Any reduction in spending or demand from our customers
could have a material adverse effect on our business, financial condition, results of
operations and prospects.
 We may not be successful in developing, enhancing, adapting to or acquiring new
technologies.
 We may fail to effectively develop and market new services, which may harm our
growth opportunities and prospects.
 We face increasing competition and may not be able to compete effectively, which
may result in downward pricing pressure or reduced demand for our services.
 Competition in the CRDMO market for GLP-1 products may intensify as the
growing GLP-1 market attracts more market entrants.
 If we fail to implement our expansion plan to enhance our manufacturing
capabilities as planned, or if such plan fails to achieve expected benefits, our
business and prospects could be materially and adversely affected.
SUMMARY
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SUMMARY OF HISTORICAL FINANCIAL INFORMATION
The following is a summary of our historical financial information as of and for the years
ended December 31, 2022, 2023 and 2024, extracted from the Accountants’ Report set out in
Appendix I to this Prospectus. The summary below should be read in conjunction with the
consolidated financial information in Appendix I, including the accompanying notes and the
information set forth in the section headed “Financial Information” in this Prospectus. Our
consolidated financial information was prepared in accordance with IFRS.
Summary of Results of Operations
The following table sets forth a summary of our results of operations for the years
indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Revenue 350,840 336,774 442,226
Cost of sales (149,771) (156,603) (192,452)
Gross profit 201,069 180,171 249,774
Other income and gains 22,725 23,144 59,057
Selling and marketing expenses (22,245) (28,071) (42,494)
Administrative expenses (43,475) (43,771) (73,406)
Research and development expenses (21,020) (23,144) (28,748)
Impairment losses on financial assets
under expected credit loss (“ ECL”)
model, net of reversal (1,125) (600) (916)
Other expenses (27) (156) (285)
Finance costs (1,281) (224) (1,141)
Profit before fair value losses on
financial liabilities at fair value
through profit or loss (“ FVTPL ”) 134,621 107,349 161,841
Fair value losses on financial liabilities
at FVTPL (67,605) (45,371) (83,392)
PROFIT BEFORE TAX 67,556 61,978 78,449
Income tax expense (13,576) (13,073) (19,276)
PROFIT FOR THE YEAR 53,980 48,905 59,173
Attributable to:
Owners of the parent 53,980 48,905 59,173
SUMMARY
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NON-IFRS MEASURE
Our consolidated financial information was prepared in accordance with IFRS. To
supplement our consolidated results which were prepared and presented in accordance with
IFRS, we use adjusted net profit (non-IFRS measure) for the year, EBITDA (non-IFRS
measure) and adjusted EBITDA (non-IFRS measure) as additional financial measures, which
are not required by, or presented in accordance with, IFRS. We believe that these measures
facilitate comparisons of operating performance from period to period and company to
company by eliminating the potential impact of certain items. The use of these non-IFRS
measures has limitations as an analytical tool, and you should not consider them in isolation
from, as a substitute for, analysis of, or superior to, our results of operations or financial
condition as reported under IFRS. In addition, these non-IFRS measures may be defined
differently from similar terms used by other companies, and may not be comparable to other
similarly titled measures used by other companies.
We define adjusted net profit (non-IFRS measure) for the year, as profit for the year
adjusted by adding back (i) fair value loss on financial liabilities at FVTPL comprises fair
value loss on convertible bonds and redemption liabilities, of which the redemption liabilities
will convert to equity upon the Listing, (ii) share-based payment compensation, which are
non-cash in nature, and (iii) listing expenses. The following table sets forth a reconciliation of
our adjusted net profit (non-IFRS measure) for 2022, 2023 and 2024.
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Profit for the year 53,980 48,905 59,173
Add
Fair value losses on financial
liabilities at FVTPL 67,065 45,371 83,392
Share-based payment compensation 1,890 1,912 4,441
Listing expenses – – 25,019
Adjusted net profit (non-IFRS
measure) for the year 122,935 96,188 172,025
We define EBITDA (non-IFRS measure) as profit for the year adjusted by adding back
income tax expenses, depreciation of property and equipment, amortization of intangible
assets, depreciation of right-of-use assets, and net finance costs/(income). We define adjusted
EBITDA (non-IFRS measure) as EBITDA (non-IFRS measure), adjusted by adding back fair
value losses on financial liabilities at FVTPL, share-based payment compensation and listing
expenses. The following table sets forth a reconciliation of our EBITDA (non-IFRS measure)
and adjusted EBITDA (non-IFRS measure) for 2022, 2023 and 2024 to the nearest measures.
SUMMARY
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Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Profit for the year 53,980 48,905 59,173
Add
Income tax expenses 13,576 13,073 19,276
Depreciation of property and
equipment 16,443 20,164 20,743
Amortization of intangible assets 6,362 6,393 6,503
Depreciation of right-of-use assets 3,128 3,224 2,843
Net finance costs/(income) 367 (6,696) (12,419)
EBITDA (non-IFRS measure) 93,856 85,063 96,119
Add
Fair value losses on financial
liabilities at FVTPL 67,065 45,371 83,392
Share-based payment compensation 1,890 1,912 4,441
Listing expenses – – 25,019
Adjusted EBITDA
(non-IFRS measure) 162,811 132,346 208,971
The following tables set forth a breakdown of our revenue by fee model and by service
offering for the years indicated:
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
FFS 331,576 94.5 326,803 97.1 425,322 96.2
FTE 17,981 5.1 9,550 2.8 16,551 3.7
Others 1,283
(1) 0.4 421 (2) 0.1 353 0.1
Total 350,840 100.0 336,774 100.0 442,226 100.0
SUMMARY
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Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
CDMO Service (3) 240,455 68.5 258,355 76.7 329,957 74.6
CRO Service 109,102 31.1 77,998 23.2 111,916 25.3
Others 1,283
(1) 0.4 421 (2) 0.1 353 (2) 0.1
Total 350,840 100.0 336,774 100.0 442,226 100.0
Notes:
(1) Others in 2022 relate to (i) lease income; and (ii) revenue from sales of raw material. In March 2021,
we disposed of the entire equity interests of Prometheus Bio to Hangzhou Haiding. Despite this disposal,
one contract remained effective in 2022, under which we sold raw material to Prometheus Bio in 2022,
generating revenue. For further details of our disposal, please refer to the section headed “History,
Development and Corporate Structure.”
(2) Others in 2023 and 2024 relate to lease income.
(3) Revenue from CDMO Service consists of revenue from NCEs projects and generic drug projects. Our
revenue from NCEs projects increased from RMB184.3 million in 2022, to RMB194.2 million in 2023,
and further increased to RMB236.6 million in 2024. Our revenue from generic drug projects increased
from RMB56.1 million in 2022 to RMB64.1 million in 2023, and further increased to RMB93.4 million
in 2024.
Our revenue increased by 31.3% from RMB336.8 million in 2023 to RMB442.2 million
in 2024, primarily due to an increase in revenue from one customer in the U.S. focusing on
development of GLP-1 drugs, driven by its respective drug development progress and
increased demand for our services.
Our revenue decreased by 4.0% from RMB350.8 million in 2022 to RMB336.8 million
in 2023, primarily due to a 10.4% decrease in average revenue per customer from
approximately RMB528.0 thousand in 2022 to RMB474.0 thousand in 2023. Such decrease in
average revenue per customer is primarily attributable to an approximately RMB34.0 million
decrease in revenue from three of our customers who significantly reduced their demands due
to changes in their peptide drug development resources, plans, and cycles in the United States
and Mainland China. The effect of reduction in average revenue per customer from 2022 to
2023 was partially offset by an increase in the number of customers from 664 to 711 during
the same years.
SUMMARY
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The following table sets forth a breakdown of our revenue based on the locations of the
contract entities of our customers, both in absolute amount and as a percentage of our total
revenue for the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
Mainland China 101,431 28.9 74,124 22.0 94,576 21.4
U.S. 132,309 37.7 114,794 34.1 243,207 55.0
Japan 55,157 15.7 73,572 21.8 31,187 7.1
Europe 45,016 12.8 62,591 18.6 48,615 11.0
Other countries
and regions
(1) 16,927 4.9 11,693 3.5 24,641 5.5
Total 350,840 100.0 336,774 100.0 442,226 100.0
Note:
(1) Other countries and regions comprise Australia, Brazil, Canada, Chile, Hong Kong, India, Israel,
Mexico, Namibia, Philippines, Republic of Korea, Saudi Arabia, Singapore, South Africa, Taiwan,
Thailand, United Arab Emirates, and Uruguay.
Our revenue in Mainland China increased by 27.6% from RMB74.1 million in 2023 to
RMB94.6 million in 2024. Our revenue overseas increased by 32.4% from RMB262.7 million
in 2023 to RMB347.7 million in 2024. For the reasons of revenue fluctuation, please refer to
the discussion above.
Our revenue in Mainland China decreased by 26.9% from RMB101.4 million in 2022 to
RMB74.1 million in 2023, primarily due to reduced demand from our customers in Mainland
China. The healthcare industry experienced a general decline in terms of the amount of
financing in recent years, forcing industry players (including our customers) to reduce their
NCE development pipeline to focus on fewer pipeline products with more potential of
commercialization success. This has in turn affected our customers’ demand for our services,
which partially led to the decline in our revenue in Mainland China from 2022 to 2023. Our
revenue overseas increased from RMB249.4 million in 2022 to RMB262.7 million in 2023,
primarily due to an increase in business volume as reflected by an increase in the number and
sizes of projects from overseas customers.
SUMMARY
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The following table sets forth a breakdown of our gross profits and gross profits margin
by service offering for the years indicated.
Y ear ended December 31,
2022 2023 2024
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
RMB’000 % RMB’000 % RMB’000 %
CDMO Service 133,845 55.7 137,058 53.1 178,432 54.1
CRO Service 67,224 61.6 43,113 55.3 71,342 63.7
Total/Overall 201,069 57.3 180,171 53.5 249,774 56.5
For details of the fluctuations of our gross profits and gross profits margin, please refer
to the section headed “Financial Information.”
Our profit for the year increased by 21.0% from RMB48.9 million in 2023 to RMB59.2
million in 2024, primarily due to (i) an increase in our revenue from RMB336.8 million in 2023
to RMB442.2 million in 2024, and (ii) an increase of our other income and gains from
RMB23.1 million in 2023 to RMB59.1 million in 2024, partially offset by: (i) an increase of
our cost of sales from RMB156.6 million in 2023 to RMB192.5 million in 2024, (ii) an increase
of our administrative expenses from RMB43.8 million in 2023 to RMB73.4 million in 2024,
and (iii) an increase of fair value losses on financial liabilities from RMB45.4 million in 2023
to RMB83.4 million in 2024. Our net profit margin decreased from 14.5% in 2023 to 13.4%
in 2024.
Our profit for the year decreased by 9.4% from RMB54.0 million in 2022 to RMB48.9
million in 2023, primarily due to (i) decrease in our revenue from RMB350.8 million in 2022
to RMB336.8 million in 2023, and (ii) increase in our cost of sales from RMB149.8 million in
2022 to RMB156.6 million in 2023, partially offset by the decrease of fair value losses on
financial liabilities at FVTPL from RMB67.1 million in 2022 to RMB45.4 million in 2023. Our
net profit margin decreased from 15.4% in 2022 to 14.5% in 2023.
Our adjusted net profit (non-IFRS measure) decreased by 21.8% from RMB122.9 million
in 2022 to RMB96.2 million in 2023, primarily due to (i) a decrease in our revenue from
RMB350.8 million in 2022 to RMB336.8 million in 2023; (ii) an increase in our cost of sales
from RMB149.8 million in 2022 to RMB156.6 million in 2023; and (iii) an increase in selling
and marketing expenses from RMB22.2 million in 2022 to RMB28.1 million in 2023.
SUMMARY
–1 4–


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Summary of Consolidated Statements of Financial Position
The following table sets forth details of our summary consolidated statements of financial
position as of the dates indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Total non-current assets 504,095 536,936 478,828
Total current assets 735,057 771,810 693,800
Total current liabilities 505,816 501,519 172,043
Net current assets 229,241 270,291 521,757
Total assets less current liabilities 733,336 807,227 1,000,585
Total non-current liabilities 530,869 553,343 681,835
Net assets 202,467 253,884 318,750
Our net assets increased from RMB253.9 million as of December 31, 2023 to RMB318.8
million as of December 31, 2024, primarily due to our total comprehensive income for the year
of RMB60.4 million in 2024.
Our net assets increased from RMB202.5 million as of December 31, 2022 to RMB253.9
million as of December 31, 2023, primarily due to our total comprehensive income for the year
of RMB49.5 million in 2023.
SUMMARY
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--- page 25 ---
The following table sets forth our current assets and liabilities as of the dates indicated.
As of December 31,
As of
April 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
CURRENT ASSETS
Inventories 79,305 73,005 84,777 94,844
Amounts due from related
parties 2,955 1,659 – –
Trade and notes receivables 19,800 36,418 57,720 30,280
Prepayments, other
receivables and other assets 7,175 11,621 16,098 18,982
Financial assets
at FVTPL 332,126 110,082 – –
Restricted cash 430 435 439 440
Time deposits – current 10,000 – 143,032 144,457
Prepaid income tax 4,218 7,578 4,551 4,653
Cash and cash equivalents 279,048 531,012 387,183 472,529
Total current assets 735,057 771,810 693,800 766,185
CURRENT LIABILITIES
Trade payables 12,711 6,731 23,469 22,508
Convertible bonds 321,000 321,000 – –
Other payables and accruals 100,391 120,534 53,460 34,639
Interest-bearing bank
borrowings – – 40,000 40,090
Contract liabilities 59,099 49,435 37,444 73,514
Lease liabilities 2,474 1,846 379 393
Amounts due to related
parties 2,333 1,855 1,811 –
Deferred government grants – – 6,438 6,421
Income tax payable 7,808 118 9,042 161
Total current liabilities 505,816 501,519 172,043 177,726
NET CURRENT ASSETS 229,241 270,291 521,757 588,459
SUMMARY
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Our net current assets increased from RMB521.8 million as of December 31, 2024 to
RMB588.5 million as of April 30, 2025, primarily due to an increase in cash and cash
equivalents of RMB85.3 million and a decrease in trade payables and other payables and
accruals of RMB19.8 million, and partially offset by an increase in contract liabilities of
RMB36.1 million.
Our net current assets increased from RMB270.3 million as of December 31, 2023 to
RMB521.8 million as of December 31, 2024, primarily due to (i) a decrease in convertible
bonds of RMB321.0 million and (ii) a decrease in other payables of RMB67.1 million.
Our net current assets increased from RMB229.2 million as of December 31, 2022 to
RMB270.3 million as of December 31, 2023, primarily due to an increase of cash and cash
equivalents of RMB252.0 million and in trade and notes receivables of RMB16.6 million, and
a decrease in contract liabilities of RMB9.7 million, partially offset by a decrease of
RMB222.0 million of financial assets at FVTPL and an increase of RMB20.1 million of other
payables and accruals.
Summary of Consolidated Statements of Cash Flows
The following table sets forth a summary of our cash flows for the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Profit before tax 67,556 61,978 78,449
Operating cash flows before movements
in working capital 146,196 124,392 177,150
Cash generated from operations 145,848 105,535 114,912
Net cash generated from operating
activities 134,798 88,327 120,507
Net cash (used in)/from investing
activities (350,932) 182,426 5,153
Net cash used in financing activities (60,085) (23,726) (276,471)
Net (decrease)/increase in cash and
cash equivalents (276,219) 247,027 (150,811)
Cash and cash equivalents at
beginning of the year 538,264 279,048 531,012
Cash and cash equivalents at end of
the year 279,048 531,012 387,183
SUMMARY
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We had net operating cash inflows of RMB134.8 million, RMB88.3 million, and
RMB120.5 million in 2022, 2023 and 2024, respectively. Our positive position of net operating
cash inflows during the Track Record Period was primarily due to our ability to generate profit
for the years during the Track Record Period.
KEY FINANCIAL RATIOS
The following table sets forth key financial ratios for the years or as of the dates
indicated.
As of/for the year ended December 31,
2022 2023 2024
Gross profit margin (1) 57.3% 53.5% 56.5%
Net profit margin (2) 15.4% 14.5% 13.4%
Return on assets (3) 4.5 3.8 4.8
Return on equity (4) 35.1 21.4 20.7
Current ratio (5) 1.5 1.5 4.0
(1) Gross profit margin equals our gross profit divided by revenue for the same year.
(2) Net profit margin equals our profit for the year divided by revenue for the same year.
(3) Return on assets equals profit (on an actual basis for 2022, 2023 and 2024) for the year divided by the
average of the opening and ending balances of total assets for the same year and multiplied by 100%.
(4) Return on equity equals profit (on an actual basis for 2022, 2023 and 2024) for the year divided by the
average of the opening and ending balances of total equity for the same year and multiplied by 100%.
(5) Current ratio equals our current assets divided by current liabilities as of the end of the year.
For further details, please see “Financial Information—Key Financial Ratios.”
OUR CONTROLLING SHAREHOLDERS
Since the establishment of our Company, Dr. Xu and Ms. Li have been acting in concert
with each other in respect of all major affairs concerning our Group. Dr. Xu and Ms. Li have
agreed to, provided that they remain key members in our Group or they remain interested in
the share capital of our Company, continue to act in concert with each other after the Listing.
As of the Latest Practicable Date, Dr. Xu and Ms. Li collectively control the voting rights of
approximately 76.42% of the total issued share capital of the Company, held directly by Ms.
Li and indirectly by their respective controlled entities.
Immediately following the completion of the Global Offering, Dr. Xu and Ms. Li will
control the voting rights of approximately 67.37% of the total issued share capital of our
Company, held (a) directly by Ms. Li as to 7.24% of the total issued share capital of our
Company; and (b) indirectly as to 60.12% by their respective controlled entities in aggregate,
SUMMARY
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namely, Qikang International, Healthy Angel, Hangzhou Haiding and the Employee Incentive
Platforms. Accordingly, upon the Listing, Dr. Xu and Ms. Li, together with Qikang
International, Healthy Angel, Hangzhou Haiding, Mr. Li Congyan (Ms. Li’s spouse) and the
Employee Incentive Platforms, are a group of Controlling Shareholders of our Company. See
“Relationship with Our Controlling Shareholders” for more information.
PRE-IPO INVESTMENTS
In 2021, we conducted the Pre-IPO Investments with the Pre-IPO Investors, including
among others, Puhua Xiaxing, Haibang Taida, Haibang Boyuan, Hangzhou Heda Xinyiyao,
Shenzhen Minhe Investment, Nanjing Outao, and Hainan Jingsheng Yiqi. For further details of
the identity and background of the Pre-IPO Investors and the principal terms of the Pre-IPO
Investments, see “History, Development and Corporate Structure—Pre-IPO Investments.”
LISTING EXPENSES
The total listing expenses payable by our Company are estimated to be approximately
HK$84.4 million, representing 17.0% of the total gross proceeds from the Global Offering,
based on an Offer Price of HK$29.50 (being the mid-point of our Offer Price range of
HK$28.40 to HK$30.60 per Offer Share). These listing expenses mainly comprise legal and
other professional fees paid and payable to the professional parties, commissions payable to the
Underwriters, and printing and other expenses for their services rendered in relation to the
Listing and the Global Offering. Approximately HK$49.4 million of the total listing expenses
is expected to be charged to our consolidated statements of profit or loss, and approximately
HK$35.0 million is expected to be deducted from equity (relating to listing expenses directly
attributable to the issue of shares).
The following table sets forth a breakdown of the listing expenses for the Global Offering
based on the mid-point Offer Price of HK$29.50 per Offer Share.
Listing Expenses
Based on an
Offer Price of
HK$29.50 per
Offer Share
(HK$’000)
Non-underwriting related expenses
Legal and audit expenses 34,979
Other expenses 24,580
Underwriting related expenses 24,822
Total 84,381
For more details, see “Financial Information—Listing Expenses” in this Prospectus.
SUMMARY
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OFFERING STATISTICS
The Global Offering consists of (subject to reallocation):
(i) The Hong Kong Public Offering of initially 1,680,000 Offer Shares (subject to
reallocation) in Hong Kong; and
(ii) the International Offering of initially 15,120,000 Offer Shares (subject to
reallocation) outside the United States in offshore transactions in reliance on
Regulation S.
Based on an Offering
Price of HK$28.40
per Offer Share
Based on an Offering
Price of HK$30.60
per Offer Share
Market Capitalization of our
Shares
(1) HK$4,027.1 million HK$4,339.1 million
Unaudited pro forma adjusted net
tangible asset per Share (2) HK$9.35 HK$9.59
(1) The calculation of market capitalization is based on 141,800,000 Shares expected to be in issue
immediately upon completion of the Global Offering.
(2) The unaudited pro forma net tangible assets per Shares is arrived at after adjusting for the estimated net
proceeds from the Global Offering and on the basis that 141,800,000 Shares were in issue assuming that
the Global Offering has been completed on December 31, 2024 but takes no account of any Shares which
may be issued or repurchased by the Company.
* No other adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets
to reflect any trading results or open transactions of the Group entered into subsequent to December 31,
2024.
FUTURE PLANS AND USE OF PROCEEDS
We estimate that the net proceeds of the Global Offering, after deducting the estimated
underwriting commissions and other fees and expenses payable by us in connection with the
Global Offering, will be approximately HK$411.2 million, assuming an Offer Price of
HK$29.50 per H Share. We intend to apply such net proceeds from the Global Offering for the
following purposes: (1) approximately 76.4% of the net proceeds, or HK$314.0 million, will
be used to further expand our service capability and capacity by constructing our facilities,
which includes Rocklin Site, Qiantang Site and Hangzhou Biopharma Town Site, in the United
States and China; (2) approximately 4.1% of the net proceeds, or HK$16.9 million, will be used
for our production capacity expansion in China. In addition to Qiantang Site and Hangzhou
Biopharma Town Site, we plan to construct or acquire a new production facility in China in the
next two or three years primarily intended for GLP-1 production; (3) approximately 9.5% of
the net proceeds, or HK$39.2 million, will be used to establish sales and after-sales service
SUMMARY
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presence in more regions in Europe to enrich our operations overseas and enlarge our customer
pool; and (4) approximately 10.0% of the net proceeds, or HK$41.1 million, will be used for
our working capital and other general corporate purposes.
See “Future Plans and Use of Proceeds” for further information relating to our future
plans and use of proceeds from the Global Offering, including the adjustment on the allocation
of the proceeds in the event that the Offer Price is fixed at a higher or lower level compared
to the midpoint of the estimated Offer Price range.
DIVIDEND
During the Track Record Period, we did not pay any dividends, nor did we declare any
dividends. As of the Latest Practicable Date, we did not have a formal dividend policy or a
fixed dividend payout ratio. Any declaration and payment as well as the amount of dividends
will be subject to our Articles of Association and applicable laws and regulations. The
declaration and payment of any dividends in the future will be determined by our shareholders’
meeting, in its discretion, and will depend on a number of factors, including but not limited to
our earnings, capital requirements, overall financial condition and contractual restrictions. We
may by ordinary resolution resolve to declare dividends in any currency and authorize payment
of the dividends out of the funds of our Company lawfully available. There is no assurance that
dividends of any amount will be declared to be distributed in any year. We will continue to
re-evaluate our dividend policy in light of our financial condition and the prevailing economic
environment.
PRC laws require that dividends be paid only out of net profits calculated according to
PRC accounting principles, which differ in many aspects from generally accepted accounting
principles in other jurisdictions, including IFRS. PRC laws also require foreign invested
enterprises, such as some of our subsidiaries in China, to set aside part of their net profit as
statutory reserves, which are not available for distribution as cash dividends. Distributions
from our subsidiaries may also be restricted if they incur debt or losses, or in accordance with
any restrictive covenants in bank credit facilities or other agreements that we or our
subsidiaries may enter into in the future.
For more details, see “Financial Information—Dividend” in this Prospectus.
RECENT DEVELOPMENT
We recorded revenue growth in the first four months ended April 30, 2025, compared to
the same period in 2024. In January 2025, we received ISO 22716:2007 Cosmetics Good
Manufacturing Practices Certification. In March 2025, we obtained the marketing approval for
Goserelin Acetate APIs in China. The utilization rates for our production lines stayed at a high
level in the first five months of 2025. We define key production lines as (i) synthesis
production lines with reactors at high capacities; and (ii) purification lines with large
diameters. The consistently high utilization rates across our production lines during the Track
Record Period and up to the Latest Practicable Date reflect underlying demand and our
SUMMARY
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operational efficiency in serving diverse market segments. The successful marketing approval
for Goserelin Acetate APIs in China further expands our product portfolio and market reach,
creating new revenue opportunities. Our ISO 22716:2007 certification qualifies us to enter the
cosmetics manufacturing sector, positioning us to capitalize on the growing demand for
cosmetic peptides and related products. With our enhanced manufacturing credentials,
expanded product approvals, and proven operational performance, we are well-positioned to
pursue opportunities across multiple sectors while maintaining our core business momentum.
In addition, as we fulfilled all the Conditions attaching to the Bond-related Grant in June 2024,
the remaining Bond-related Grant is recognized as other income in 2024 and is one-off in
nature, we expect a decrease in other income in 2025. For details, please see “Financial
Information—Other Payables and Accruals” and Note 26 and Note 31 of the Accountants’
Report in Appendix I to this Prospectus.
On September 9, 2024, the U.S. House of Representatives passed the BIOSECURE Act.
The BIOSECURE Act prohibits entities that receive federal funds from using biotechnology
that is from a company associated with a foreign adversary. Specifically, federal agencies and
recipients of federal funds (e.g., grantees) may not procure or use any biotechnology equipment
or service that is from a biotechnology company of concern and may not contract with any
entities that do so. A biotechnology company of concern is an entity that is under the control
of a foreign adversary and that poses a risk to national security based on its research or
multiomic data collection (e.g., collection of genomic information). As of the Latest
Practicable Date, we believe that the risk of our operations being affected by the proposed
BIOSECURE Act is low because we have not been named as a “biotechnology companies of
concern” as defined in the proposed BIOSECURE Act. For details, please see “Regulatory
Overview—Other Foreign Regulations—Laws and Regulations concerning International
Trade—Proposed BIOSECURE Act.”
The U.S. government has announced substantial new tariffs affecting a wide range of
products and jurisdictions and has indicated an intention to continue developing new trade
policies, including with respect to the pharmaceutical industry. In February 2025, the United
States government imposed a 10% tariff on imports from China. Such tariff was further
increased to 20% in March 2025. Between February 2025 and April 2025, the U.S.
administration has cumulatively imposed additional 145% tariffs (on top of other tariffs
imposed before February 2025) on Chinese imports. Other countries, including China,
announced retaliatory actions or plans for retaliatory actions. For example, on April 11, 2025,
China responded by increasing tariffs on U.S. goods to 125%. On May 12, 2025, China and the
United States jointly announced a 90-day suspension of certain of their trade restrictions, so
that the United States will impose tariffs of 30% on most Chinese imports during this period,
while China will impose tariffs of 10% on U.S. imports. The two sides agreed to continue
negotiations during this period. The additional tariffs imposed by the U.S. government on
certain products imported from China may impact our cost structure, increase our operating
costs and create disruptions in our supply chain.
SUMMARY
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Impact of tariffs
As of the Latest Practicable Date, the recently imposed tariffs have not caused an
immediate material adverse impact on our business operations and financial performance. As
of the Latest Practicable Date, we have not experienced any attempts by our U.S. customers to
renegotiate pricing or cancel orders in response to the tariffs. On the contrary, our total revenue
from U.S. customers increased for the four months ended April 30, 2025 as compared to the
same period in 2024.
Most of our products exported to the U.S. are subject to tariffs. Substantially all of these
tariffs are borne by our customers. In a typical order, our customer is responsible for import
clearance and tariff payments.
Our U.S. revenue primarily consists of APIs used in clinical development, rather than for
commercialized products. We believe certain of our products are subject to favorable tariff
treatment under the Harmonized Tariff Schedule of the United States (“HTS”). The HTS works
by assigning a standardized classification code to every imported product, which determines
the applicable import duty rate, trade agreements, trade quota or other special requirements for
goods entering the U.S. Certain classifications enjoy more favorable tariff rates as compared
to the others, and certain of our customers may be able to leverage such classifications for more
favorable tariffs on certain of our products exported to the U.S.. We cannot assure you,
however, that our customers are able to avail themselves of the full benefits under the HTS, if
at all, or that the classification of our products under the HTS for favorable tariffs treatment
would not be challenged by the U.S. custom.
As the tariffs are borne by our U.S. customers, we do not believe the new tariff policy has
a direct or immediate material impact on our business operations or financial performance. We
believe impact from the tariffs, if any, is only temporary and not long-term. Given the ongoing
uncertainty surrounding tariff policies, it is common for customers to exercise greater caution
when placing orders. Instead of placing large orders to build inventory, some customers are
increasingly adopting a just-in-time ordering approach. This shift has led to a temporary
decrease in our order backlog. As of April 30, 2025, the amount of backlogs (representing
confirmed purchase orders with specified amount that had not been fulfilled or delivered) was
RMB349.0 million, consisting of RMB34.3 million and RMB314.7 million from CRO and
CDMO services, respectively. This represents a decrease from our backlogs (representing
confirmed purchase orders with specified amount that had not been fulfilled or delivered) of
RMB408.5 million as of December 31, 2024, consisting of RMB37.6 million and RMB370.9
million from CRO and CDMO services, respectively.
Customer behavior change is industry wide and not specific to our company. We also
believe the change is only temporary for the following reasons:
 Tariffs are typically assessed at the time of delivery, which often occurs several
weeks after an order is placed. Given the current tariffs pause is only for 90 days,
changes in customer behavior are primarily due to concerns that tariff rates
SUMMARY
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applicable at the time of delivery may differ materially from those at the time of
order placement. This is not driven by a decline in underlying demand. Based on
daily communications with customers and to the best of our knowledge, we are not
aware of the customers’ shifting orders to competitors during this period. Rather,
customers have indicated they are waiting for greater clarity and stability in tariff
policy. We believe this can be effectively resolved if the tariffs are stabilized at a
level not worse than the current situation;
 The backlog from the U.S. customers is primarily driven by the clinical development
stages and evolving clinical needs of our clients, and as such, it has historically
fluctuated over time. Revenue is recognized only after considering various factors,
including delivery schedules and fulfillment conditions. Moreover, numerous other
variables contribute to our revenue beyond the recorded backlog. Accordingly,
short-term changes in backlog levels do not necessarily correspond to changes in
revenue;
 We believe demand for our services persists, and as the tariffs are also applicable to
our competitors, they have only narrowed the price differences between us and our
main competitors. Although additional tariffs may apply to our services, we remain
confident in our ability to compete effectively in the global market, leveraging our
competitive pricing and operational efficiency. During the Track Record Period, we
had a higher profit margin as compared to our competitors. This margin provides us
with room to adjust our pricing strategy;
 Many of our U.S. customers are multinational corporations with global demand that
extends beyond the U.S. market, and have imposed strategic planning for logistic
arrangements and inventory management to enhance tax efficiency;
 We also benefit from a high degree of customer stickiness. Customers’ drug
development processes are closely tied to the APIs supplied by us. Switching to an
alternative supplier may entail significant cost and regulatory implications which
may be burdensome, as it may require changing the API, amending regulatory
filings, and potentially conducting additional clinical trials; and
 Additionally, our reputation for delivering high-quality APIs and services has
positioned it to attract new customers while retaining existing ones.
Mitigating measures
We also plan to take certain measures to tackle with the potential impact of future U.S.
tariffs:
 Our facility in the U.S., which provides GMP production services for peptide APIs,
may serve the needs of the U.S. customers while reducing the impact of the tariffs
between China and the United States. We plan to complete the construction of our
SUMMARY
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new production lines at the Rocklin site in California (including installation of
equipment) during the second half of 2025, which is expected to increase our annual
production capacity by approximately 100 to 300 kilograms. Furthermore, we intend
to utilize proceeds from the Global Offering to enhance our production capabilities
and to expand our R&D team at the Rocklin site.
 We will continue to support our U.S. customers’ determination of more favorable
tariffs for the APIs supplied by us.
 We will coordinate with our U.S. customers, many of whom are multinational
corporations with global needs, to fulfill more global orders in more locations in
addition to the U.S..
Based on the aforementioned, our Directors believe that the recently imposed tariffs have
not caused material adverse impact on our business operations and financial performance.
However, given the ongoing discussions between the United States and its trade partners,
including China, there remains significant uncertainty about whether the United States may
further change the scope, level and interpretation of tariffs it imposes. Revenue contribution
from the U.S. accounted for 37.7%, 34.1%, 55.0% for the year ended December 31, 2022, 2023
and 2024, respectively. As the revenue contribution from the U.S. accounted for a significant
portion of our total revenue and may continue to increase, if the United States imposes a higher
tariff this may have a material negative impact on our business operations and financial
performance. For details, please refer to “Risk Factors–Risks Relating to Doing Business in
Jurisdictions Where We Operate–Changes in geopolitical relationships, international trade
policies and other tensions may impact our business operations” and “Future Plans and Use of
Proceeds”.
No Material Adverse Changes
Our Directors confirm that up to the date of this Prospectus, there has been no material
adverse changes in our financial, operational, or trading position, indebtedness, mortgage,
contingent liabilities, guarantees or prospects since December 31, 2024, being the end of the
period reported on the Accountants’ Report included in Appendix I; and there has been no
event since December 31, 2024 and up to the date of this Prospectus which would materially
affect the information shown in the Accountants’ Report set out in Appendix I to this
Prospectus. However, our financial performance may be affected by changes in the fair value
of redemption liabilities on equity shares until their conversion into equity upon Listing.
SUMMARY
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In this Prospectus, unless the context otherwise requires, the following terms shall
have the meanings set out below. Certain other terms are explained in the section headed
“Glossary of Technical Terms” in this Prospectus.
“Accountants’ Report” the accountants’ report prepared by Ernst & Y oung,
details of which are set out in Appendix I
“affiliate(s)” with respect to any specified person, any other person,
directly or indirectly, controlling or controlled by or
under direct or indirect common control with such
specified person
“AFRC” the Accounting and Financial Reporting Council of Hong
Kong
“Articles of Association”
or “Articles”
the articles of association of our Company, as amended,
which shall become effective on the Listing Date, a
summary of which is set out in Appendix III
“associate(s)” has the meaning ascribed to it under the Listing Rules
“Audit Committee” the audit committee of the Board
“Board” or “our Board” the board of Directors
“Business Day” a day on which banks in Hong Kong are generally open
for normal business to the public and which is not a
Saturday, Sunday or public holiday in Hong Kong
“Capital Market Intermediaries”
or “capital market
intermediary(ies)” or “CMI(s)”
the capital market intermediaries participating in the
Global Offering and has the meaning ascribed thereto
under the Listing Rules
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“Chief Executive Officer” the chief executive officer of our Company
“China”, “Mainland China”
or “PRC”
the People’s Republic of China which, for the purpose of
this Prospectus and for geographical reference only,
excluding Hong Kong Special Administrative Region of
the PRC, Macao Special Administrative Region of the
PRC, and Taiwan Region
DEFINITIONS
–2 6–


--- page 36 ---
“Chinese Peptide” Chinese Peptide Company* (ʮ̡),
formerly known as Chinese Peptide Company* (ψʕ
ʮ̡), a limited liability company
incorporated under the laws of the PRC on August 27,
2001 and a wholly-owned subsidiary of the Company
“close associate(s)” has the meaning ascribed thereto under the Listing Rules
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong) as amended, supplemented or otherwise modified
from time to time
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong) as amended, supplemented or otherwise
modified from time to time
“Company”, “our Company”,
or “the Company”
Medtide Inc. ( इᅃᔼᖹ(एϪ)ʮ̡), a limited
liability company incorporated in the PRC on June 11,
2020 and converted into a joint stock company with
limited liability on February 10, 2023, formerly known as
Taide Pharmaceutical (Zhejiang) Co., Ltd.* ( इᅃᔼᖹ(ए
Ϫ)ʮ̡)
“Compliance Adviser” Altus Capital Limited
“connected person(s)” has the meaning ascribed thereto under the Listing Rules
“connected transaction(s)” has the meaning ascribed thereto under the Listing Rules
“Controlling Shareholder(s)” has the meaning ascribed thereto under the Listing Rules
and unless the context otherwise requires, refers to Dr.
Xu, Ms. Li, Healthy Angel, Qikang International, Mr. Li
Congyan, Hangzhou Haiding, Hangzhou Xiyong and
Hangzhou Y uanxi. See section headed “Relationship with
Our Controlling Shareholders” in this Prospectus
“Corporate Governance Code” the Corporate Governance Code set out in Appendix C1
to the Listing Rules
“CSRC” the China Securities Regulatory Commission ( ʕ਷ᗇՎ
ึ)
“Director(s)” or “our Director(s)” the director(s) of our Company
DEFINITIONS
–2 7–


--- page 37 ---
“Dr. Xu” Dr. Xu Qi (೘), our chairwoman of the Board, an
executive Director, Chief Executive Officer and one of
our Controlling Shareholders
“EIT” the PRC enterprise income tax
“EIT Law” the Enterprise Income Tax Law of the PRC ( ʕശɛ͏
), as amended, supplemented or
otherwise modified from time to time
“EMA” European Medicines Agency
“Employee Incentive Platforms” the pre-IPO employee incentive platforms of our Group,
namely Hangzhou Xiyong and Hangzhou Y uanxi
“Exchange Participant” a person (a) who, in accordance with the Rules of the
Hong Kong Stock Exchange, may trade on or through the
Hong Kong Stock Exchange; and (b) whose name is
entered in a list, register or roll kept by the Hong Kong
Stock Exchange as a person who may trade on or through
the Hong Kong Stock Exchange
“Extreme Conditions” extreme conditions caused by a super typhoon as
announced by the government of Hong Kong
“FDA” the Food and Drug Administration of the U.S.
“FINI” the “Fast Interface for New Issuance” platform operated
by HKSCC
“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., a
market research and consulting company and
Independent Third Party, which prepared the Frost &
Sullivan Report
“Frost & Sullivan Report” an independent market research report commissioned by
us and prepared by Frost & Sullivan for the purpose of
this Prospectus
“Gaodi Investment” Gaodi Investment Development (Shanghai) Co., Ltd.*
(࢝(ɪऎ)ʮ̡), a limited liability
company incorporated under the laws of the PRC on
January 29, 2014 and a wholly-owned subsidiary of our
Company
DEFINITIONS
–2 8–


--- page 38 ---
“General Rules of HKSCC” the General Rules of HKSCC as may be amended or
modified from time to time and where the context so
permits, shall include the HKSCC Operational
Procedures
“Global Offering” the Hong Kong Public Offering and the International
Offering
“Group”, “our Group”, “our”,
“we” or “us”
our Company and its subsidiaries, or any one of them as
the context may require, and where the context requires,
the businesses operated by our Company and/or its
subsidiaries and their predecessors (if any)
“Guide for New Listing
Applicants”
the Guide for New Listing Applicants issued by the Hong
Kong Stock Exchange effective from January 1, 2024, as
amended, supplemented or otherwise modified from time
to time
“H Share(s)” overseas listed foreign share(s) in the share capital of our
Company with a nominal value of RMB1.00 each, which
is/are to be subscribed for and traded in HK dollars and
to be listed on the Hong Kong Stock Exchange
“H Share Registrar” Computershare Hong Kong Investor Services Limited
”Hangzhou Biopharma Town
Site”
the Group’s new production facility under construction
located in Biopharma Town ( ᔼᖹಥʃᕄ), Hangzhou,
Zhejiang, China
“Hangzhou Haiding” Hangzhou Haiding Technology Co., Ltd.* (Ҧ
ʮ̡) (previously known as Shaoxing Haiding
Technology Co., Ltd.* (ʮ̡)), which
is owned as to 99% by Ms. Li, our executive Director,
and 1% by her spouse, Mr. Li Congyan (֧and is
one of our Controlling Shareholders
DEFINITIONS
–2 9–


--- page 39 ---
“Hangzhou Xiyong” Hangzhou Xiyong Enterprise Management Consulting
Partnership (Limited Partnership)* (ψဢ͑Άุ၍ଣፔ
༔ΥྫΆุ(Υྫ)), formerly known as Liaocheng
Xihe Enterprise Consulting Partnership (Limited
Partnership)* (ဢձΆุ၍ଣፔ༔ΥྫΆุ (Υ
ྫ)), which is a limited partnership established in the
PRC on December 3, 2020 and a pre-IPO employee
incentive platform of our Group, of which Ms. Li is the
sole general partner and is one of our Controlling
Shareholders
“Hangzhou Y uanxi” Hangzhou Y uanxi Enterprise Management Consulting
Partnership (Limited Partnership)* (ψʩဢΆุ၍ଣፔ
༔ΥྫΆุ(Υྫ)), formerly known as Liaocheng
Y uande Enterprise Consulting Partnership (Limited
Partnership)* (ʩᅃΆุ၍ଣፔ༔ΥྫΆุ (Υ
ྫ)), which is a limited partnership established in the
PRC on December 3, 2020 and a pre-IPO employee
incentive platform of our Group, of which Ms. Li is the
sole general partner and is one of our Controlling
Shareholders
“Healthy Angel” Healthy Angel International Limited, a company
incorporated in the Marshall Islands on March 13, 2014
with limited liability, which is wholly-owned by Dr. Xu,
and is one of our Controlling Shareholders
“HK$” or “Hong Kong dollars”
or “HK dollars” and “HK
cents”
Hong Kong dollars, the lawful currency of Hong Kong
“HKSCC” Hong Kong Securities Clearing Company Limited, a
wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“HKSCC EIPO” the application for Hong Kong Offer Shares to be issued
in the name of HKSCC Nominees and deposited directly
into CCASS to be credited to your designated HKSCC
Participant’s stock account through causing HKSCC
Nominees to apply on your behalf, including by
instructing your broker or custodian who is a HKSCC
Participant to give electronic application instructions via
HKSCC’s FINI system to apply for Hong Kong Offer
Shares on your behalf
DEFINITIONS
–3 0–


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“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary
of HKSCC
“HKSCC Operational
Procedures”
the operational procedures of HKSCC, containing the
practices, procedures and administrative or other
requirements relating to HKSCC’s services and the
operations and functions of CCASS, FINI or any other
platform, facility or system established, operated and/or
otherwise provided by or through HKSCC, as from time
to time in force
“HKSCC Participant” a person admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the
PRC
“Hong Kong Offer Shares” the 1,680,000 H Shares offered by us for subscription at
the Offer Price pursuant to the Hong Kong Public
Offering (subject to adjustments as described in the
section headed “Structure of the Global Offering”)
“Hong Kong Public Offering” the offering of the Hong Kong Offer Shares for
subscription by the public in Hong Kong (subject to
adjustments as described in the section headed “Structure
of the Global Offering”) at the Offer Price (plus
brokerage, SFC transaction levy, Hong Kong Stock
Exchange trading fee and AFRC transaction levy), on and
subject to the terms and conditions described in the
section headed “Structure of the Global Offering”
“Hong Kong Stock Exchange”
or “Stock Exchange”
The Stock Exchange of Hong Kong Limited, a wholly
owned subsidiary of Hong Kong Exchange and Clearing
Limited
“Hong Kong Takeovers Code”
or “Takeovers Code”
the Codes on Takeovers and Mergers and Share Buy-
backs issued by the SFC, as amended, supplemented or
otherwise modified from time to time
“Hong Kong Underwriters” the underwriters listed in the paragraph headed
“Underwriting—Hong Kong Underwriters”, being the
underwriters of the Hong Kong Public Offering
DEFINITIONS
–3 1–


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“Hong Kong Underwriting
Agreement”
the underwriting agreement dated June 19, 2025, relating
to the Hong Kong Public Offering entered into by, among
other parties, our Company, Dr. Xu, Healthy Angel,
Qikang International, Hangzhou Haiding, the Joint
Sponsors, the Overall Coordinators and the Hong Kong
Underwriters, as further described in the section headed
“Underwriting—Hong Kong Underwriting
Arrangements—Hong Kong Public Offering—Hong
Kong Underwriting Agreement”
“Independent Third Party(ies)” any entity(ies) or person(s) who, to the best knowledge of
our Directors having made due and careful enquiries, is
not a connected person of our Company within the
meaning of the Listing Rules
“Inflation Reduction Act” a United States federal law which aims to reduce the
federal government budget deficit, lower prescription
drug prices, and invest in domestic energy production
while promoting clean energy
“International Offer Shares” the 15,120,000 H Shares offered by our Company
pursuant to the International Offering (subject to
adjustment as described in the section headed “Structure
of the Global Offering”)
“International Offering” the offering of the International Offer Shares at the Offer
Price outside the United States in offshore transactions in
reliance on Regulation S, as further described in the
section headed “Structure of the Global Offering”
“International Underwriters” the group of international underwriters who are expected
to enter into the International Underwriting Agreement to
underwrite the International Offering
“International Underwriting
Agreement”
the underwriting agreement relating to the International
Offering expected to be entered into on or about the Price
Determination Date by, among other parties, our
Company, Dr. Xu, Healthy Angel, Qikang International,
Hangzhou Haiding, the Overall Coordinators and the
International Underwriters, as further described in the
section headed “Underwriting—International Offering”
DEFINITIONS
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“Joint Bookrunners” the joint bookrunners of the Listing as named in the
section headed “Directors, Supervisors and Parties
Involved in the Global Offering”
“Joint Global Coordinators” the joint global coordinators of the Listing as named in
the section headed “Directors, Supervisors and Parties
Involved in the Global Offering”
“Joint Sponsors” the joint sponsors of the Listing as named in the section
headed “Directors, Supervisors and Parties Involved in
the Global Offering”
“Latest Practicable Date” June 16, 2025, being the latest practicable date for the
purpose of ascertaining certain information contained in
this Prospectus prior to its publication
“Listing” the listing of our H Shares on the Main Board
“Listing Committee” the listing committee of the Hong Kong Stock Exchange
“Listing Date” the date, expected to be on or about June 30, 2025, on
which the H Shares are to be listed and on which dealings
in the Shares are to be first permitted to take place on the
Hong Kong Stock Exchange
“Listing Rules” the Rules Governing the Listing of Securities on The
Stock Exchange of Hong Kong Limited, as amended,
supplemented or otherwise modified from time to time
“M&A Rules” the Regulations on Mergers and Acquisitions of Domestic
Enterprises by Foreign Investors (Իᒅ
)
“Main Board” the stock exchange (excluding the option market)
operated by the Hong Kong Stock Exchange which is
independent from and operated in parallel with the GEM
of the Hong Kong Stock Exchange
“MFDS” the Korean Ministry of Food and Drug Safety
“MOFCOM” or “Ministry of
Commerce”
the Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷
ਠਕ௅) (formerly known as the Ministry of Foreign
Trade and Economic Cooperation of the PRC ( ʕശɛ͏
௅))
DEFINITIONS
–3 3–


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“Ms. Li” Ms. Li Xiangli ( ҽಱ஁), our executive Director and one
of our Controlling Shareholders
“NDRC” the National Development and Reform Commission ( ʕ
ึ)
“NMPA” the National Medical Products Administration of China
(္ຖ၍ଣ҅) or, where the context so requires,
its predecessor, the China Food and Drug Administration
(္ຖ၍ଣᐼ҅), or CFDA
“Nomination Committee” the nomination committee of the Board
“Offer Price” the final offer price per Offer Share (exclusive of
brokerage fee of 1%, SFC transaction levy of 0.0027%,
Hong Kong Stock Exchange trading fee of 0.00565% and
AFRC transaction levy of 0.00015%) at which the Offer
Shares are to be subscribed for and issued pursuant to the
Global Offering as described in the section headed
“Structure of the Global Offering”
“Offer Share(s)” the Hong Kong Offer Shares and the International Offer
Shares
“Overall Coordinators” the overall coordinators as named in the section headed
“Directors, Supervisors and Parties Involved in the
Global Offering”
“PBOC” the People’s Bank of China ( ʕ਷ɛ͏ვБ), the central
bank of the PRC
“PRC Company Law” Company Law of the People’s Republic of China ( ʕശɛ
ج)
PRC GAAP” generally accepted accounting principles in the PRC
“PRC Legal Adviser” Grandall Law Firm (Hangzhou), our legal adviser on
PRC laws in connection with the Global Offering
DEFINITIONS
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“Pre-IPO Employee Incentive
Scheme”
the pre-IPO employee incentive scheme of our Company
approved and adopted in December 2020 and amended in
November 2021 and November 2022, as amended from
time to time, a summary of the principal terms of which
is set forth in the section headed “Statutory and General
Information—Pre-IPO Employee Incentive Scheme” in
Appendix IV
“Pre-IPO Investment(s)” the investment(s) in our Group undertaken by the Pre-
IPO Investors, the details of which are set out in the
section headed “History, Development and Corporate
Structure” in this Prospectus
“Pre-IPO Investor(s)” the investor(s) making investments in our Group prior to
this initial public offering as set out in the section headed
“History, Development and Corporate Structure—Pre-
IPO Investments—Overview”
“Price Determination Agreement” the agreement to be entered into by the Overall
Coordinators (for themselves and on behalf of the Hong
Kong Underwriters) and our Company on the Price
Determination Date to record and fix the Offer Price
“Price Determination Date” the date, expected to be on or before Thursday, June 26,
2025 (Hong Kong time) on which the Offer Price is
determined, or such later time as our Company and the
Overall Coordinators (on behalf of the Underwriters) may
agree, but in any event not later than 12:00 noon on
Thursday, June 26, 2025
“Prospectus” this Prospectus being issued in connection with the Hong
Kong Public Offering
“Qiantang Site” the production facility situated in No. 69, Street 12 of
Qiantang District, Hangzhou, Zhejiang Province, China
“Qikang International” Health Angel International Limited (ʮ̡),
a limited company incorporated in Hong Kong on April 1,
2014, which is wholly-owned by Healthy Angel, and is
one of our Controlling Shareholders
“Regulation S” Regulation S under the U.S. Securities Act
“Remuneration Committee” the remuneration committee of the Board
DEFINITIONS
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“Renminbi” or “RMB” the lawful currency of the PRC
“Rocklin Site” the new production facility of our Group under
construction in Rocklin, California, United States
“SAFE” the State Administration of Foreign Exchange of the PRC
(̮ි၍ଣ҅)
“SAIC” the State Administration of Industry and Commerce of
the PRC (၍ଣᐼ҅),
which has now been merged into the SAMR
“SAMR” the State Administration for Market Regulation of the
PRC (̹ఙ္ຖ၍ଣᐼ҅)
“SA T” the State Taxation Administration of the PRC ( ʕശɛ͏
೼ਕᐼ҅)
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” or “Securities and Futures
Ordinance”
the Securities and Futures Ordinance, Chapter 571 of the
Laws of Hong Kong, as amended, supplemented or
otherwise modified from time to time
“Share(s)” ordinary share(s) in the capital of our Company with a
nominal value of RMB1.00 each, comprising Unlisted
Shares and H Shares
“Shareholder(s)” holder(s) of our Share(s)
“State Council” the State Council of the PRC ( ʕശɛ͏΍ձ਷਷ਕ৫)
“subsidiary(ies)” has the meaning ascribed to it in section 15 of the
Companies Ordinance
“substantial shareholder(s)” has the meaning ascribed to it under the Listing Rules
“Supervisor(s)” supervisor(s) of the Company
“Supervisory Committee” the committee of the Supervisors
“TGA” the Therapeutic Goods Administration of Australia
“Track Record Period” the years ended December 31, 2022, 2023 and 2024
DEFINITIONS
–3 6–


--- page 46 ---
“treasury shares” has the meaning ascribed to it under the Listing Rules
“U.S. Government” the federal government of the United States, including its
executive, legislative and judicial branches
“U.S. Securities Act” United States Securities Act of 1933, as amended,
supplemented or otherwise modified from time to time
“Underwriters” the Hong Kong Underwriters and the International
Underwriters
“Underwriting Agreements” the Hong Kong Underwriting Agreement and the
International Underwriting Agreement
“United States”, “USA” or
“U.S.”
the United States of America, its territories and
possessions, any State of the United States, and the
District of Columbia
“United States Economic
Sanctions”
economic, financial and trade restrictions imposed
against individuals, entities, and jurisdictions whose
actions contradict United States foreign policy or
national security goals
“Unlisted Share(s)” ordinary share(s) issued by our Company, with a nominal
value of RMB1.00 each, which is/are not listed on any
stock exchange
“US$” or “U.S. dollars” or
“USD”
United States dollars, the lawful currency of the United
States
“V A T” value-added tax
“White Form eIPO ” the application for Hong Kong Offer Shares to be issued
in the applicant’s own name, submitted online through
the designated website of the White Form eIPO Service
Provider, at www.eipo.com.hk
“White Form eIPO Service
Provider”
Computershare Hong Kong Investor Services Limited
DEFINITIONS
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“Xinbang” Guizhou Xinbang Pharmaceutical Co., Ltd. (ԞႡ
ʮ̡), which was incorporated in the PRC on
January 27, 1995 and converted into a joint-stock
company on February 2, 2002, the shares of which are
listed on the Shenzhen Stock Exchange (stock code:
002390)
“Y uanxi Pharmaceutical” Hangzhou Y uanxi Pharmaceutical Technology Co., Ltd.*
(ʮ̡), a limited liability
company incorporated under the laws of the PRC on
December 25, 2020 and a wholly-owned subsidiary of the
Company
“%” per cent
Certain amounts and percentage figures included in the Prospectus have been subject to
rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures preceding them.
For ease of reference, the names of Chinese laws and regulations, governmental
authorities, institutions, natural persons or other entities (including our subsidiary) have been
included in this Prospectus in both the Chinese and English languages and in the event of any
inconsistency, the Chinese versions shall prevail. English translations of company names and
other terms from the Chinese language are provided for identification purposes only.
* For identification purposes only
DEFINITIONS
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--- page 48 ---
Unless the context otherwise requires, explanations and definitions of certain
terms used in this Prospectus in connection with our Group and our business shall
have the meanings set out below. The terms and their meanings may not correspond to
standard industry meaning or usage of these terms.
“amino acid” organic molecules containing an amine and carboxylic acid
that are monomers of a peptide chain
“ANDA” abbreviated new drug application, a simplified submission
to the FDA requesting authorization to market a new
formulation of an existing drug or an investigational drug
similar to an already approved drug, for which both its
therapeutic indications and formulation were previously
approved by the FDA
“API” active pharmaceutical ingredients, any substance or
mixture of substances intended to be used in the
manufacture of a drug (medicinal) product in order to
furnish pharmacological activity or other direct effect in
the diagnosis, cure, mitigation, treatment, or prevention of
disease or to affect the structure or function of the body
“aptamer” single-stranded oligonucleotides that fold into specific
architectures and bind to targets to inhibit protein – protein
interactions
“ASO” antisense oligonucleotide, small nucleic acid drugs
comprised of single-stranded nucleic acid used to treat
diseases at the gene level
“biologic” a product that is composed of any virus, therapeutic serum,
toxin, antitoxin, vaccine, blood, blood component or
derivative, allergenic product, polypeptide, protein or
analogous product applicable to the prevention, treatment
or cure of diseases or conditions of human beings
“Cbz” benzyloxycarbonyl group, used for amine group protection
in organic synthesis
GLOSSARY OF TECHNICAL TERMS
–3 9–


--- page 49 ---
“CDMO” contract development and manufacturing organization, a
company that serves other companies in the
pharmaceutical industry on a contract basis to provide
comprehensive services from drug development through
drug manufacturing
“cGMP” current good manufacturing practice
“clinical trial/study” a research study for validating or finding the therapeutic
effects and side effects of test drugs in order to determine
the therapeutic value and safety of such drugs
“CMC” chemistry, manufacturing, and control, a section to
evaluate the characteristics of a therapeutic and its
manufacturing and quality testing process used to support
clinical studies and marketing applications
“CoA” Certificate of Analysis, a contractual document often
issued by a quality control department, confirming with
analysis results that a product is tested with available
results
“commercialization” the stage in drug development when a new drug is
approved and released to the market
“CpG oligonucleotides” cytosine-phosphorothioate-guanine oligodeoxynucleotides,
short single-stranded synthetic DNA molecules that can
activate various immune-cell subsets
“CRO” contract research organization, a company that provides
support to the pharmaceutical, biotech, and medical device
industries in the form of research services outsourced on a
contract basis
“CRDMO” contract research, development and manufacturing
organization, a company that provides discovery, research,
development and manufacturing services in the
pharmaceutical and/or biotech industry on a contract basis
“cyclic peptide” peptide chains taking cyclic ring structure
“cyclization techniques” techniques to cyclize peptides using a chemical linker
which binds to several amino acids within a peptide
GLOSSARY OF TECHNICAL TERMS
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“difelikefalin” a kappa opioid receptor agonist used in the treatment of
pruritus associated with chronic kidney disease in patients
undergoing hemodialysis
“DMF” drug master files, submissions to regulatory authorities
used to provide confidential, detailed information of drug
products
“DNA” a molecule that carries most of the genetic instructions
used in the development, functioning and reproduction of
all known living organisms and many viruses
“DOTA” 1,4,7,10-tetraazacyclododecane-1,4,7,10-tetraacetic acid
“DOTAGA”
2-(4,7,10-tris(carboxymethyl)-1,4,7,10-tetraazacyclododecan-
1-yl) pentanedioic acid
“drug discovery” the process through which potential new drugs are
identified and may involve a wide range of scientific
disciplines, including biology, chemistry and
pharmacology
“drug product” a dosage form that contains one or more APIs and/or
inactive ingredients
“drug substance” an API that is intended to furnish pharmacological activity
or other direct effect in the diagnosis, cure, mitigation,
treatment, or prevention of disease or to affect the
structure or any function of the human body
“dsRNA” double-stranded RNA, a signal for inducing the
transcriptional silencing of a specific gene
“DTPA” diethylenetriaminepentaacetic acid
“FDA-483 observation” an FDA 483 observation, or “inspectional observation,” is
a notice sent by the FDA to highlight any potential
regulatory violations found during a routine inspection.
This can relate to the company’s facility, equipment,
processes, controls, products, employee practices, or
records. If the issues are systemic, the 483 observation can
trigger training, redesign, process implementation, and
other measures
GLOSSARY OF TECHNICAL TERMS
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“FFS” fee-for-service, a payment model where the fee income is
primarily based on the services provided
“Fmoc” fluorenylmethoxycarbonyl protecting group, a base-labile
protecting group for amines used in organic synthesis
“formulation development” the process of designing and creating a stable and effective
drug product by combining the API with excipients to
achieve optimal bioavailability, stability, and patient
compliance, to ensure that the drug can be safely and
efficiently manufactured and delivered to meet regulatory
requirements for use on humans
“FTE” full-time-equivalent, a payment model where a number of
employees are allocated to the project at a fixed rate per
employee per period of time
“GalNAc” N-acetylgalactosamine, an amino sugar derivative of
galactose
“GCP” good clinical practice, an international ethical and
scientific quality standard for the performance of a clinical
trial on medicinal products involving humans
“generic drug” a drug that is chemically identical to an original drug and
is generally available in the same or similar strength and
dosage forms as the original drug
“GLP” good laboratory practice, a quality system of management
controls for research laboratories and organizations to try
to ensure the uniformity, consistency, reliability,
reproducibility, quality and integrity of chemical and
pharmaceuticals non-clinical safety tests
“GLP-1” glucagon like peptide-1, a naturally occurring peptide
hormone that decreases blood sugar levels in a glucose-
dependent manner by enhancing the secretion of insulin
“GLP-1RA” GLP-1 receptor agonist
“GMP” good manufacturing practice, the practices required in
order to conform to the guidelines recommended by
agencies that control the authorization and licensing of the
manufacture and sale of products
GLOSSARY OF TECHNICAL TERMS
–4 2–


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“ICH” International Conference on Harmonization of Technical
Requirements for Registration of Pharmaceuticals for
Human Use, a project that brings together the regulatory
authorities of Europe, Japan, China and the United States
and experts from the pharmaceutical industry in these
regions for the purpose of reducing or eliminating the need
to duplicate the testing carried out during the research and
development of new medicines by recommending ways to
achieve greater harmonization in the interpretation and
application of technical guidelines and requirements for
product registration
“IND” investigational new drug, an application in the drug review
process required by a regulatory authority to decide
whether a new drug is permitted to initiate clinical trials;
also known as clinical trial application, or CTA, in
European Union
“KPI” key performance indicator
“ligation method” a method of joining of two peptide fragments through
amino acid by the action of an catalytic enzyme
“LNA” locked nucleic acids, also known as bridged nucleic acid or
inaccessible RNA, a modified RNA nucleotide in which
the ribose moiety is modified with an extra bridge,
providing increased stability against enzymatic
degradation
“MAPs” multiple antigenic peptides
“metabolism” the chemical processes that occur within a living organism
in order to maintain life, comprising catabolism
(breakdown of larger molecules into components) and
anabolism (synthesis of smaller molecules into larger ones
with specific structures, characteristics and purposes)
“method development” a process to establish a suitable analytical methodology to
separate, identify, and quantify the chemical components
in a particular sample
“method validation” an assessment of a procedure to ensure that the product is
suitable for its intended purpose
GLOSSARY OF TECHNICAL TERMS
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“multinational corporation” also known as multinational company, a company that has
business operations in at least one country other than its
home country
“molecule” a group of two or more atoms connected by chemical
bonds, forming the smallest unit of a substance that retains
the composition and properties of that substance
“NCE” new chemical entity, a novel, chemical molecule drug that
is undergoing clinical trials or has received a first approval
“NDA” new drug application, a process required by an regulatory
authority to approve a new drug for sale and marketing
“NOTA” 1,4,7-triazacyclononane-1,4,7-triacetic acid
“NOTAGA”
2-(4,7-bis(carboxymethyl)-1,4,7-triazonan-1-yl) pentanedioic
acid
“O-ethyl” a common nucleoside modification of RNA to increase
affinity
“oligonucleotides” short DNA or RNA molecules that have a wide range of
application in pharmaceutical and biotech industries,
which can be synthesized in laboratories or found in nature
“O-methoxyethyl” a common nucleoside modification of RNA to enhance
binding affinity
“O-methylation” a common nucleoside modification of RNA to produce a
methoxy group
“PDC” peptide drug conjugate, the attachment of a drug/probe to
a peptide by a selective chemical reaction
“peptide” small fragments of proteins, typically comprising 2-99
amino acids with a molecular weight of less than 10,000
Da.
“peptide-focused CRDMO” CRDMO companies where peptide CRDMO services
contribute over 50% of their revenues
“pharmacopoeia” a book that is published by government authorities or
medical or pharmaceutical societies to provide directions
for identifying and preparing drugs or biological products
GLOSSARY OF TECHNICAL TERMS
–4 4–


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“Phase I clinical trial” a study in which a drug is introduced into healthy human
subjects or patients with the target disease or condition and
tested for safety, dosage tolerance, absorption,
metabolism, distribution, excretion, and if possible, to gain
an early indication of its efficacy
“Phase II clinical trial” a study in which a drug is administered to a limited patient
population to preliminarily evaluate the efficacy of the
product for specific targeted diseases, to identify possible
adverse effects and safety risks, and to determine optimal
dosage
“Phase III clinical trial” a study in which a drug is administered to an expanded
patient population generally at geographically dispersed
clinical trial sites, in well-controlled clinical trials to
generate enough data to statistically evaluate the efficacy
and safety of the product for approval, to provide adequate
information for the labeling of the product
“piRNA” piwi-interacting RNA, small non-coding RNA molecules
expressed in animal cells that are involved in gene
silencing
“PMO” phosphorodomidate morpholino oligomers, a type of
oligomer molecule (an oligo) that inhibits gene expression
in a sequence-dependent manner
“PNA” peptide nucleic acids, an artificially synthesized polymer
similar to DNA or RNA to hybridize with complementary
DNAs or RNAs with high affinity and specificity
“POC” peptide-oligonucleotide conjugate, a covalent construct
that links a molecule like DNA to a synthetic peptide
sequence
“polypeptide” a molecular chain of amino acids
“preclinical study” a study testing a drug on non-human subjects, to gather
efficacy, toxicity, pharmacokinetic and safety information
and to decide whether the drug is ready for clinical trials
“process validation” the analysis of data gathered throughout the design and
manufacturing of a product in order to confirm that the
process can reliably output products of a determined
standard
GLOSSARY OF TECHNICAL TERMS
–4 5–


--- page 55 ---
“QC” quality control, a process to review the quality of products
and ensure the safety, efficacy, and consistency of
pharmaceutical products
“RDC” radionuclide drug conjugate, as a particular form of
coupling drugs, are formed by combining radioactive
isotopes with disease-targeting molecules
“release testing” an assessment of the measure of release of the API from
the drug product matrix in controlled conditions
“registration inspection” an inspection carried out by the NMPA to determine the
safety, efficacy, quality controllability of drug candidates
seeking regulatory approval for commercialization
“RNA” ribonucleic acid, a molecule made up of one or more
nucleotides that plays an essential biological role in
coding, decoding, regulation, and expression of genes
“RNAi” RNA interference, a biological process in which RNA
molecules are involved in sequence-specific suppression
of gene expression by RNA
“RISC” RNA-induced silencing complex is a multiprotein
complex, specifically a ribonucleoprotein, which functions
in gene silencing via a variety of pathways at the
transcriptional and translational levels
“semaglutide” a GLP-1 analog peptide, used for the treatment of type two
diabetes and long-term weight management
“shRNA” short hairpin RNA, an artificial RNA molecule with a tight
hairpin turn that can be used to silence target gene
expression via RNAi
“siRNA” small interfering RNA, sometimes known as short
interfering RNA or silencing RNA, a class of double
stranded non-coding RNA molecules to inhibit gene
expression
“small molecule” in the fields of molecular biology and pharmacology, a low
molecular weight organic compound that may regulate a
biological process, with a size in the order of one
nanometer
GLOSSARY OF TECHNICAL TERMS
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“Spray Dry” a method of forming a dry powder from a liquid or slurry
by rapidly drying with a hot gas
“stability tests” or “stability
studies”
tests or studies on the capability of a drug in a specific
container/closure system to remain within its physical,
chemical, microbiological therapeutic and toxicological
specification
“synthesis” the production of compounds by chemical reaction from
simple starting materials
“t-Boc” tert-butyloxycarbonyl group or tert-butoxycarbonyl
protecting group, a protecting group used in organic
synthesis which can be added to amines under aqueous
conditions
“teduglutide” glucagon-like peptide-2 analog that is used for the
treatment of short bowel syndrome
“TIDES” TIDES drugs and TIDES-relevant products
“TIDES CRDMO” CRDMO service for TIDES, including TIDES drugs and
TIDES-relevant products
“TIDES drugs” primarily consist of peptide drugs and oligonucleotide
drugs
“TIDES-relevant product” other products relevant to peptides or oligonucleotides
except drugs, such as TIDES cosmetics product
“tirzepatide” a long-acting glucose-dependent insulinotropic peptide
analogue that activates both the GLP-1 and glucose-
dependent insulinotropic peptide receptors and is used for
the treatment of type two diabetes and for weight loss
“triptorelin pamoate” a pamoate salt of triptorelin that is a medication to
decrease testosterone to treat prostate cancer
“validation” a process that involves performing laboratory tests to
verify that a particular instrument program, manufacturing
process, analytical method or measurement technique is
working properly and is capable of being relied upon
GLOSSARY OF TECHNICAL TERMS
–4 7–


--- page 57 ---
We have included in this Prospectus forward-looking statements. Statements that are not
historical facts, including but not limited to statements about our intentions, beliefs,
expectations or predictions for the future, are forward-looking statements.
This Prospectus contains forward-looking statements and information relating to us and
our subsidiaries that are based on the beliefs of our management as well as assumptions made
by and information currently available to our management. When used in this Prospectus, the
words “aim,” “anticipate,” “aspire,” “believe,” “could,” “expect,” “going forward,” “intend,”
“may,” “ought to,” “plan,” “project,” “schedules,” “seek,” “should,” “target,” “vision,” “will,”
“would,” and the negative of these words and other similar expressions, as they relate to us or
our management, are intended to identify forward-looking statements. Such statements reflect
the current views of our management with respect to future events, operations, liquidity and
capital resources, some of which may not materialize or may change. These statements are
subject to certain risks, uncertainties and assumptions, including the risk factors as described
in the section headed “Risk Factors” and elsewhere in this Prospectus, some of which are
beyond our control and may cause our actual results, performance or achievements, or industry
results, to be materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. Y ou are strongly cautioned that
reliance on any forward-looking statements involves known and unknown risks and
uncertainties. The risks and uncertainties facing us which could affect the accuracy of
forward-looking statements include, but are not limited to, the following:
 our operations and business prospects;
 future developments, trends and conditions in the industries and markets in which
we operate or plan to operate;
 general economic, political and business conditions in the markets in which we
operate, including but not limited to interest rates, foreign exchange rates;
 changes to the regulatory environment in the industries and markets in which we
operate;
 our ability to maintain relationship with, and the actions and developments
affecting, our major customers and suppliers;
 our ability to maintain the market positions and the actions and developments of our
competitors;
 our ability to effectively control costs and operating expenses;
 the ability of business partners to perform in accordance with contractual terms and
specifications;
 our ability to retain senior management and key personnel and recruit qualified staff;
FORW ARD-LOOKING STATEMENTS
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--- page 58 ---
 our business strategies and plans to achieve these strategies, including our service
and geographic expansion plans; and
 all other risks and uncertainties described in “Risk Factors”.
By their nature, certain disclosures relating to these and other risks are only estimates and
should one or more of these uncertainties or risks, among others, materialize, actual results
may vary materially from those estimated, anticipated or projected, as well as from historical
results. Specifically but without limitation, sales could decrease, costs could increase, capital
costs could increase, capital investment could be delayed and anticipated improvements in
performance might not be fully realized.
Subject to the requirements of applicable laws, rules and regulations, we do not have any
and undertake no obligation to update or otherwise revise the forward-looking statements in
this Prospectus, whether as a result of new information, future events or otherwise. As a result
of these and other risks, uncertainties and assumptions, the forward-looking events and
circumstances discussed in this Prospectus might not occur in the way we expect or at all.
Accordingly, you should not place undue reliance on any forward-looking information. All
forward-looking statements in this Prospectus are qualified by reference to the cautionary
statements in this section as well as the risks and uncertainties discussed in the section headed
“Risk Factors” in this Prospectus.
In this Prospectus, statements of or references to our intentions or those of our Directors
are made as of the date of this Prospectus. Any such information may change in light of future
developments.
FORW ARD-LOOKING STATEMENTS
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--- page 59 ---
An investment in our H Shares involves significant risks. Y ou should carefully
consider all of the information in this Prospectus, including the risks and uncertainties
described below, as well as our financial statements and the related notes, and the
“Financial Information” section, before deciding to invest in our H Shares. The
following is a description of what we consider to be our material risks. Any of the
following risks could have a material adverse effect on our business, financial
condition, results of operations and growth prospects. In any such an event, the market
price of our H Shares could decline, and you may lose all or part of your investment.
The information given is as of the Latest Practicable Date unless otherwise stated, will
not be updated after the date hereof, and is subject to the cautionary statements in the
section headed “Forward-Looking Statements” in this Prospectus.
We believe there are certain risks and uncertainties involved in our operations, some of
which are beyond our control. We have categorized these risks and uncertainties into: (i) risks
relating to our business and our industry; (ii) risks relating to doing business in jurisdictions
where we operate; and (iii) risks relating to the Global Offering. Additional risks and
uncertainties presently not known to us or not expressed or implied below or those we currently
deem immaterial could also harm our business, financial condition and results of operations.
Y ou should consider our business and prospects in light of the risks we face, including the ones
discussed in this section.
RISKS RELATING TO OUR BUSINESS AND OUR INDUSTRY
Our business largely depends on our customers’ spending on and demand for our
discovery, development and manufacturing services for peptide and oligonucleotides,
their budget for R&D expenditure and the clinical and market success of their products.
Any reduction in spending or demand from our customers could have a material adverse
effect on our business, financial condition, results of operations and prospects.
The success of our business largely depends on the number and size of service
agreements/orders that we obtain from our customers, primarily including pharmaceutical and
biotech companies, pursuant to which these customers outsource their peptide and
oligonucleotides discovery, development and manufacturing projects to us. Over the past
several years, we have benefitted from an increased demand for our services primarily as a
result of the continued growth of the peptide drugs and the outsourcing service industry and
increasing R&D expenditures of our customers. Changes in demand from customers whether
due to reasons related to us or to their own product development or commercialization plans,
may affect their purchase amount from us and our revenue. For more information on the
industry trend, please see the section headed “Industry Overview.” A slowing or reversal of any
of these trends could have a material adverse effect on the demand for our services.
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In addition to the forgoing industry trends, our customers’ willingness and ability to
utilize our services are also subject to, among other things, their own financial performance,
changes in their available resources, access to capital, their decisions to acquire in-house
discovery, development or commercial manufacturing capacity, their spending priorities, their
budgetary policies and practices, and their need to develop new products, which, in turn, is
dependent upon a number of factors, including their competitors’ discovery, development and
commercial manufacturing initiatives, and the anticipated market update, clinical and
reimbursement scenarios for specific products and therapeutic areas. We may experience
reduction in spending by domestic customers due to their unexpected or delayed development
progress, and the lack of sufficient funding. For example, we experienced a slight decrease in
revenues from 2022 to 2023, which was primarily due to a 10.4% decrease in average revenue
per customer from approximately RMB528.0 thousand in 2022 to RMB474.0 thousand in 2023.
In addition, consolidation in the industries in which our customers operate may have an
impact on such spending as our customers integrate acquired operations, including research
and development departments and manufacturing operations. Such consolidation primarily
takes place among leading companies within the related industry, serving as an internal
initiative aimed at enhancing the production capacity of these leading companies. Furthermore,
consolidation requires significant capital and labor resources, which most companies in the
industry cannot afford. Although consolidation is not a general trend within the industry and
only happens in exceptional cases, any such consolidation may still have an impact on
customers’ spending as they integrate acquired operations, including research and development
and manufacturing operations. If our customers reduce their spending on our services as a
result of any of these or other factors, our business, financial condition, results of operations,
cash flows and prospects would be materially and adversely affected.
We may not be successful in developing, enhancing, adapting to or acquiring new
technologies.
The global pharmaceutical and biotech outsourcing services market is constantly
evolving, and we must keep pace with new technologies and methodologies to maintain our
competitive position. It is critical for us to continue investing significant amounts of human
and capital resources to develop or acquire new technologies in order to enhance the scope and
quality of our services. We may also decide to continue expanding our business by entering into
new markets and new geographic areas, and therefore may need to develop or adapt to new
technologies and methodologies. We cannot assure you that we will be able to develop,
enhance or adapt to new technologies and methodologies in a timely manner or at all. Any
failure to do so could stagnate or even significantly reduce demand for our services and harm
our business and prospects. Even if we are able to successfully develop new technologies and
methodologies or optimize existing technologies after we spend significant time and efforts on
research and development, we cannot guarantee you that we will definitely be able to generate
sufficient return on our investment.
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Furthermore, to develop and market our new technologies and methodologies
successfully, we are required to accurately assess and meet customers’ needs, make significant
capital expenditures, optimize our drug development and manufacturing process to predict and
control costs, hire, train and retain qualified personnel, obtain required regulatory clearances
or approvals, increase customer awareness and acceptance of our services, provide quality
services in a timely manner, price our services competitively, integrate innovations into our
existing system and effectively incorporate customer feedback into our business planning. If
the demand for our new technologies or methodologies decreases, our business, financial
condition, results of operations and prospects could be materially and adversely affected.
In addition, technology innovations could bring alternatives to our current and potential
customers, which could reduce or even eliminate the demand for our services at all. Our failure
to develop, introduce or enhance our services’ ability to compete with new technologies in a
cost-effective and timely manner could have a material adverse effect on our business,
financial condition, results of operations and prospects.
We may fail to effectively develop and market new services, which may harm our growth
opportunities and prospects.
We intend to continue to expand our oligonucleotide CDMO service and enhance
formulation capabilities. We are also constantly evaluating potential areas where future
business opportunities may arise. To develop and market our new services successfully, we
must accurately assess and meet customer needs, make significant capital expenditures,
optimize our service processes to predict and control costs, hire, train and retain the necessary
personnel, obtain required regulatory clearances or approvals, increase customer awareness
and acceptance of our services, provide services of a high quality and in a timely manner, price
our services competitively, compete effectively with others and effectively integrate customer
feedback into our business planning and improvement. If we fail to effectively develop new
services and create demand for them, our future business, including our results of operations,
financial condition, cash flows and prospects, could be materially and adversely affected. We
may not be successful or may consume a significant amount of time and resources in expanding
into non-peptide (such as small molecule and biologics) CRDMO services, considering the
high entry barrier and differences in terms of technology, production, business development
and operations.
We are subject to inspections conducted by relevant regulatory authorities.
In many countries or regions where pharmaceutical products are intended to be ultimately
sold, such as China, the U.S. and certain E.U. countries, the relevant government agencies and
industry regulatory bodies impose high standards on the safety and efficacy of such products,
as well as stringent laws, regulations and industry standards on how we and our customers
develop and manufacture such products. Depending on different jurisdictions in which our
customers operate, our provision of CRDMO services for those customers is subject to various
and extensive ongoing regulations of the NMPA, the FDA, the EMA and equivalent regulatory
authorities of other jurisdictions. These regulatory authorities may conduct inspections of our
facilities to monitor our regulatory compliance from time to time. Any adverse actions by the
competent authorities against us could result in warning letters, product recalls or seizures,
monetary sanctions, injunctions to halt manufacture and distribution, restrictions on our
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operations, civil or criminal sanctions, or withdrawal of existing or denial of pending
approvals, including those relating to products or facilities, or other punitive actions against us
or our customers, the termination of ongoing projects by our customers and the disqualification
of data for submission to regulatory authorities. Any of the above negative consequences could
have a material adverse impact on our reputation, business, financial condition, results of
operations and prospects.
Changes in government regulations or in practices relating to the pharmaceutical and
biotech industries, including reform of the drug approval process in relevant jurisdictions,
could decrease demand for the services we provide, and compliance with new regulations may
result in additional costs. Changes that result in a relaxation in regulatory requirements, or the
introduction of simplified approval procedures which will lower the entry barrier for potential
competitors, or an increase in regulatory requirements which may increase the difficulty for us
to satisfy such requirements or may make our services less competitive, could eliminate or
substantially reduce the demand for our services.
Further, we are subject to certain laws and regulations that require us to obtain and
maintain various approvals, licenses, permits, certificates, registrations or filings from
different authorities to conduct and operate our business. We could be ordered by the relevant
regulatory authorities to cease operation, or may be required to undertake corrective measures
requiring capital expenditure or other remedial actions, which could materially and adversely
affect our business, financial condition and results of operations. There is also no assurance
that the relevant regulatory authorities would not take any enforcement action against us. In the
event that such enforcement action is taken, our business operations could be materially and
adversely disrupted. In addition, some of these approvals, permits, licenses, certificates,
registrations or filings are subject to periodic renewal and/or reassessment by the relevant
authorities, and the standards of such renewal and/or reassessment may change from time to
time. We may also be required to obtain additional approvals, permits, licenses, certificates,
registrations or filings that were previously not required to operate our existing businesses as
a result of new regulations coming into effect, change to interpretation or implementation of
existing laws and regulations. We may face adverse actions by the relevant authorities in
relations to renewals or obtaining additional approvals, permits, licenses, certificates,
registrations or filings, which could materially adverse affect our business.
We face increasing competition and may not be able to compete effectively, which may
result in downward pricing pressure or reduced demand for our services.
The global pharmaceutical CRDMO service market is highly competitive, and we expect
the level of competition will continue to increase. As a CRDMO service provider for peptide,
we compete, both domestically and internationally, with other players in the market, such as
full-service or specialty pharmaceutical outsourcing companies, large pharmaceutical
companies offering third-party manufacturing services. We face competition in several
different areas, including scientific expertise, knowledge and experience in research and
development, availability of a broad range of equipment and technology compliance with
cGMP , regulatory compliance, cost-effective services, financial stability, quality and breadth of
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services, our capacity and ability to deliver in a timely manner, our ability to protect
intellectual property or other confidential information of our customers, maintenance of our
qualifications and accreditations, depth of customer relationships and prices.
Some of our competitors may have more financial resources, better research and technical
capabilities, broader scope of service, more pricing flexibility, stronger sales and marketing
efforts, longer track record and better brand recognition. In addition, our competitors may
improve the performance of their services, and introduce new services with lower prices, or
adapt more quickly to new technologies and changes in customer demand and requirements.
Changes in the nature or extent of our customer requirements may render our service and
product offerings obsolete or non-competitive. Furthermore, increased competition could
create additional pricing pressure on our services, which could reduce our revenue, gross profit
margin and profitability. We may rely on customers’ peptide development plan, which could
affect their purchase from us and our revenue. There is no assurance that we will be able to
compete effectively with existing competitors or new competitors or that increased level of
competition will not adversely affect our business, results of operations, financial condition
and prospects.
We also expect continuous competition from both domestic and international competitors
as we continue to invest in more sophisticated capabilities and capacity in laboratory, process
development and manufacturing services. We also expect increasing competition as additional
competitors enter our market and as more advanced technologies become available. We
compete with other pharmaceutical CRDMO service providers in specific service areas. We
also compete with the in-house development and commercial manufacturing functions of
pharmaceutical and biotech companies.
Competition in the CRDMO market for GLP-1 products may intensify as the growing
GLP-1 market attracts more market entrants.
We have strategically focused on the pipeline buildup in the field of GLP-1. GLP-1 has
become a major driver for the rapid growth of the global peptide drug market. Our future
growth in business scale and results of operations also depend in part on GLP-1 related
projects. GLP-1 drugs has changed the drug landscape for the treatment of metabolic diseases.
The global GLP-1 drug market by sales revenue grew from US$9.3 billion in 2018 to US$38.9
billion in 2023, representing a CAGR of 33.2%, and is expected to further grow to US$129.9
billion in 2032, representing a CAGR of 14.3%. However, if the growth of global GLP-1 drug
market turns out slower than the forecast above, or if the global GLP-1 drug market
experiences a decline in overall size in the future, our business prospects as reflected by the
size of our addressable market and the demand for our GLP-1 related projects may be
materially adversely affected. In addition, the fast-evolving GLP-1 market may attract an
influx of new entrants into the CRDMO market for GLP-1 products, which could substantially
increase competition within the industry. These new entrants may include established
non-peptide-focused CRDMO companies as well as new start-ups, and each may bring
financial resources, technologies or business strategies that could compete with our business.
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If these new market entrants offer prices, technology or service capabilities that are
accepted by the market, we may be forced to adjust our own pricing strategies, upgrade our
service capabilities, and consequently incur significant expenses and expenditure, which may
not necessarily provide the return as anticipated. If we are unable to compete effectively
against these new market entrants, our business, results of operations, financial condition and
prospects may be adversely affected.
If our service quality fails to meet our customers’ evolving needs, or if we fail to meet our
customers’ audit and inspections, our customers may not continue to purchase our
services.
The services we offer are customized, exacting and complex, due in part to strict
regulatory requirements. We believe service quality and customer satisfaction are among the
most important factors for our business growth, failure to which may impair our reputation and
result in decline in customer demand for our services. In order to deliver quality services, it is
critical to understand and take actions to fulfill the customer’s expectation and adapt to the
customers’ evolving needs. Our results of operations further depend on our ability to execute
and, when necessary, improve our quality management strategy and systems, and our ability to
effectively train and maintain our employee base with respect to quality management. We
believe our strong execution capabilities and quality services are widely recognized by our
customers. However, we cannot assure you that we will always be able to deliver quality
services that meet our customers’ evolving needs. A failure of our quality control systems in
our existing and future operations and facilities could result in problems with facility
operations or preparation or provision of product or service. In each case, such problems could
arise from a variety of factors, including equipment malfunction, failure to follow specific
protocols and procedures, problems with raw materials or manufacturing operations, operator
error, and failure to comply with regulations enforced by relevant government. Such problems
could affect our development and production process, and may result in project suspension,
destruction of products or a halt of facility production altogether.
In addition, our failure to meet required quality standards may result in our failure to
timely deliver high quality work products, including API and products we manufacture for our
customers’ projects, to our customers, which in turn could damage our reputation and business
relationship with our customers. Any such failure could, among other things, lead to increased
costs, lost revenue, reimbursement to customers damage to and possibly termination of existing
customer relationships, time and expense spent investigating the cause and, depending on the
cause, similar losses with respect to other products. If problems are not discovered before a
product is released to the market by our customers, product recall and liability costs may also
be incurred. In addition, such risks may be greater at facilities that are new or going through
significant expansion or renovation.
Furthermore, our customers regularly inspect our facility, processes and practices to
ensure that our services meet their standards in the discovery, development and manufacturing
process. However, we cannot assure you that we will be able to pass all the customer audits
and inspections at all times. Failure to pass any of these audits or inspections to our customers’
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satisfaction could significantly harm our reputation and result in the termination of ongoing
projects by our customers, which could materially and adversely affect our business, financial
condition, results of operations and prospects.
If our customers determine that their expenditures on our services do not generate
expected results, they may allocate a portion or all of their budgets to our competitors and
reduce or terminate their business with us. Therefore, we cannot assure you that customers that
have utilized our services in the past will continue to spend at similar levels, or that they will
continue to use our services at all in the future. We may not be able to replace customers which
decrease or cease their purchase of our services with new customers that spend at similar levels
or more on our services. As a result, we may suffer from a loss of customers and our ability
to maintain and/or grow our revenues will be materially and adversely affected.
We may not be able to execute our growth strategies or manage our growth effectively.
Pursuing our growth strategies has resulted in, and will continue to result in, substantial
demands on capital and other resources. In addition, managing our growth and executing our
growth strategies will require, among other things, our ability to continue to innovate and
develop advanced technology in the highly competitive global pharmaceutical CRDMO service
market, effectively coordinate and integrate our facilities and teams across different sites, hire,
train and retain qualified personnel, implement effective cost control and quality control,
maintain sufficient liquidity, and effective and efficient financial and management control,
carry out increased marketing and customer support activities, and manage our suppliers to
leverage our purchasing power. If we fail to successfully execute our growth strategies, we may
not be able to maintain our growth rate and, as a result, our business, financial condition,
results of operations and prospects may be materially and adversely affected.
If we fail to implement our expansion plan to enhance our manufacturing capabilities as
planned, or if such plan fails to achieve expected benefits, our business and prospects
could be materially and adversely affected.
We provide manufacturing services at different scales, including laboratory scale,
non-GMP scale and cGMP-compliant scale, to support our customers’ non-clinical, clinical and
commercialization needs. We currently mainly rely on our facilities in Hangzhou to
manufacture peptide and oligonucleotides products. We plan to increase our production
capacity by building additional facilities in the United States and Hangzhou for clinical and
commercial manufacturing of peptide and oligonucleotides. However, we cannot assure you
that our expansion plan will be successfully implemented without delays or at all. Our ability
to implement our expansion plan is subject to a number of factors. New manufacturing
facilities may require prior review by regulatory authorities and/or approval of the
manufacturing process and procedures in accordance with applicable requirements. This
review may be costly and time-consuming. In addition, we will need to ensure that our new
manufacturing facilities meet applicable quality standards, such as GLP , GMP and cGMP , for
which we may incur substantial costs.
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Any failure or delay in implementing any part of our expansion plan may result in a lack
of production capacity to support our growth, market expansion, and the commercialization of
our customers’ products, which in turn could adversely affect our business, results of
operations and financial condition. Moreover, our plans to increase our production capacity
require significant capital investment, and the actual costs of our expansion plan may exceed
our original estimates, which could materially and adversely affect the realization of expected
return on our expenditures. In addition, if we fail to fully utilize the additional production
capacity due to any adverse change to the market environment, technologies, and relevant
policies, our business, results of operations and financial condition could be materially and
adversely affected.
If we are unable to successfully expand or operate in new geographic markets, our
growth, results of operations and financial condition could be adversely affected.
During the Track Record Period, we generated a majority of our revenue from customers
overseas. We intend to further expand our geographic footprint, and we intend to meet the
growing demand from customers worldwide. The legal and regulatory frameworks and
competitive landscapes in United States and any other jurisdictions where we may maintain
operations in the future may be different from those of the PRC. Our current and future
operations also may be subject to regulation by U.S. federal, state and local authorities
including, among others, the Centers for Medicare and Medicaid Services and other divisions
within the U.S. Department of Health and Human Services such as the Office of the Inspector
General and the Office for Civil Rights. Our future manufacturing facilities will be required to
obtain and maintain regulatory approvals, including being subject to ongoing, periodic
inspection by the FDA or other comparable regulatory authorities to ensure compliance with
GMP regulations. Further, we will be subject to continual review and inspections to assess
compliance with GMP and other marketing application, and previous responses to any
inspection observations if we were to build manufacturing facilities in the future. More
generally, we may incur additional costs associated with complying with such federal or local
laws and regulations. Furthermore, in light of our future manufacturing facilities, we may not
be able to adequately manage our operational costs, such as costs associated with staffing,
production, among others. There are ambiguities as to what is required to comply with any of
these requirements, and if we fail to comply with any such requirements, we could be subject
to applicable penalties. We may encounter unforeseeable barriers and challenges, which may
result in a delay to or failure of our expansion plans. In addition, we may not be able to manage
our costs or generate sufficient revenue to justify the time and resources spent on such
expansion plan. If our geographic expansion is unsuccessful, our business operation and
financial condition could be materially and adversely affected.
Our success depends on our ability to attract, train, motivate and retain highly skilled
scientists and other technical personnel.
Our success depends on our team of scientists and other technical personnel and their
ability to deliver high-quality and timely services to our customers and keep pace with
cutting-edge technologies. Such scientists are well-sought after by our competitors and we may
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face challenges in attracting and retaining skilled scientists and other technical personnel. We
compete vigorously with pharmaceutical and biotech companies, other outsourcing services
providers and research and academic institutions for qualified and experienced scientists and
other technical personnel. We may not be able to hire and retain enough skilled and
experienced scientists or other technical personnel at the current level of wages. To compete
effectively, we may need to offer higher compensation and other benefits, which could
materially and adversely affect our financial condition and results of operations. In addition,
we may not be successful in training our professionals to keep pace with changes in customer
needs and technological and regulatory standards. Any inability to attract, motivate, train or
retain qualified scientists or other technical personnel may have a material adverse effect on
our business, financial condition, results of operations, cash flows and prospects.
The continuing and collaborative efforts of our senior management and key employees are
crucial to our success, and our business could be severely disrupted if we lose their
services.
The continued service of our senior management and key employees is critical to the
success of our business. In particular, we are dependent on our senior management team led by
our Executive Directors, for their management, supervision and planning of our business. Our
senior management’s technical and industry expertise have significantly contributed to the
growth of our institutional knowledge base. The loss of service with respect to any of our
senior management or key scientific personnel may have a material adverse effect on our
business and operations. If we lose the services of any senior management member or key
employee, we may be unable to identify and retain a suitable qualified replacement and may
incur additional expenses and time to recruit and train new personnel, which could severely
disrupt our business operations.
We have made, and are continuing to make, significant capital investments to meet
growing demands of our customers, and, as a result, we depend on the continued success
of our customers’ projects and business.
We have made and are continuing to make significant capital expenditures based on
anticipated demand from existing and potential new businesses. We depend on our customers’
success in advancing their products through development, regulatory approval and
commercialization. We depend on the continued success of these projects, as well as
exploration of new business opportunities, to support our sustained growth. Any delay,
non-approval, unexpected side effect, low success rate or lack of demand may have a material
impact on our business. Consequently, we may be required to reallocate our resources, a
decision that could cause delays in our service offerings and result in lower-than-expected
revenue.
Our customers operate in a heavily regulated industry and are subject to the oversight of
regulators across the globe, including in China, the United States and Europe. Changes in laws
and regulations in those jurisdictions relating to the pharmaceutical and biotechnology
industries could materially and adversely affect the business of our customers and in turn affect
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the demand for our services. Any such existing or proposed regulations could expose our
services to higher requirements and the evolving interpretation and application of these laws
and regulations may have a material impact on our and our customers’ operation and business.
If the business of our customers is negatively affected, the demand for our services may
decrease as a result.
Specifically, early-stage biotech companies which have little assets or capital may rely
particularly on the success of their projects to maintain their business. If their projects were to
fail, these companies may not be able to continue to operate and may become insolvent. If this
were to happen, these companies may not be able to pay our service fees and may need to
terminate their service agreement with us.
We may not be successful in protecting the intellectual property owned by us or our
customers or licensed from third parties.
Our success depends on the protection of the intellectual property owned by us or our
customers or licensed from third parties. We primarily rely on our own know-how, trade secrets
and other intellectual property to carry out our CRDMO services. In addition, due to the nature
of our services, we typically have access to a significant amount of know-how, intellectual
property and even trade secrets owned by our customers. Our customers typically retain
ownership of all intellectual property of their products, including the intellectual property
provided to us. We typically own all intellectual property rights relating to any process,
analytical method development related technical inventions, trade secrets, or improvements
conceived during the performance of the projects between our customers and us. We take
significant efforts to protect our customers’ proprietary and confidential information, including
requiring our employees and relevant other third parties to enter into confidentiality
agreements prohibiting them from disclosing our customers’ proprietary information or
technology. However, these agreements may not provide meaningful protection for our
customers’ trade secrets and proprietary know-how as relevant parties may breach these
agreements, which is out of our control. Any failure to protect the intellectual property owned
by our customers or licensed from third parties may subject us to liability for breach of
contract, as well as significantly damage our reputation, which is fundamental to our business.
Further, unauthorized third parties may obtain access to our trade secrets or know-how,
and others may independently develop similar or equivalent trade secrets or know-how.
Although we strive to diligently protect our intellectual property rights, we cannot assure you
that all of our efforts to protect and defend our intellectual property will be successful, and we
may encounter challenges in securing and enforcing our intellectual property rights. If our
proprietary information is divulged to third parties, including our competitors, or our
intellectual property rights are otherwise misappropriated or infringed, our competitive
position could be harmed. Any failure to protect our own intellectual property may severely
disrupt our business operations and reduce or eliminate any competitive advantage we have
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developed. Failure to protect the intellectual property owned by us or our customers or licensed
from third parties could materially harm our business, financial condition, results of operations
and prospects, and any remediation may significantly divert management’s attention and
resources from other activities.
Our services and our customers’ products may infringe on or misappropriate the
intellectual property rights of third parties.
Any claims that our services infringe third parties’ rights, including claims arising from
our contracts with our customers, regardless of their merit or resolution, could be costly and
may divert the efforts and attention of our management and technical personnel. We may not
prevail in such proceedings given the complex technical issues and inherent uncertainties in
intellectual property litigation. If such proceedings result in an adverse outcome, we could be
required, among other things, to pay substantial damages, discontinue the use of the infringing
technology, expend significant resources to develop non-infringing technology, license such
technology from the third party claiming infringement (which license may not be available on
commercially reasonable terms or at all) and/or cease the infringing processes or offerings, any
of which could have a material adverse effect on our business.
In addition, our customers’ products may be subject to intellectual property infringement
claims and such claims could materially affect our business if their products cease to be
manufactured and they have to discontinue the use of the infringing technology which we may
provide. Any of the foregoing could affect our ability to compete or could have a material
adverse impact on our reputation, business, financial condition and results of operations.
We may fail to retain our existing customers or acquire new customers.
We have a diverse and growing customer base with a global footprint. However, we
cannot assure you that we will be able to retain all existing customers. We cannot assure you
that we will be able to maintain or strengthen our relationships with our existing customers, or
that our existing customers will continue to outsource projects to us. If there is any significant
reduction in spending on our CRDMO services by our existing customers due to industry
consolidation, deterioration of their financial conditions, budget cuts on R&D activities,
pending regulatory approvals or other reasons, and we are unable to obtain suitable contracts
or work orders of a comparable size and terms in substitution, our business, financial condition
and results of operations may be materially and adversely affected. In addition, any
deterioration on our major customers’ ability to settle their trade receivables in a timely manner
will have a material adverse effect on our results of operations.
Our success also depends on our ability to acquire new customers. We may not be able
to attract new customers if we are unable to maintain our competitive edges including, among
others, service capabilities and quality, timeliness of delivery and proprietary technical
capabilities. Our success in attracting customers will also depend, in part, on our ability to be
responsive to pricing pressures and changing industry trend. To remain competitive in the
global peptide and oligonucleotides outsourcing services market, we must continuously expand
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our integrated service capabilities, develop and upgrade our proprietary technical capabilities
and grow with our customers to establish long-term relationship. We also may not be able to
attract customers if we are unable to market ourselves effectively. If we are unable to attract
new customers, our business, financial condition or results of operations could be materially
and adversely affected.
The potential loss of our five largest customers in each year during the Track Record
Period or any of our large contracts could materially and adversely affect our business,
financial condition and results of operations.
In 2022, 2023 and 2024, revenue generated from our five largest customers in each year
during the Track Record Period accounted for 44.8%, 48.3% and 50.3% of our revenue in each
year, respectively, and revenue generated from our largest customer in each year during the
Track Record Period accounted for 15.4%, 20.9% and 26.8% of our revenue in each year,
respectively. For more information about our top five customers in each year during the Track
Record Period, see “Business—Customers.” We cannot assure you that we will be able to
maintain or strengthen our relationships with our five largest customers in each year during the
Track Record Period, or that our five largest customers in each year during the Track Record
Period will continue to outsource projects to us. If there is any significant reduction in
spending on our CRDMO services by our five largest customers in each year during the Track
Record Period due to industry consolidation, deterioration of their financial conditions, budget
cuts on R&D activities, pending regulatory approvals or other reasons, and we are unable to
obtain suitable contracts or work orders of a comparable size and terms in substitution, our
business, financial condition and results of operations may be materially and adversely
affected. In addition, any deterioration on our key customers’ ability to settle their trade
receivables in a timely manner will have a material adverse effect on our results of operations.
We may not recover some or all of our cost or receive service fees, if we fail to complete
our services stipulated under our contracts or work orders, or if we under-price our
services for any reason.
We generate revenue primarily from CRDMO services provided on FFS and FTE basis.
We generally receive payments in accordance with a pre-agreed payment schedule specified in
the contract or work order. The payment schedule sets out the fees for services we provide at
relevant discovery, development or manufacturing steps that fall under the scope of work in the
contract or work order. Our service contracts and work orders under the FFS model typically
include a detailed schedule that sets forth specifications of and anticipated time required for
completing each step as well as the corresponding payment. For more information, see
“Business—Our Business Model—Our Fee models.” As a result, if we fail to deliver services
in a timely manner in accordance with our contractual requirements, regulatory standards or
ethical considerations, if we incur cost overruns or if we price these contracts or work orders
below our costs because of competitive pressures, we could be subject to significant costs.
Furthermore, should our customers’ drug candidates fail to pass the requisite steps or proceed
through development, regulatory approval or commercialization, our services would be cut
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short and we would not be able to fully realize the value of our contracts or expand our services
to later stage work for such customer, which could have an adverse effect on our business,
financial condition, results of operations, cash flows and prospects.
In pricing our contracts, we evaluate factors such as market positioning, prices of
comparable services offered by our competitors, degree of saturation of the market, market
trends, complexity of the services required, costs of our services, and timeliness. However, we
cannot guarantee that our evaluation of these factors is accurate and correct. In the event that
our contracts are underpriced or our operating costs exceed our budgets, we would incur losses
on our contracts and our business, financial condition, results of operations, cash flows, and
prospects would be adversely affected.
We are subject to product and other liability risks that could have a material adverse
effect on our results of operations and financial condition.
In providing our services, we face a range of potential liabilities. We typically undertake
to defend, indemnify and hold our customers harmless from and against any liabilities and
damages (including reasonable attorneys’ fees) resulting from any third-party claims, demands,
suits or proceedings to the extent arising out of or relating to our negligence, willful
misconduct, unlawful activities or material breach of the long-term service agreement or
project-based service contract or a work order under the long-term service agreement. In
particular, we may face product liability risks if the peptide and oligonucleotides we help to
discover, develop or manufacture are subject to product liability claims. We provide services
in the discovery, development and commercial manufacturing of peptide and oligonucleotides
that are intended ultimately to be used in humans, either in clinical trials or as marketed
products, although we do not commercially market or sell these products to end users. If any
of these drugs harms people due to our negligence, willful misconduct, unlawful activities or
material breach, we may be subject to litigation and may be required to pay damages. Damages
awarded in a product liability action could be substantial and could have a material adverse
effect on our reputation, business, financial condition, results of operations and prospects.
Although we currently maintain product liability insurance, our insurance coverage may be
inadequate or may become unavailable on terms acceptable to us.
Our customers’ peptide and oligonucleotides are, or may in the future be, sold, in
jurisdictions, particularly in developed markets such as the United States, Europe and Japan,
which may have onerous product liability and pharmaceutical product regulatory regimes, as
well as litigious environments that may further expose us to the risk of product liability claims.
Even if we are able to successfully defend ourselves against any such product liability claims,
doing so may require significant resources and the time and attention of our management.
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The peptide and oligonucleotides we help to discover, develop or manufacture may cause
undesirable adverse events that could cause a decline in customer demand for our
services.
Undesirable adverse events caused by the peptide and oligonucleotides we help to
discover, develop or manufacture could cause our customers or regulatory authorities to
interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay
or denial of regulatory approval for the relevant drugs. Results of our customers’ trials could
reveal a high and unacceptable level of severity or prevalence of adverse events. In such event,
trials could be suspended or terminated and the regulatory authority may order our customers
to cease further development of, or deny approval of, such drugs. If any of adverse events is
attributable to or associated with our services, with or without merits, it may cause a decline
in customer demand for our services and materially and adversely affect our business, results
of operations and financial condition.
Any disruption of our current facility could restrict our ordinary business operations and
materially and adversely affect our results of operations and financial condition.
As of the Latest Practicable Date, we operated one facility in China and another two
facilities were under construction in the United States and China, respectively. Our facilities
may be harmed or rendered inoperable by physical damage from fires, floods, earthquakes,
typhoons, power outages, mechanical breakdowns, telecommunications failures, loss of
licenses, certifications and permits, changes in governmental planning for the land underlying
the facilities, and the regulatory development, many of which are beyond our control. Any
substantial interruption in the development and manufacturing operations at our current facility
could result in our inability to satisfy customer demands, or even lead to our failure to fulfill
contractual obligations, which could in turn materially and adversely affect our business,
results of operations and financial condition.
Our reputation is key to our business success. Negative publicity may adversely affect our
reputation, business and growth prospect.
Any negative publicity concerning us or our affiliates, even if untrue, could adversely
affect our reputation and business prospects. In particular, in light of our specialized customer
base, customer referrals and word-of-mouth marketing have significantly contributed to our
ability to acquire customers. Damage to our reputation could be difficult, expensive and
time-consuming to repair and could make potential or existing customers reluctant to select us
for new engagements, resulting in a loss of business and could adversely affect our recruitment
and retention efforts. Damage to our reputation could also reduce the value and effectiveness
of our brand name and could reduce investor confidence in us, adversely affecting the price of
our Shares.
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Doing business with overseas customers and planned international expansion may subject
us to a number of economic, political, regulatory, operation and management risks.
We have developed a global customer base. In 2022, 2023 and 2024, 71.1%, 78.0% and
78.6% of our revenue were attributable to ultimate customers with headquarters overseas. As
a CRDMO, we may have obligations under the medicinal products regime that applies in the
jurisdictions where our customers are located to the extent that we are involved in R&D,
preclinical studies and/or clinical trials. Failure to comply with any of the legal and regulatory
requirements may result in material impact on our provision of services to customers in the
relevant jurisdictions. We intend to continue to expand our presence globally. We face risks and
challenges in serving overseas customers, future overseas operations and competing in
international markets, including, but not limited to:
 our ability to effectively manage our employees in different business environments
from that of the PRC;
 our ability to develop and maintain relationships with customers, suppliers and other
local business;
 compliance with product safety requirements and standards that are different from
those of the PRC;
 variations and changes in laws applicable to our operations in different jurisdictions,
including enforceability of intellectual property and contract rights;
 a rising trade protectionism, a decline in world trade or a downturn in the economy
of the United States or the European Union;
 customs regulations and the import and export of goods and raw materials;
 the ability to provide sufficient levels of technical support in different locations;
 our ability to effectively communicate internally and with our customers across
different cultures;
 our ability to obtain and renew licenses that may be needed in various jurisdictions
to support operations;
 fluctuations in currency exchange rates;
 changes in local tax laws, tax rates in certain countries that may exceed those of the
PRC and lower earnings due to withholding requirements or the imposition of
tariffs, exchange controls or other restrictions;
 seasonal reductions in business activity;
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 local laws related to, and relationships with, local labor unions and works councils;
and
 general economic and political conditions.
If any of these risks later materializes and we have failed to anticipate and effectively
manage them, we may suffer a material adverse effect on our business and results of operations.
We may be directly or indirectly subject to applicable anti-corruption and anti-bribery
laws and regulations, which could expose us to penalties and other adverse effects.
We provide CRDMO services primarily for pharmaceutical and biotech companies, and
we and our customers are subject to anti-bribery laws of China. The PRC government has taken
increasingly stringent measures to correct corruptive practices in the pharmaceutical industry
(“Anti-Corruption Campaign ”) since 2023. For example, in May 2023, 14 governmental
departments including the National Health Commission jointly issued the Key Points for the
Correction of Malpractice in the Purchase and Sales of Medical Products and Medical Services
in 2023 ( 2023ᓃ), emphasizing the
need to address prominent corruption issues in the healthcare industry, particularly to rectify
the malpractice that may occur involving the medical industrial associations and during the
process of the purchases and sales of medical products. The Anti-Corruption Campaign targets
not only at the medical and health institutions, but has also extended to upstream
manufacturers, distribution channels, and third-party organizations, such as medical industrial
associations. As this campaign deepens, the proposed sales and marketing programs of our
customers may be impacted and the demand for our services may decrease. In addition, many
of our customers are located in the United States and are subject to the Foreign Corrupt
Practices Act (“ FCPA”) that generally bans an entity from, directly or indirectly, making
improper payments to foreign officials for the purpose of obtaining or retaining business. As
a result, our service contracts often include anti-bribery provisions which require us to comply
with the FCPA and other anti-bribery laws in the United States. As our business has expanded,
the applicability of the FCPA and other anti-bribery laws to our operations has increased.
Although we have procedures and controls to monitor anti-bribery compliance, we cannot
guarantee these measures can fully protect us from reckless or criminal acts committed by our
employees or agents, and we could be held liable for actions taken by our employees or agents,
which could expose us to risks of regulatory investigations and penalties. If we fail to comply
with applicable anti-bribery laws due to our own deliberate or inadvertent acts or those of our
employees, our reputation could be harmed and we could incur criminal or civil penalties, other
sanctions and significant expenses, which could have a material adverse effect on our business,
financial condition and results of operations.
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We may become subject to legal or administrative proceedings and claims during the
ordinary course of our business.
We may become, from time to time, subject to legal or administrative proceedings and
claims that arise in the ordinary course of business or pursuant to governmental or regulatory
enforcement activity. Actions brought against us, with or without merit, may result in
administrative measures, settlements, injunctions, fines, penalties, negative publicity, or other
results that could have material adverse effect on our reputation, business, financial condition,
results of operations, and prospects. Even if we are successful in defending ourselves against
these actions, we may incur significant costs and divert management’s attention and resources
in such defense. In addition, from time to time, we may have to resort to administrative and
court proceedings to enforce our legal rights. It is possible that the administrative and court
authorities would not interpret and enforce the statutory provisions and contractual terms in a
manner favorable to us, and it may be more difficult to predict the outcome of any
administrative and court proceedings that we may be involved in the future. Furthermore, any
litigations, legal disputes, claims or administrative proceedings which are initially not of
material importance may escalate and become important to us due to a variety of factors, such
as the facts and circumstances of the cases, the likelihood of loss, the monetary amount at stake
and the parties involved.
Our insurance might not cover claims brought against us, or might not provide sufficient
payments to cover all of the costs to resolve one or more such claims and might not continue
to be available on terms acceptable to us. In particular, any claim could result in unanticipated
liability to us if the claim is outside the scope of the indemnification arrangement we have with
our customers, our customers do not abide by the indemnification arrangement as required, or
the liability exceeds the amount of any applicable indemnification limits or available insurance
coverage. A claim brought against us that is uninsured or underinsured could result in
unanticipated costs and could have a material adverse effect on our financial condition, results
of operations or reputation.
Increased labor costs could slow our growth and affect our profitability.
Our operations require a sufficient number of qualified employees. In recent years, the
average labor cost in the global CRDMO market, has been steadily increasing as the
competition for qualified employees has become more intense. Our staff costs accounted for
31.6%, 35.5% and 33.5% of our cost of sales in 2022, 2023 and 2024, respectively. We cannot
assure you that there will not be further increase in labor cost. If there is a significant increase
in our labor cost, our operations and profitability may be adversely affected.
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We depend on a stable and adequate supply of quality raw materials from our suppliers,
and price increases or interruptions of such supply could have an adverse impact on our
business.
Our business operations require a substantial amount of raw materials. In 2022, 2023 and
2024, our material costs accounted for 38.9%, 33.2% and 36.3% of our cost of sales,
respectively. The raw materials and equipment required for the provision of our services are
generally readily available in the market through a number of suppliers. In the event of
significant price increases for raw materials, we cannot assure you that we will be able to raise
the prices of our services sufficiently to cover the increased costs. As a result, any significant
price increase for our raw materials may have an adverse effect on our profitability. A sustained
disruption in the supply chain involving multiple customers or vendors could have a material
adverse effect on our results of operations.
Furthermore, suppliers may fail to provide us with raw materials and other components
that meet the qualifications and standards required by us or our customers. If suppliers are not
able to provide us with materials that meet our or our customers’ specifications on a timely
basis, our discovery, development and manufacturing activities may be interfered, or such
materials may be available only at a higher cost or after a long delay, which could prevent us
from successful and timely completion of the specified tasks in the drug development process
as prescribed in our service contracts or work orders. Any such inability to deliver or delay in
delivering our services may create liability for us to our customers for breach of contract or
cause us to experience order cancellations and loss of customers. We may become subject to
product liability or warranty claims caused by defective raw materials or components from a
supplier.
We cannot assure you that we will be able to secure a stable supply of raw materials going
forward. Our suppliers may not be able to keep up with our fast growth or may reduce or cease
their supply of raw materials to us at any time. Our supplier relationships could be interrupted
due to natural disasters, international supply disruptions caused by geopolitical issues, trade
frictions, global shipping crises, or other events beyond our control or could be terminated in
the future. Any sustained interruption in our receipt of adequate supplies could have an adverse
effect on our business and financial results.
In addition, while we have supply chain processes intended to reduce volatility in
component and material pricing, we may not be able to successfully manage price fluctuations.
Price fluctuations or shortages could have a material adverse effect on our results of operations
and financial condition. Furthermore, we cannot assure you that our suppliers have obtained
and will be able to renew all licenses, permits and approvals necessary for their operations or
comply with all applicable laws and regulations, and such failure by them may lead to
interruption in their business operation, which in turn may result in shortage of raw materials
supplied to us. Some of our suppliers are based overseas and therefore may need to maintain
export or import licenses. If the supply of raw materials is interrupted, our business operation
and financial position may be adversely affected.
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Our operations may be affected by concentrating on a few key suppliers. Should there be
any loss of key suppliers or disruption in their supply, our business and results of
operations could be materially and adversely affected.
We rely on a limited number of suppliers for supply of raw materials, machinery and
equipment, engineering and others. 43.6%, 40.4% and 32.5% of our total purchase for 2022,
2023 and 2024, respectively, were from our five largest suppliers in each year during the Track
Record Period. It generally involves several risks when there is a concentration on a few key
suppliers, including the possibility of defective products from a supplier, loss of market share
of supplier’s products, failure of supplier’s products to maintain their competitiveness because
of changing industry standards or clients’ preference, a shortage of product supply and loss of
such suppliers.
We may not be able to meet the delivery schedules or may encounter delays in our
projects if we are unable to maintain our relationships with our key suppliers or our key
suppliers fail to supply the raw material to us in a timely manner and under acceptable terms.
If there is any disruption in their supply of materials to us and we are unable to identify an
alternative source of supply with competitive prices and terms and satisfactory quality in a
timely manner, our business and results of operations may be adversely affected.
We may not be able to effectively manage our inventory levels.
Our inventories include raw materials used for our services. We manage the raw
materials’ inventory level by monitoring the status of our ongoing projects and incoming new
projects, and place orders with suppliers for any inventory that is expected to decline below
targeted levels. We procure raw materials and equipment in accordance with our business
expansion plan or to replace obsolete equipment on an as-needed basis. Adequate inventory
level, however, is subject to numerous uncertainties, including current project progress, our
level of success in securing new projects and other factors beyond our control. We recorded
inventories of RMB79.3 million, RMB73.0 million and RMB84.8 million as of December 31,
2022, 2023 and 2024, respectively.
If we fail to manage our inventory levels effectively, we may be subject to a heightened
risk of inventory obsolescence, a decline in the value of inventories, and potential inventory
write-downs or write-offs. Procuring additional inventories may also require us to commit
substantial working capital, preventing us from using such capital for other purposes. Any of
the foregoing may materially and adversely affect our results of operations and financial
condition.
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We face foreign exchange risk, and fluctuations in exchange rates could have a material
adverse effect on our financial condition and results of operations.
Changes in exchange rates have in the past, and could in the future continue to, materially
and adversely affect our financial condition and results of operations. Our margins will be
under pressure when the Renminbi appreciates against the U.S. dollar. For example, we
recorded foreign exchange differences in connection with our operations, which led to gains of
RMB11.9 million, RMB5.1 million, and RMB7.3 million in 2022, 2023 and 2024, respectively.
Fluctuations in exchange rates between the Renminbi and the U.S. dollar and other
currencies may be affected by, among other things, trade tensions between the U.S. and China,
as well as international economic and political developments. Due to the economic situation
and financial market developments in the PRC and abroad, the PRC government has decided
to proceed further with reform of the Renminbi exchange rate regime and to enhance the
Renminbi exchange rate flexibility.
Significant impairment losses with respect to our trade receivables may materially and
adversely affect our business, results of operations and financial condition.
As of December 31, 2022, 2023 and 2024, our trade receivables were RMB20.7 million,
RMB40.9 million and RMB62.6 million, respectively, and we recorded allowance for credit
losses of RMB4.0 million, RMB4.5 million and RMB4.9 million as of the same dates,
respectively. We recognized impairment loss, net of reversal with respect to our trade
receivables of RMB1.2 million, RMB0.5 million and RMB0.4 million as of December 31,
2022, 2023 and 2024, respectively. If any of our customers’ cash flow, working capital,
financial condition or results of operations deteriorates, it may be unable, or it may otherwise
be unwilling, to pay trade receivables owed to us promptly or at all. Any substantial default or
delay of a customer’s payment obligations may materially and adversely affect our business,
financial conditions and results of operations.
We may incur impairment losses with respect to our other intangible assets and goodwill
in the future, which may materially and adversely affect our business, financial condition
and results of operations.
Our other intangible assets, primarily comprising software and knowhows, were
RMB47.0 million, RMB41.1 million and RMB36.0 million as of December 31, 2022, 2023 and
2024, respectively. Our goodwill, amounted to RMB95.4 million, RMB95.4 million and
RMB95.4 million as of December 31, 2022, 2023 and 2024, respectively. During the Track
Record Period, we did not recognize impairment losses with respect to our intangible assets or
goodwill. We cannot assure you that we will not recognize such impairment losses in the future.
Impairment losses could arise from various factors such as a decrease in the future utility of
our technology assets due to industry advancements that render them obsolete or less useful.
Changes in market conditions could also erode the value attributed to customer relationships.
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Moreover, an economic downturn affecting our sectors could necessitate a re-evaluation of the
carrying value of both our intangible assets and goodwill. Should any such impairments be
recognized, our business, financial condition and results of operations could be materially and
adversely affected.
The discontinuation of any of government grants or preferential tax treatment currently
available to us could adversely affect our financial position, results of operations, cash
flows and prospects.
During the Track Record Period, we have benefited from government grants. Our
eligibility to receive these financial incentives requires that we continue to meet the specified
qualifications. Subject to applicable PRC laws and regulations, tax incentive schemes of the
PRC are determined at the discretion of the central government or relevant local government
authorities, which could determine to eliminate or reduce the financial incentives, generally
with prospective effect. There can be no assurance that we will be able to obtain similar
financial incentives on recurring basis, or at all, in the future. Since our receipt of the financial
incentives may be subject to periodic time lags and varied practices across different
governmental departments, as long as we continue to receive these financial incentives, our net
income in a particular period may be higher or lower relative to other periods depending on the
potential changes in these financial incentives in addition to any business or operational factors
that we may otherwise experience. The discontinuation of financial incentives currently
available to us could have a material adverse effect on our financial condition, results of
operations, cash flows and prospects.
We may not be able to fulfill our obligations in respect of contract liabilities, which may
have a material adverse effect on our results of operations and financial condition.
As of December 31, 2022, 2023 and 2024, our contract liabilities were RMB59.1 million,
RMB49.4 million and RMB37.4 million, respectively. If we fail to fulfill our obligations under
our contracts with customers, we may not be able to convert such contract liabilities into
revenue, and our customers may also require us to refund the deposits we have received, which
may adversely affect our cash flow and liquidity condition. In addition, it may adversely affect
our relationship with such customers, which may also affect our reputation and results of
operations in the future.
We may undertake acquisitions or joint ventures that may have a material adverse effect
on our ability to manage our business and may not be successful.
To pursue our growth strategy, we may acquire new technologies, businesses or services
or enter into strategic alliances with third parties. We may not be able to identify attractive
targets, and we have limited experience in acquisitions. In addition, we may not be able to
successfully acquire the targets identified despite spending significant amount of time and
resources on pursuing such acquisition. Furthermore, integration of an acquired company, its
intellectual property or technology into our own operations is a complex, time-consuming and
expensive process. The successful integration of an acquisition may require, among other
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things, that we integrate and retain key management, sales and other personnel, integrate the
acquired technologies or services into our integrated services from both an engineering and a
sales and marketing perspective, integrate and support preexisting supplier, distribution and
customer relationships, coordinate research and development efforts, and consolidate duplicate
facilities and functions.
The geographic distance between companies, the complexity of the technologies and
operations being integrated and the disparate corporate cultures may altogether increase the
difficulties of integrating an acquired company or technology. In addition, it is common in our
industry for competitors to attract customers and recruit key employees away from companies
during the integration phase of an acquisition.
Our available cash and stock may be used for our future acquisitions, which will possibly
result in significant acquisition-related charges to earnings and dilution to our shareholders.
Future acquisitions will likely present challenges and could require that our management
develop expertise in new areas, manage new business relationships and attract new types of
customers. The diversion of our management’s attention and any difficulties encountered in
these acquisitions could have an adverse effect on our ability to effectively manage our own
business. These acquisitions and equity investments may also expose us to other potential risks,
including loss of the invested amounts, inability to earn an adequate return, unforeseen
liabilities, diversion of resources from our existing businesses and potential harm to
relationships with employees or customers.
We have granted, and may continue to grant, restricted share units or other types of
awards under our share incentive plans, which may result in increased share-based
payment compensation. Those share-based awards may also adversely impact our results
of operations and be dilutive to your shareholding.
We adopted the Pre-IPO Employee Incentive Scheme to enhance our ability to attract and
retain exceptionally qualified individuals and to encourage them to acquire a proprietary
interest in the growth and performance of us. We incurred share-based payment compensation
of RMB1.9 million, RMB1.9 million and RMB4.4 million in 2022, 2023 and 2024,
respectively.
We believe share-based awards as part of an overall compensation package are important
to attracting and retaining key personnel and employees, and we plan to continue to grant
share-based payment compensation to employees in the future. As a result, our share-based
payment expenses may increase, which may have an adverse effect on our results of operations
and financial condition and dilute your shareholding.
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We may not be able to secure additional financing on favorable terms, or at all, to meet
our future capital needs.
We may need additional capital, aimed to expand our capacity, develop new services and
remain competitive. We expect to meet such capital commitments by using cash from
operations and net proceeds to be received from the Global Offering. However, financing may
be limited in amounts or on terms acceptable to us. Our ability to obtain additional capital is
subject to a variety of uncertainties, including our future financial condition, results of
operations and cash flows, general market conditions for capital-raising activities within the
industry, global political conditions, economic and other conditions in China, the United States
or globally. The sale of additional equity or equity-linked securities could lead to dilution to
the shares held by our shareholders.
We have limited insurance coverage, and any claims beyond our insurance coverage may
result in us incurring substantial costs and a diversion of resources.
We maintain property insurance policies covering physical damage to, or loss of, our
facilities and their improvements, equipment, office furniture and inventory; employer’s
liability insurance generally covering death or work injury of employees; product liability and
professional errors and omissions insurance covering product liability claims arising from the
use or operation of our products and claims arising from negligence in connection with our
services to customers; public liability insurance covering certain incidents involving third
parties that occur on our premises; machinery breakdown insurance covering unforeseen and
sudden physical loss or damage to our machinery. We do not maintain key-man life insurance
for any members of our senior management or other key personnel or business disruption
insurance. See “Business—Insurance” for details. Our insurance coverage may be insufficient
to cover any claim for product liability, damage to our facilities, plant and equipment or
employee injuries. In particular, we may face product liability risks if the peptide and
oligonucleotides we help develop or manufacture are subject to product liability claims. Our
liability is not always capped under our service agreements, and in certain cases, the product
liability cap is not applicable for claims relating to personal injuries or death. Any liability or
damage to, or caused by, our facilities or our personnel beyond our insurance coverage may
result in us incurring substantial costs and a diversion of resources.
Any failure of our information systems, such as from data corruption, cyber-based attacks
or network security breaches, could have a material adverse effect on our business and
results of operations.
We rely on a variety of information technology and automated operating systems to
manage or support our operations, including protecting our customers’ intellectual property.
The proper functioning of these systems is critical to the efficient operation and management
of our business. In addition, these systems may require modifications or upgrades as a result
of technological changes or growth in our business. These changes may be costly and
disruptive to our operations and could impose substantial demands on management time. Our
systems and those of third-party providers may be vulnerable to damage or disruption caused
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by circumstances beyond our control, such as catastrophic events, power outages, natural
disasters, computer system or network failures, viruses or malware, physical or electronic
break-ins, unauthorized access, cyber-attacks and thefts. We cannot assure you that the
measures and steps we take to secure our systems and electronic information are adequate. Any
significant disruption to our systems could result in unauthorized disclosure of confidential
information and adversely affect our business and operating results.
An occurrence of a natural disaster, widespread health epidemic or other outbreaks, could
have a material adverse effect on our business, results of operations and financial
condition.
Our business could be materially and adversely affected by natural disasters and extreme
weather conditions, such as snowstorms, earthquakes, fires or floods, the outbreak of a
widespread health epidemic, or other events, such as wars, acts of terrorism, environmental
accidents, power shortage or communication interruptions. The occurrence of such a disaster
or prolonged outbreak of contagious diseases or other adverse public health issues could
materially disrupt our business and operations. For example, a series of precautionary and
control measures were implemented worldwide to contain the virus during the COVID-19
pandemic.
We are also vulnerable to natural disasters and other force majeure events. Fire, floods,
typhoons, earthquakes, power shortages, telecommunications failures, wars, riots, terrorist
attacks or similar events could adversely affect our ability to conduct our business. Our
business could also be adversely affected by the effects of Ebola virus diseases, H1N1 flu,
H7N9 flu, avian flu, Severe Acute Respiratory Syndrome (“ SARS ”), or other epidemics. The
occurrence of any of the foregoing events may, among others, disrupt our R&D and
manufacturing activities and affect the business environment and sentiment, all of which may
have a material and adverse effect on our business, results of operations, financial condition
and prospects.
We may face penalties for our property defects in China.
We have not obtained the relevant permits for the construction of temporary fixture with
an aggregate GFA of approximately 389 sq.m, representing less than 2% of total owned GFA.
Such temporary fixture are used primarily for protecting instruments from the weather, which
are immaterial to our operations. Our rights to these temporary fixture may be limited or
challenged by relevant governmental authorities. We may also be subject to administrative
fines or other penalties due to the lack of the relevant regulatory permits, certificates and
approvals. See “Business—Legal and Compliance Matters—Immaterial Non-compliance” for
further description of this incident.
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Failure to make full contribution to social insurance and housing provident funds for
some of our employees in accordance with relevant PRC laws and regulations may subject
us to penalties.
According to the Social Insurance Law and the Regulation on the Administration of
Housing Provident Funds and other applicable PRC regulations, any employer operating in
China must open social insurance registration accounts and housing provident fund registration
accounts, and contribute social insurance premium and housing provident fund for its
employees. Any failure to make timely and adequate contribution of social insurance premium
and housing provident fund for its employees may trigger an order of correction from
competent authority requiring the employer to make up the full contribution of such unpaid
social insurance premium and housing provident fund within a specified period of time, and the
competent authority may further impose fines or penalties. During the Track Record Period, we
failed to make full contribution to the social insurance and housing provident funds for some
of our employees as required under the applicable PRC laws and regulations, involving an
immaterial amount which will not bring any material adverse effect on our operations. In 2022,
2023 and 2024, the amount of shortfall in social insurance and housing provident fund
contributions was RMB0.6 million, RMB0.5 million and RMB0.1 million, respectively. As
advised by our PRC Legal Adviser, pursuant to relevant PRC laws and regulations, the
under-contribution of social insurance within a prescribed period may subject us to a daily
overdue charge of 0.05% of the delayed payment amount. If such payment is not made within
the stipulated period, the competent authority may further impose a fine of one to three times
of the overdue amount. Furthermore, pursuant to relevant PRC laws and regulations, if there
is a failure to pay the full amount of housing provident fund as required, the housing provident
fund management center may require payment of the outstanding amount within a prescribed
period. If the payment is not made within such time limit, an application may be made to the
PRC courts for compulsory enforcement. See “Business—Legal and Compliance
Matters—Immaterial Non-compliance” for further description of this incident.
RISKS RELATING TO DOING BUSINESS IN JURISDICTIONS WHERE WE
OPERATE
Changes in geopolitical relationships, international trade policies and other tensions may
impact our business operations.
During the Track Record Period, we generated a substantial portion of our revenue from
companies headquartered in the United States or other foreign jurisdictions. As a significant
part of our capacity and facilities are currently located in China, our business is therefore
subject to constantly changing international economic, regulatory, social and political
conditions, and local conditions in those foreign countries and regions. As a result, China’s
political relationships with those foreign countries and regions may affect the demand for our
services and our ability to serve foreign customers or joint venture customers set up by foreign
companies. There can be no assurance that such customers will not alter their perception of us
or their preferences as a result of adverse changes to the state of political relationships between
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China and the relevant foreign countries or regions. Any tensions and political concerns
between China and the relevant foreign countries or regions may cause a decline in the demand
for our services and adversely affect our business, financial condition, results of operations,
cash flows and prospects.
In recent years, as trade frictions increase between the United States and China, concerns
exist among PRC enterprises transacting with United States companies that a possible trade
war between the two countries could have possible impact on their business. Elevated tensions
between the two countries have been driven by a range of factors, including global pandemic,
legislative actions, economic sanctions, and executive orders. These developments have led to
restrictions on various transactions and investments involving Chinese enterprises. Rising
tensions could reduce levels of trades, investments, technological exchanges and other
economic activities between the two major economies, which would have a material adverse
effect on global economic conditions and the stability of global financial markets. A trade
friction between global large trade partners could also threaten the ongoing global economic
development and the increasing cross-border transactions trend. A deterioration in Sino-US
relationship could negatively impact the global economic development and the cross-border
transactions between China and the United States.
The U.S. government has announced substantial new tariffs affecting a wide range of
products and jurisdictions and has indicated an intention to continue developing new trade
policies, including with respect to the pharmaceutical industry. See “Summary—Recent
Development” for further details of this development. We also plan to take certain measures to
tackle with the potential impact of future U.S. tariffs. See “Summary—Recent Development”
for the impact of tariff and our mitigating measures. Based on the aforementioned, our
Directors believe that the recently imposed tariffs have not caused material adverse impact on
our business operations and financial performance.
However, given the ongoing discussions between the United States and its trade partners,
including China, there remains significant uncertainty about whether the United States may
further change the scope, level and interpretation of tariffs it imposes. Revenue contribution
from the U.S. accounted for 37.7%, 34.1%, 55.0% for the year ended December 31, 2022, 2023
and 2024, respectively. As the revenue contribution from the U.S. accounted for a significant
portion of our total revenue and may continue to increase, if the United States imposes a higher
tariff this may have a material negative impact on our business operations and financial
performance. The tariffs imposed by the United States have led and may in the future lead to
retaliatory measures taken by other countries. In such case, our customers in the United States
may have to pay higher for our products and services, and we may become less competitive
compared to peers outside China, especially peers in the U.S., who are not subject to the special
tariff imposed on exports from China. For example, if the United States imposes a 125% or
even higher tariff on our goods, we cannot assure you that our U.S. customers would not
attempt to renegotiate prices with us or cancel their orders. There is no guarantee that there will
not be additional tariffs imposed or enhanced measures against imports from China, which
could materially and adversely affect our business operations and financial performance.
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We cannot assure you that all of the mitigating measures against higher tariffs would
work, if at all. For example, custom authorities may challenge the classification of our products
exported into the U.S., or that we may not able to produce the APIs in our U.S. facilities in the
near future. Failure of such mitigating measures may have a material adverse impact on our
business operations and financial performance. We continually monitor the global trade
environment for new and/or changing tariffs, retaliatory actions, trade agreements, export
restrictions, sanctions or other restrictions that may impact us or our supply chain or customers.
Changes to trade policies, treaties and tariffs, or the perception that these changes could
occur, could adversely affect the financial and economic conditions in the jurisdictions in
which we operate. Such political tensions and policy changes may have an adverse effect on
global economic conditions, the stability of global financial markets, and international trade
policies. Moreover, the bilateral relationship is an ongoing matter, evolving sometimes from
day to day, and we cannot predict how the relationship will further evolve or what impact any
subsequent developments in the relationship may have on our business.
Given that a substantial number of our customers are pharmaceutical and biotech
companies in the United States, the demands of our services are significantly influenced by
United States government’s attitude toward Chinese services providers in pharmaceutical and
biotechnology industries. In addition, foreign CRDMOs may be subject to U.S.
legislation, including the proposed BIOSECURE Act. For details, please see “Regulatory
Overview—Other Foreign Regulations—Laws and Regulations concerning International
Trade—Proposed BIOSECURE Act.” If the BIOSECURE Act is enacted in the proposed form,
and if we or our customers were to be listed as or designated as “biotechnology companies of
concern” as defined in the BIOSECURE Act, our ability and our customers’ ability to engage
in business with the U.S. government or with companies that engage in business with the U.S.
government may be limited, which could disrupt or diminish our business activities. As of the
Latest Practicable Date, we believe that the risk of our operations being affected by the
proposed BIOSECURE Act is low because we have not been named as a “biotechnology
companies of concern” as defined in the proposed BIOSECURE Act. However, we cannot
assure you that we will not be negatively influenced by the increasing trade frictions between
the United States and China as well as by adverse changes in United States laws and
regulations toward diplomatic relations. As a result, our business, financial condition, results
of operations and business prospects could be materially and adversely affected.
Our listing may be impeded and our business operations may be adversely affected by the
Measures for Cybersecurity Review or the Regulation on the Administration of Cyber
Data Security (Draft for Comments).
On December 28, 2021, the Cyberspace Administration of China (“ CAC”), jointly with
the other 12 governmental authorities, promulgated the Measures for Cybersecurity Review
() (the “ MCR”), which became effective from February 15, 2022.
Pursuant to Article 2 of the MCR, besides the procurement of network products and services
by critical information infrastructure operators, any data processing activity by network
platform operators that affects or may affect national security shall be subject to the
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cybersecurity review. In accordance with Article 7 of the MCR, network platform operators
mastering personal information of more than one million users must apply to the Cybersecurity
Review Office for cybersecurity review when listing abroad ( ਷̮ɪ̹).
Based on the fact that (i) the MCR came into effect recently, and its implementation and
interpretation are subject to uncertainties and (ii) we have not been involved in any
investigations on cybersecurity review initiated by the CAC on such basis and nor have we
received any inquiry, notice, warning, or sanctions in such respect, with the support of our PRC
data compliance adviser Han Kun Law Offices, we are of the view that we comply with such
regulations in all material aspects and we believe such regulations would not have a material
adverse impact on our business operations or our Global Offering. Considering that (a) we have
not been involved in any cybersecurity review or investigation by the CAC or other authorities
with respect to the MCR; (b) we have not been informed that we are recognized as a crucial
information infrastructure operator by any relevant authority; (c) the data processed by us has
not been included in the effective core data and important data catalogs by any authority; and
(d) we have taken reasonable and adequate technical and management measures to ensure data
security, we are of the view that the likelihood that our business operation or the Global
Offering might give rise to national security risks is remote.
However, the MCR was released in recent years, certain provisions of which are still
unclear and are subject to the finalization or clarifications by relevant authorities. As such, the
PRC regulatory authorities may have broad discretion in the interpretation of “affect or may
affect national security”. If we were deemed as a data processor that “affects or may affect
national security” by the PRC regulatory authorities under their broad discretion, we may be
subject to cybersecurity review. If we fail to pass such cybersecurity review, our Listing may
be impeded, our business operations may be adversely affected, and/or we may be subject to
other severe penalties and/or action by the competent government authorities.
Our global business may be subject to compliance with existing or future sanctions and
export control laws and regulations.
We have a global sales network and therefore we are subject to sanctions and export
control laws and regulations. As a result of the ongoing conflict between Russia and Ukraine,
the United States, in coordination with the United Kingdom and the European Union, among
others, has implemented sanctions and export control measures targeting Russia, Belarus, and
Russian-controlled regions of Ukraine (Crimea, Donetsk and Luhansk). These measures
include (i) blocking sanctions prohibiting dealings with various Russian senior government
officials, and companies in various sectors important to the Russian economy, including major
Russian financial institutions; (ii) expanded sectoral sanctions related to designated Russian
entities’ ability to raise capital; (iii) the disconnection of certain Russian and Belarusian banks
from the Society for Worldwide Interbank Financial Telecommunication (“ SWIFT ”) financial
messaging network; (iv) bans on new investment in Russia; (v) bans on the provision of certain
services in Russia in the areas of accounting, trust formation, management consulting, quantum
computing, and in relation to the maritime transport of Russian-origin crude oil and petroleum
products; (vi) bans on the import into the United States of certain Russian origin products,
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including various energy products; (vii) bans on the conduct of business or investment activity
in the Russian-controlled Crimea, Donetsk and Luhansk regions of Ukraine; and (viii)
restrictions on the export of various products to Russia and Belarus, including certain dual-use
industrial and commercial products, and luxury goods. Additionally, certain logistics operators
have imposed bans on direct air deliveries to Russia and restrictions on land deliveries to and
from Russia, Belarus and Ukraine.
To date, none of these sanctions or related measures have resulted in any material adverse
impacts to our business and we have not been subject to liabilities arising from any violation
of these sanctions or related measures. The imposition of the current or possible future
additional export controls and economic sanctions on transactions with entities in any countries
or regions subject to sanctions or export controls, including Russia could limit or prevent us
from operating all or a portion of our business or pursuing future business opportunities in such
countries or regions. Any violation by us or other business partners of applicable sanction
and/or export control laws and regulations could subject us to liabilities and losses and damage
our reputation. In addition, the ongoing conflict between Russia and Ukraine could lead to
disruption, instability and volatility in global markets and industries that could negatively
impact our operations. The scope of the impact of sanctions, export controls and the ongoing
conflict between Russia and Ukraine is impossible to predict at this time, and any material
change in such laws and regulations could impose additional compliance obligations on our
global business or have an adverse impact on our business.
We procure a substantial portion of equipment required for our operations from overseas,
including the United States, and we may thus be subject to export control laws and regulations
in the applicable jurisdictions, and specifically, the U.S. Export Administration Regulations,
U.S. customs regulations and economic and trade sanctions administered by the United States
governments, including but not limited to the U.S. Department of Commerce and its agencies,
such as the Bureau of Industry and Security, and the U.S. Department of the Treasury and its
agencies. These regulations provide that certain products may be exported outside of the
United States only with the required export authorizations, including by license, license
exception or other appropriate government authorizations. If we fail to comply with these laws
or complete inspections required by the regulatory authorities in the United States, such as the
U.S. Department of Commerce, in coordination with relevant government authorities of China,
we may be adversely affected by reputational harm or loss of access to certain materials and
equipment.
The economic, social and other general conditions in jurisdictions where we operate could
affect our business, results of operations, financial conditions and prospects.
We conduct a substantial part of our business operations in China. Accordingly, our
business, results of operations and financial condition are influenced by economic, social, legal
and other general developments in China. In particular, factors such as consumer, corporate and
government spending, business investment, level of economic development, and resource
allocation could affect the growth of our business.
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The PRC economy has experienced significant growth over the past decades since the
implementation of China’s reform and opening-up policy. In recent years, the PRC government
has implemented measures emphasizing the utilization of market forces in economic reform
and the establishment of sound corporate governance practices in business enterprises. These
economic reform measures may be adaptively adjusted from industry to industry or across
different regions of the country. Although these reforms have resulted in significant economic
growth and social progress, we cannot predict whether changes in China’s economic and social
conditions, laws, regulations and policies will have any material impact on our future business,
financial condition or results of operations. If the business environment in China changes, our
business in China and the growth of our business may also be adversely affected.
Compliance with environmental protection and health and safety laws and regulations
can be expensive, and noncompliance with these laws and regulations may result in
significant monetary damages, fines and other penalties.
Our operations are subject to extensive national and local laws with respect to
environmental protection, health and safety, including but not limited to the treatment and
discharge of pollutants into the environment and the use of toxic and hazardous chemicals in
the process of our business operations. In addition, our construction projects can only be put
into operation after the relevant administrative authorities in charge of environmental
protection and health and safety have examined and approved the relevant facilities in certain
jurisdictions. As requirements imposed by such laws and regulations may change and more
stringent laws or regulations may be adopted, we may not be able to comply with, or accurately
predict any potential substantial cost of complying with, these laws and regulations. If we fail
to comply with environmental protection and health and safety laws and regulations, we may
be subject to rectification orders, substantial fines, potentially significant monetary damages,
or production suspensions in our business operations. As a result, any failure by us to control
the use or discharge of hazardous substances could have a material and adverse impact on our
business, financial condition, results of operations and prospects.
In addition, we cannot fully eliminate the risk of accidental contamination, biological or
chemical hazards or personal injury at our facilities during the process of development and
manufacturing of pharmaceuticals. In the event of such accident, we could be held liable for
damages and clean-up costs which, to the extent not covered by existing insurance or
indemnification, could harm our business. Other adverse effects could result from such
liability, including reputational damage resulting in the loss of business from customers. We
may also be forced to close or suspend operations at certain of our affected facilities
temporarily, or permanently. As a result, any accidental contamination, biological or chemical
hazards or personal injury could have a material and adverse impact on our business, financial
condition, results of operations and prospects.
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Our investments in different countries may be adversely affected by regulatory or
government scrutiny of the target countries.
We may selectively pursue strategic alliances, investments and acquisitions in the future.
Such investments may be subject to stringent regulatory or governmental scrutiny imposed by
relevant authorities. For example, the United States Congress has passed legislation that will
expand the jurisdiction and powers of the Committee on Foreign Investment in the United
States (“ CFIUS ”), the United States interagency committee that conducts national security
reviews of foreign investment. The Foreign Investment Risk Review Modernization Act
(“FIRRMA ”) was signed into law in August 2018. Pursuant to FIRRMA, investments in
companies that deal in “critical technology” are subject to filing requirements and, in some
instances, review and approval by CFIUS. The term “critical technology” includes, among
others, technology subject to United States export controls and certain “emerging and
foundational technology,” a term that is still being defined but that is expected to include a
range of United States biotechnology. If an investment by a foreign entity in a United States
business dealing in “critical technology” meets certain thresholds, a filing with CFIUS is
mandatory. While FIRRMA currently grants CFIUS jurisdiction on only controlling and certain
non-controlling investments made by foreign persons in United States businesses in research
and development in biotechnology, CFIUS’s jurisdiction may be further expanded in the future,
which may increase the uncertainty and transaction costs of our future investments in and
acquisitions of United States biotechnology businesses and therefore adversely affect the
implementation of our future merger and acquisition activities and investment strategies in
respect of United States biotechnology assets and businesses.
We are subject to stringent privacy laws and information security policies related to data
privacy and security, and we may be exposed to risks relating to personal or other
sensitive information.
The regulatory framework for the collection, use, safeguarding, sharing, transfer and
other processing of personal information worldwide is rapidly evolving and is likely to remain
uncertain for the foreseeable future. Regulatory authorities in virtually every major target
market in which we operate or intend to operate have implemented and are considering a
number of legislative and regulatory proposals concerning personal data protection. Whilst we
have adopted security policies and measures to protect the data and personal information we
process, misappropriation, misuse, leakage, falsification or intentional or accidental release or
loss of personal data might not be avoided due to human error, employee misconduct or system
breakdown. Any failure or perceived failure by us to prevent information security breaches or
to comply with privacy policies or privacy-related legal obligations, or any compromise of
information security that results in the unauthorized release or transfer of personally
identifiable information, could cause our customers to lose trust in us and could expose us to
legal claims. Although we have made efforts to ensure our compliance with the applicable
privacy regulations in the relevant jurisdictions, we may not be capable of adjusting our
internal policies in a timely manner and any failure to comply with applicable regulations could
also result in regulatory enforcement actions against us.
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Complying with all applicable laws, regulations, standards and obligations relating to
privacy and data security may cause us to incur substantial operational costs or require us to
modify our data processing practices and processes. Non-compliance could result in
proceedings against us by data protection authorities, governmental entities or others,
including class action privacy litigation in certain jurisdictions, which would subject us to
significant fines, penalties, judgments and negative publicity. In addition, if our practices are
not consistent or viewed as not consistent with legal and regulatory requirements, including
changes in laws, regulations and standards or new interpretations or applications of existing
laws, regulations and standards, we may become subject to audits, inquiries, whistleblower
complaints, adverse media coverage, investigations, severe criminal or civil sanctions and
reputational damage. Any of the foregoing could have a material adverse effect on our
competitive position, business, financial condition, results of operations and prospects.
We may face risks from transferring our scientific data.
On March 17, 2018, the General Office of the State Council promulgated the Measures
for the Management of Scientific Data (), or the Scientific Data
Measures, which provided a broad definition of scientific data and relevant rules for the
management of scientific data. According to the Scientific Data Measures, if the provision of
scientific data involving “state secrets” is required in foreign exchanges and cooperation,
Chinese enterprises should clarify the type, scope and purpose of the data to be used, and report
to the competent authority for approval in accordance with relevant procedures of
confidentiality management regulations. When publishing a paper in a foreign academic
journal requires the author to submit the relevant scientific data, the author should, prior to the
publication, submit such scientific data to the belonged institution for unified management if
such scientific data are generated with the government funding. Given the term “state secret”
is not clearly defined, we cannot assure you that we can always obtain relevant approvals for
sending scientific data. If we are unable to obtain necessary approvals in a timely manner, or
at all, our provision of service may be hindered, which could materially and adversely affect
our business, financial condition, results of operations and prospects. If the relevant
government authorities consider the transmission of our scientific data to be in violation of the
requirements under the Scientific Data Measures, we may be subject to rectification and other
administrative penalties imposed by those government authorities.
Holders of H Shares may be subject to PRC income taxes.
Holders of H Shares that are non-PRC resident individuals or non-PRC resident
enterprises, whose names appear on the register of members of H Shares of our Company, are
subject to PRC income tax in accordance with the applicable tax laws and regulations, on
dividends received from us and gains realized through the sale or transfer by other means of
H shares by such shareholders. According to the Individual Income Tax Law of the PRC ( ʕ
) and the Implementation Regulations for the Individual Income
Tax Law of the PRC (ૢԷ), which both came into
effect on January 1, 2019, the tax applicable to non-PRC resident individuals is imposed at a
rate of 20% for any dividends obtained from within China or gains on the transfer of shares and
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shall be withheld and paid by the withholding agent. For non-PRC resident enterprises that do
not have establishments or premises in China, and for those that have establishments or
premises in China but whose income is not related to such establishments or premises, under
the EIT Law and its implementation regulations, dividends paid by us and gains realized by
such foreign enterprises upon the sale or other disposition of H Shares are subject to PRC
income tax at a 10% rate. We intend to withhold tax at a rate of 10% from dividends paid to
non-PRC resident enterprise holders of our H Shares (including HKSCC Nominees). Non-PRC
resident enterprises that are entitled to be taxed at a reduced rate under an applicable income
tax treaty or arrangement will be required to apply to the PRC tax authorities for a refund of
any amount withheld in excess of the applicable treaty rate, and payment of such refund will
be subject to the PRC tax authorities’ approval. Pursuant to the Arrangement between the
Mainland and the Hong Kong Special Administrative Region for the Avoidance of Double
Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income executed on
August 21, 2006, the PRC Government may levy taxes on the dividends paid by PRC
companies to Hong Kong residents in accordance with the PRC laws, but the levied tax (in the
case the beneficial owner of the dividends are not companies directly holding at least 25% of
the equity interest in the company paying the dividends) shall not exceed 10% of the total
dividends. According to the Enterprise Income Tax Law of the PRC (ה
), which was newly revised and implemented on December 29, 2018, and the
Implementation Regulations for the Enterprise Income Tax Law of the PRC, which was newly
revised and implemented on April 23, 2019, if a non-resident enterprise has no presence or
establishment within China, or if it has established a presence or establishment but the income
obtained has no actual connection with such presence or establishment, it shall pay an
enterprise income tax on its income derived from within China with a reduced rate of 10%.
Pursuant to the Arrangement between the Mainland and the Hong Kong Special Administrative
Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect
to Taxes on Income, dividends paid by PRC resident enterprises to Hong Kong residents can
be taxed either in Hong Kong or in accordance with the PRC laws. However, if the beneficial
owner of the dividends is a Hong Kong resident, the tax charged shall not exceed: (i) 5% of
the total amount of dividends if the Hong Kong resident is a company that directly owns at least
25% of the capital of the PRC resident enterprise paying dividends; (ii) otherwise, 10% of the
total amount of dividends. Considering the above, non-PRC resident holders of our H Shares
should be aware that they may be obligated to pay PRC income tax on the dividends and gains
realized through sales or transfers by other means of the H Shares.
Payment of dividends is subject to restrictions under the applicable PRC laws.
Under the applicable PRC laws and the constitutional documents of our Company,
dividends may be paid only out of distributable profits, which refer to after-tax profits as
determined under PRC GAAP less any recovery of accumulated losses and required allocations
to statutory capital reserve funds. As a result of these PRC laws and regulations, each of our
PRC subsidiaries is restricted in its ability to transfer its net profit to us in the form of
dividends and we may not have sufficient or any distributable profit to make dividend
distributions to our Shareholders in the future, including periods for which our financial
statements indicate that our operations have been profitable. Limitations on the ability of our
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operating subsidiaries in China to pay dividends to us could materially and adversely limit our
ability to distribute dividends. In addition, the calculation of our distributable profits under
PRC GAAP differs in certain aspects from the calculation under IFRS. As a result, we may not
be able to pay a dividend in a given year if we do not have distributable profits as determined
under PRC GAAP even if we have profits as determined under IFRS.
There might be uncertainties in effecting service of legal process, enforcing foreign
judgments against us or our Directors and senior management personnel in the PRC.
We are a joint stock company incorporated in the PRC. In addition, a majority of our
Directors and senior management personnel reside within the PRC, and substantially all of
their assets are located within the PRC. Therefore, it may be difficult for investors to directly
effect service of legal process upon us or our Directors and senior management personnel in
the PRC.
To address any ESG risks, we may incur additional costs, which may materially and
adversely affect our financial performance.
To identify, manage, and mitigate ESG risks, we may incur additional costs and expenses
which could impact our financial performance. Given the nature of our business, we do not
produce any material generation of emissions and wastes and no heavy pollutions. Nonetheless,
we monitor environmental and climate-related risks that may impact on our business, strategy
and financial performance and evaluate the magnitude of the resulting impact over the short-,
medium- and long-term horizons. We monitor a wide range of indicators such as power
consumption, emission of greenhouse gas, water consumption and waste generation to manage
our environmental and climate-related risks arising from our operations and are committed to
providing adequate support to our employees to nurture a friendly and inspirational corporate
culture. This commitment may entail incurring substantial additional costs and would
potentially impact our profitability. See “Business—ESG Matters.”
In addition, the increasing ESG-related regulatory requirements, including various ESG
disclosure mandates in the jurisdictions where we operate, may lead to rising compliance costs
and cost of sales may rise. Failure to adapt to new regulations or meet evolving industry
expectations and standards could result in consumers choosing products from other companies,
which may materially and adversely affect our results of operations and financial conditions.
RISKS RELATING TO THE GLOBAL OFFERING
No public market currently exists for our H Shares, and an active trading market for our
H Shares may not develop, especially taking into account that our existing shareholders
may be subject to a lock-up period.
No public market currently exists for our H Shares. The initial Offer Price for our H
Shares to the public will be the result of our negotiations with the Overall Coordinators (for
themselves and on behalf of the Underwriters) and the Offer Price may differ significantly from
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the market price of the H Shares following the Global Offering. We have applied to the Stock
Exchange for listing of, and permission to deal in, our Offer Shares. A listing on the Stock
Exchange, however, does not guarantee that an active and liquid trading market for our H
Shares will develop, or if it does develop, that it will be sustained following the Global
Offering, or that the market price of the H Shares will not decline following the Global
Offering.
The price and trading volume of our H Shares may be volatile, which could lead to
substantial losses to investors.
The price and trading volume of our H Shares may be subject to significant volatility in
response to various factors beyond our control, including the general market conditions of the
securities in Hong Kong and elsewhere in the world. In particular, the business and
performance and the market price of the shares of other companies engaging in similar business
may affect the price and trading volume of our H Shares. In addition to market and industry
factors, the price and trading volume of our H Shares may be highly volatile for specific
business reasons, such as fluctuations in our revenue, earnings, cash flows, investments,
expenditures, regulatory developments, announcements of competitive developments,
acquisitions or strategic alliances in our industry, relationships with our suppliers, movements
or activities of key personnel, general market conditions or other developments affecting us or
our industry or actions taken by competitors.
Pursuant to the applicable PRC law, within the 12 months following the Listing Date, all
existing Shareholders (including the Pre-IPO Investors) could not dispose of any of the Shares
held by them. Due to such lock-up requirement, the liquidity and trading volume of the H
Shares in the short term following the Global Offering may be significantly affected. These
factors may significantly affect the market price and volatility of our H Shares, regardless of
our actual operating performance.
The price of our H Shares when trading begins could be lower than the Offer Price.
The Offer Price of our Shares sold in the Global Offering is expected to be determined
on the Price Determination Date. However, the H Shares will not commence trading on the
Stock Exchange until they are delivered, which is expected to be a few business days after the
Price Determination Date. As a result, investors may not be able to sell or otherwise deal in the
H Shares during that period. Accordingly, holders of our H Shares are subject to the risk that
the price of the H Shares when trading begins could be lower than the Offer Price as a result
of adverse market conditions or other adverse developments that may occur between the time
of sale and the time trading begins.
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Future sales or perceived sales of our H Shares in the public market by major
Shareholders following the Global Offering could materially and adversely affect the
price of our H Shares.
Prior to the Global Offering, there has not been a public market for our H Shares. Future
sales or perceived sales by our existing Shareholders of our H Shares after the Global Offering
could result in a significant decrease in the prevailing market price of our H Shares. Future
sales of significant amounts of our H Shares in the public market or the perception that these
sales may occur could significantly decrease the prevailing market price of our H Shares and
our ability to raise equity capital in the future.
Any possible conversion of Unlisted Shares into H Shares could increase the supply of H
Shares in the market and negatively impact the market price of our H Shares.
According to the stipulations by the State Council’s securities regulatory authority and the
Articles of Association, our Unlisted Shares may be converted into H Shares and such
converted H Shares may be listed or traded on an overseas stock exchange, provided that prior
to the conversion and trading of such converted shares, the requisite internal approval
processes (but without the necessity of Shareholders’ approval) have been duly completed and
the filing with the CSRC has been completed. In addition, such conversion, trading and listing
must comply with the regulations prescribed by the State Council’s securities regulatory
authorities and the regulations, requirements and procedures prescribed by the relevant
overseas stock exchange. We can apply for the listing of all or any portion of our Unlisted
Shares on the Stock Exchange as H Shares in advance of any proposed conversion to ensure
that the conversion process can be completed promptly upon notice to the Stock Exchange and
delivery of shares for entry on the H Share register. This could increase the supply of H Shares
in the market, and future sales, or perceived sales, of the converted H Shares may adversely
affect the market price of H Shares.
Y ou will incur immediate and significant dilution and may experience further dilution if
we issue additional Shares in the future.
The Offer Price of the Offer Shares is higher than the net tangible asset value per Share
immediately prior to the Global Offering. Therefore, purchasers of our Offer Shares in the
Global Offering will experience a substantial immediate dilution. There can be no assurances
that if we were to immediately liquidate after the Global Offering, any assets will be distributed
to Shareholders after the creditors’ claims. To expand our business, we may consider offering
and issuing additional Shares in the future. To the extent that we raise additional capital
through the sale of equity or convertible debt securities, your ownership interest will be
diluted, and the terms may include liquidation or other preferences that adversely affect your
rights as a holder of our H Shares. Issuance of additional Shares, or the possibility of such
issuance, may cause dilution to our shareholders if we issue additional Shares at a price which
is lower than the net tangible asset value per Share prior to the issuance of such additional
Shares, and may cause the market price of our H Shares to decline.
RISK FACTORS
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Our Controlling Shareholders have significant influence over our Company and their
interests may not be aligned with the interest of our other shareholders.
Immediately upon the completion of the Global Offering, our Controlling Shareholders
will collectively control approximately 67.37% voting power at general meetings of our
Company. Our Controlling Shareholders will, through their voting power at the Shareholders’
meetings and their delegates on the Board, have significant influence over our business and
affairs, including decisions in respect of mergers or other business combinations, acquisition
or disposition of assets, issuance of additional Shares or other equity securities, timing and
amount of dividend payments, and our management. Our Controlling Shareholders may not act
in the best interests of our minority Shareholders. In addition, without the consent of our
Controlling Shareholders, we could be prevented from entering into transactions that could be
beneficial to us. This concentration of ownership may also discourage, delay or prevent a
change in control of our Company, which could deprive our Shareholders of an opportunity to
receive a premium for the Shares as part of a sale of our Company and may significantly reduce
the price of our Shares.
There can be no assurance that we will declare and distribute any amount of dividends in
the future.
During the Track Record Period, we did not pay any dividends, nor did we declare any
dividends. See “Financial Information—Dividend” for further details of our dividend policy.
There can be no assurance that future dividends will be declared or paid. The declaration,
payment and amount of any future dividends are subject to the discretion of our Directors
depending on, among other considerations, our business and financial performance, cash
requirements and availability, capital and regulatory requirements and general business
conditions. We may not have sufficient or any profits to enable us to make dividend
distributions to our Shareholders in the future, even if our financial statements indicate that our
operations have been profitable.
Forward-looking statements contained in this Prospectus are subject to risks and
uncertainties.
This Prospectus contains forward-looking statements with respect to our business
strategies, operating efficiencies, competitive positions, and growth opportunities for existing
operations, plans and objectives of management, certain pro forma information and other
matters.
The words “anticipate,” “believe,” “could,” “potential,” “continue,” “expect,” “intend,”
“may,” “plan,” “seek,” “will,” “would,” “should” and the negative of these terms and other
similar expressions identify a number of these forward-looking statements. These forward-
looking statements, including, among others, those relating to our future business prospects,
capital expenditure, cash flows, working capital, liquidity and capital resources are necessary
estimates reflecting the best judgment of our Directors and management and involve a number
of risks and uncertainties that could cause actual results to differ materially from those
suggested by the forward-looking statements. As a result, these forward-looking statements
RISK FACTORS
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should be considered in light of various important factors, including those set out in the section
headed “Risk Factors” in this Prospectus. Accordingly, such statements are not a guarantee of
future performance and you should not place undue reliance on any forward-looking
information. All forward-looking statements in this Prospectus are qualified by reference to
this cautionary statement.
Certain facts, forecasts and statistics contained in this Prospectus are derived from
various official government sources and may not be accurate, reliable, complete or up to
date.
We have derived certain information and statistics in this Prospectus, particularly the
section headed “Industry Overview,” the report prepared by Frost & Sullivan, which was
commissioned by us, and from various official government publications and other publicly
available publications provided by the PRC government. We believe that the sources of the
information are appropriate sources for such information, and we have taken reasonable care
in extracting and reproducing such information. However, information and statistics from
official government sources have not been independently verified by us or any other parties
involved in the Global Offering and no representation is given as to their accuracy. Due to
possibly flawed or ineffective collection methods or discrepancies between published
information and market practice and other problems, the statistics herein may be inaccurate or
may not be comparable with statistics produced for other economies, and you should not place
undue reliance on them. Furthermore, we cannot assure you that they are stated or compiled
on the same basis, or with the same degree of accuracy, as similar statistics presented
elsewhere. In all cases, you should consider carefully how much weight or importance you
should attach to or place on such information or statistics.
Y ou should read the entire Prospectus carefully, and we strongly caution you not to place
any reliance on any information contained in press articles or other media regarding us
or the Global Offering.
Y ou are strongly advised to read the entire Prospectus carefully and are cautioned against
placing any reliance on the information in any press article or any other media coverage which
contains information not disclosed or not consistent with the information included in this
Prospectus. Subsequent to the date of this Prospectus but prior to the completion of the Global
Offering, there may be press and media coverage regarding us and the Global Offering, which
may contain, among other things, certain financial information, projections, valuations and
other forward-looking information about us and the Global Offering. We have not authorized
the disclosure of any such information in the press or media and do not accept responsibility
for the accuracy or completeness of such press articles or other media coverage. We make no
representation as to the appropriateness, accuracy, completeness or reliability of any of the
projections, valuations or other forward-looking information about us. To the extent such
statements are inconsistent with, or conflict with, the information contained in this Prospectus,
we disclaim responsibility for them. Accordingly, prospective investors are cautioned to make
their investment decisions on the basis of the information contained in this Prospectus only and
should not rely on any other information.
RISK FACTORS
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DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This Prospectus, for which our Directors (including any proposed Director who is named
as such in this Prospectus) collectively and individually accept full responsibility, includes
particulars given in compliance with the Companies (Winding up and Miscellaneous
Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules (Chapter 571V
of the Laws of Hong Kong) and the Listing Rules for the purpose of giving information to the
public with regard to us. Our Directors, having made all reasonable enquiries, confirm that, to
the best of their knowledge and belief, the information contained in this Prospectus is accurate
and complete in all material respects and not misleading or deceptive, and there are no other
facts, the omission of which would make this Prospectus or any statement in this Prospectus
misleading.
CSRC FILING REQUIREMENT
We have filed the required documents with the CSRC, and the CSRC has issued the filing
notice dated December 12, 2024, confirming our completion of the filing pursuant to the new
filing regime introduced by the Overseas Listing Trial Measures for the Global Offering, the
conversion of certain Unlisted Shares into H Shares and the listing of the H Shares on the Hong
Kong Stock Exchange.
UNDERWRITING
This Prospectus is published solely in connection with the Hong Kong Public Offering
which forms part of the Global Offering. For applicants under the Hong Kong Public Offering,
this Prospectus contain the terms and conditions of the Hong Kong Public Offering. The Global
Offering comprises the Hong Kong Public Offering of initially 1,680,000 H Shares and the
International Offering of initially 15,120,000 H Shares (subject, in each case, to reallocation
on the basis described in “Structure of the Global Offering”).
The listing of the Offer Shares on the Hong Kong Stock Exchange is sponsored by the
Joint Sponsors. Pursuant to the Hong Kong Underwriting Agreement, the Hong Kong Public
Offering is underwritten by the Hong Kong Underwriters on a conditional basis, with one of
the conditions being that the Offer Price is agreed between the Overall Coordinators (for and
on behalf of the Underwriters) and us. The International Offering is managed by the Overall
Coordinators and is underwritten by the International Underwriters. The International
Underwriting Agreement is expected to be entered into on or about the Price Determination
Date, subject to agreement on the Offer Price between the Company and the Overall
Coordinators (for and on behalf of the Underwriters). If, for any reason, the Offer Price is not
agreed between the Company and the Overall Coordinators (for and on behalf of the
Underwriters) on or before the Price Determination Date, or such later date or time as may be
agreed between the Overall Coordinators (for and on behalf of the Underwriters) and the
Company, the Global Offering will not proceed. See “Underwriting” for details about the
Underwriters and the underwriting arrangements.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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DETERMINATION OF THE OFFER PRICE
The Offer Shares are being offered at the Offer Price which the Overall Coordinators (for
and on behalf of the Underwriters) and the Company will determine on or before Thursday,
June 26, 2025, and in any event not later than 12:00 noon on Thursday, June 26, 2025.
If the Overall Coordinators (for and on behalf of the Underwriters) and the Company are
unable to reach an agreement on the Offer Price on or before the Price Determination Date, or
such later date or time as may be agreed between the Overall Coordinators (for and on behalf
of the Underwriters) and the Company, the Global Offering will not become unconditional and
will lapse.
RESTRICTIONS ON OFFER AND SALE OF THE OFFER SHARES
No action has been taken to permit a Hong Kong Public Offering of the Offer Shares or
the general distribution of this Prospectus in any jurisdiction other than Hong Kong.
Accordingly, this Prospectus may not be used for the purposes of, and does not constitute, an
offer or invitation in any jurisdiction or in any circumstances in which such an offer or
invitation is not authorized or to any person to whom it is unlawful to make such an offer or
invitation. The distribution of this Prospectus and the offering and sales of the Offer Shares in
other jurisdictions are subject to restrictions and may not be made except as permitted under
the applicable securities laws of such jurisdictions pursuant to registration with or
authorization by the relevant securities regulatory authorities or an exemption therefrom. Each
person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering will be
required to confirm, or be deemed by his or her acquisition of Hong Kong Offer Shares to
confirm, that he or she is aware of the restrictions on offers and sales of the Offer Shares
described in this Prospectus. In particular, the Offer Shares have not been offered or sold, and
will not be offered or sold, directly or indirectly, in the PRC.
The Offer Shares are offered for subscription solely on the basis of the information
contained and representations made in this Prospectus, and on the terms and subject to the
conditions set out herein and therein. No person is authorized in connection with the Global
Offering to give any information, or to make any representation not contained in this
Prospectus, and any information or representation not contained in this Prospectus must not be
relied upon as having been authorized by the Company, the Joint Sponsors, the Overall
Coordinators, the Joint Global Coordinators, the Joint Bookrunners, the Underwriters, the
Capital Market Intermediaries, any of their respective directors, officers, employees, agents,
affiliates or advisers or any other persons or parties involved in the Global Offering. For further
details of the structure of the Global Offering, including its conditions, and the procedures for
applying for Hong Kong Offer Shares, see the sections headed “Structure of the Global
Offering” and “How to Apply for Hong Kong Offer Shares”.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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APPLICATION FOR LISTING ON THE HONG KONG STOCK EXCHANGE
We have applied to the Listing Committee for the granting of listing of, and permission
to deal in, our H Shares to be converted from the Unlisted Shares, our H Shares to be issued
pursuant to the Global Offering. Dealings in the H Shares on the Hong Kong Stock Exchange
are expected to commence on Monday, June 30, 2025. No part of our H Shares is listed on or
dealt in on any other stock exchange, and no such listing or permission to list is being or
proposed to be sought in the near future.
The H Shares will be traded in board lot of 100 H Shares. The stock code of the H Shares
is 3880.
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotments made in respect of any applications will be invalid if the listing of,
and permission to deal in, the Offer Shares on the Hong Kong Stock Exchange is refused before
the expiration of three weeks from the date of the closing of the application lists, or such longer
period (not exceeding six weeks) as may, within the said three weeks, be notified to the
Company by the Hong Kong Stock Exchange.
COMPLIANCE WITH LISTING RULES
We will comply with applicable laws and regulations in Hong Kong (including the Listing
Rules) and any other undertakings which have been given in favor of the Hong Kong Stock
Exchange from time to time. If the Listing Committee finds that there has been a breach by us
of the Listing Rules or such other undertakings which may have been given by us in favor of
the Hong Kong Stock Exchange from time to time, the Listing Committee may instigate
cancellation or disciplinary proceedings in accordance with the Listing Rules.
H SHARE REGISTER AND STAMP DUTY
All H Shares issued pursuant to applications made in the Hong Kong Public Offering and
the International Offering will be registered on the Company’s H Share register of members to
be maintained by our H Share Registrar, Computershare Hong Kong Investor Services Limited
at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong
Kong. We will maintain the Company’s principal register of members at our current registered
office in the PRC.
Dealings in the H Shares registered in our H Share register of members will be subject
to the Hong Kong stamp duty. See “Statutory and General Information—Other
Information—Taxation of Holders of H Share” in Appendix IV to this Prospectus. Investors
should seek professional tax advice for further details of Hong Kong stamp duty.
Unless otherwise determined by our Board, dividends will be paid to Shareholders whose
names are listed on our H Share register of members in Hong Kong, by ordinary post, at the
Shareholders’ risk in Hong Kong dollars to the registered address of each Shareholder.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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DIVIDENDS PAYABLE TO HOLDERS OF H SHARES
Unless determined otherwise by our Company, dividends payable in Hong Kong dollars
in respect of the H Shares will be paid to the Shareholders as recorded on the H Share register
of members of our Company in Hong Kong and sent by ordinary post, at the Shareholders’ risk,
to the registered address of each Shareholder.
According to the Guide to the Program for “Full Circulation” of H shares promulgated by
CSDC on February 7, 2020, cash dividends to domestic investors of H-share “full circulation”
shall be distributed through CSDC. An H-share listed company shall transfer RMB cash
dividends to the designated bank account of the Shenzhen subsidiary of CSDC, who shall
complete the clearing of cash dividends by distributing the cash dividends to investors through
domestic securities companies.
H SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the granting of listing of, and permission to deal in, our H Shares on the Hong
Kong Stock Exchange and our compliance with the stock admission requirements of HKSCC,
our H Shares will be accepted as eligible securities by HKSCC for deposit, clearance and
settlement in CCASS with effect from the date of commencement of dealings in our H Shares
on the Hong Kong Stock Exchange or any other date as HKSCC chooses. Settlement of any
transactions between participants of the Hong Kong Stock Exchange is required to take place
in CCASS on the second settlement day after any trading day. All activities under CCASS are
subject to the General Rules of HKSCC and HKSCC Operational Procedures in effect from
time to time. Investors should seek the advice of their stockbroker or other professional
advisers for details of the settlement arrangements as such arrangements may affect their rights
and interests. All necessary arrangements have been made for our H Shares to be admitted into
CCASS.
PROFESSIONAL TAX ADVICE RECOMMENDED
Applicants for the Offer Shares are recommended to consult their professional advisers if
they are in any doubt as to the tax implications of subscribing for, purchasing, holding,
disposing of and dealing in our H Shares or exercising rights attached to them. None of the
Company, the Underwriters, the Joint Sponsors, the Overall Coordinators, the Joint Global
Coordinators, the Joint Bookrunners, the Capital Market Intermediaries, any of their respective
directors, supervisors, officers, employees, agents or advisers or any other persons involved in
the Global Offering accepts responsibility for any tax effects or liabilities of holders of Shares
resulting from the subscription, purchase, holding or disposal of, or dealing in, our H Shares.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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INFORMATION ON THE CONVERSION OF UNLISTED SHARES INTO H SHARES
Our Company has applied for conversion of Unlisted Shares into H Shares, which
involves 56,798,888 Unlisted Shares held by the existing Shareholders. See the sections headed
“History, Development and Corporate Structure” and “Share Capital” for details of our existing
Shareholders and their respective interests in our Company and relevant procedures for the
conversion of Unlisted Shares into H Shares. Such H Shares to be converted from Unlisted
Shares are restricted from trading for a period of one year after the Listing. The relevant filing
procedure in relation to the conversion of certain Unlisted Shares into H Shares has been
completed on December 12, 2024.
PROCEDURES FOR APPLICATION FOR HONG KONG OFFER SHARES
The procedures for applying for the Hong Kong Offer Shares are set out in the section
headed “How to Apply for Hong Kong Offer Shares.”
STRUCTURE OF THE GLOBAL OFFERING
See the section headed “Structure of the Global Offering” for details of the structure of
the Global Offering, including its conditions.
LANGUAGE
The English names of the PRC nationals, entities, departments, facilities, certificates,
titles, laws, regulations and the like are translations of their Chinese names and are included
herein for identification purposes only. If there is any inconsistency, the Chinese name prevails.
ROUNDING
Certain amounts and percentage figures included in this Prospectus have been subject to
rounding adjustments, or have been rounded to one decimal place. Any discrepancies in any
tables or charts between the total shown and the sums of the amounts listed are due to rounding.
MARKET SHARE DATA
The statistical and market share information contained in this Prospectus has been derived
from official government publications, market data providers and other independent third-party
sources. This statistical information may not be consistent with other statistical information
from other sources within or outside the PRC. While reasonable caution has been made in the
process of reproducing the data and statistics extracted from such official government
publications, the Joint Sponsors and our Company, or any of their directors, employees, agents,
and representatives make no representation to the appropriateness, accuracy, completeness or
reliability of any such statistical and market share information.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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EXCHANGE RATE CONVERSION
Solely for your convenience, certain translations among amounts in Renminbi, HK dollars
or US dollars are contained in this Prospectus. None should be regarded as and be interpreted
as an amount in one currency that can be on the relevant dates or any other dates actually
converted into that in another currency at the rates below or cannot be converted at all. Unless
otherwise specified:
(i) all amounts in Renminbi are translated into HK dollars at an exchange rate of
RMB0.91457 to HK$1.00, being the middle exchange rate set by the PBOC
prevailing on the Latest Practicable Date;
(ii) all amounts in Renminbi are translated into US dollars at an exchange rate of
RMB7.1789 to US$1.00, being the middle exchange rate set by the PBOC prevailing
on the Latest Practicable Date; and
(iii) all amounts in HK dollars are translated into US dollars at an exchange rate of
HK$7.8495 to US$1.00 (calculated based on (i) and (ii) above).
Any discrepancies in any table between totals and sums of amounts listed therein are due
to rounding.
INFORMATION ABOUT THIS PROSPECTUS AND THE GLOBAL OFFERING
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In preparation for the Listing, our Company has sought the following waivers from strict
compliance with the relevant provisions of the Listing Rules.
W AIVER IN RESPECT OF MANAGEMENT PRESENCE IN HONG KONG
According to Rule 8.12 of the Listing Rules, a new applicant for a primary listing on the
Stock Exchange must have a sufficient management presence in Hong Kong. This normally
means that at least two of our executive Directors must be ordinarily resident in Hong Kong.
Rule 19A.15 of the Listing Rules further provides that the requirement in Rule 8.12 of the
Listing Rules may be waived by having regard to, among other considerations, our
arrangements for maintaining regular communication with the Hong Kong Stock Exchange.
We do not have a sufficient management presence in Hong Kong for the purpose of
satisfying the requirement under Rule 8.12 and Rule 19A.15 of the Listing Rules. Our
management headquarters, senior management, business operations and assets are primarily
based outside Hong Kong. The Directors consider that by either means of relocation of our
existing executive Directors or appointment of additional executive Director who will be
ordinarily resident in Hong Kong would not be beneficial to, or appropriate for, our Group and
therefore would not be in the best interests of our Company or the Shareholders as a whole.
As such, we have applied to the Stock Exchange for, and the Stock Exchange has granted us
a waiver from strict compliance with Rule 8.12 and Rule 19A.15 of the Listing Rules. We will
ensure that there is a regular and effective communication between us and the Stock Exchange
by way of, among others, the following conditions:
(a) pursuant to Rules 3.05 of the Listing Rules, we have appointed and will continue to
maintain two authorized representatives, who will act as our principal channel of
communication with the Stock Exchange and ensure that our Company complies
with the Listing Rules at all times. The two authorized representatives appointed are
Ms. Li Lingmei (ૠ), our executive Director and secretary to the Board, and Mr.
Lee Chung Shing (ϓ), our joint company secretary (the “ Authorized
Representatives ”). Both of the Authorized Representatives will be readily
contactable by telephone, facsimile (if applicable) and email to deal promptly with
enquiries from the Stock Exchange. The Authorized Representatives will also be
available to meet with the Stock Exchange to discuss any matter within a reasonable
period of time upon request of the Stock Exchange. Our Company has provided
contact details of the two Authorized Representatives to the Stock Exchange and
will inform the Stock Exchange promptly in respect of any change in the authorized
representatives;
(b) both Authorized Representatives have means to contact all Directors (including the
independent non-executive Directors) promptly at all times as and when the Stock
Exchange wishes to contact our Directors for any matters. Our Company has
implemented a policy whereby (1) each Director has provided his/her valid phone
numbers or other means of communication to the Authorized Representatives; (2) in
the event that a Director expects to travel or is otherwise out of office, he/she will
W AIVERS
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endeavor to provide his/her phone number of the place of his/her accommodation to
the Authorized Representatives or maintain an open line of communication via
his/her mobile phone; and (3) each Director has provided his/her mobile phone
number, office phone number, e-mail address and fax numbers (if applicable) to the
Stock Exchange and will inform the Stock Exchange promptly if there are any
changes to the contact details of the Directors;
(c) pursuant to Rule 3.20 of the Listing Rules, each Director has provided his/her
contact information to the Stock Exchange and to the Authorized Representatives.
This will ensure that the Stock Exchange and the Authorized Representatives should
have means for contacting all Directors promptly at all times as and when required;
(d) all our Directors who are not ordinarily resident in Hong Kong have confirmed that
they possess or can apply for valid travel documents to visit Hong Kong and will be
able to meet with relevant members of the Stock Exchange in Hong Kong upon
reasonable notice, when required;
(e) pursuant to Rules 3A.19 of the Listing Rules, we have retained the services of Altus
Capital Limited as compliance adviser (the “ Compliance Adviser ”) upon Listing
for a period commencing on the Listing Date and ending on the date on which we
comply with Rule 13.46 of the Listing Rules in respect of our financial results for
the first full financial year commencing after the Listing Date. The Compliance
Adviser will have access at all times to our Authorized Representatives, our
Directors and our senior management as prescribed by Rule 3A.23 of the Listing
Rules, who will act as the additional channel of communication with the Stock
Exchange when the Authorized Representatives are not available. Our Company
shall ensure that our Authorized Representatives, Directors, Supervisors and our
senior management members will timely provide such information and assistance as
the Compliance Adviser may need or may reasonably request in connection with the
performance of the Compliance Adviser’s duties as set forth in the Listing Rules. We
have provided the Stock Exchange with the names, mobile phone numbers, office
phone numbers, fax numbers (if applicable) and email addresses of at least two of
the Compliance Adviser’s officers who will act as our Compliance Adviser’s contact
persons between the Stock Exchange and our Company. We will inform the Stock
Exchange as soon as practicable in respect of any change of authorized
representatives and/or the Compliance Adviser;
(f) our Authorized Representatives, Directors and other officers of our Company will
provide promptly such information and assistance as the Compliance Adviser may
reasonably require in connection with the performance of the Compliance Adviser’s
duties as set forth in Chapter 3A of the Listing Rules. There will be adequate and
efficient means of communication between our Company, Authorized
Representatives, Directors and other officers of our Company and the Compliance
Adviser, and to the extent reasonably practicable and legally permissible, we will
keep the Compliance Adviser informed of all communications and dealings between
W AIVERS
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the Stock Exchange and us; meetings between the Stock Exchange and our Directors
could be arranged through our Authorized Representatives or the Compliance
Adviser, or directly with our Directors within a reasonable time frame. We will
inform the Stock Exchange as soon as practicable in respect of any change of
Authorized Representatives and/or the Compliance Adviser;
(g) we will appoint other professional advisers (including legal advisers in Hong Kong)
after the Listing to assist us in dealing with any questions which may be raised by
the Stock Exchange and to ensure that there will be prompt and effective
communication with the Stock Exchange; and
(h) our Company has designated one of our staff members as the communication officer
at our headquarters after the Listing who will be responsible for maintaining
day-to-day communication with the Authorized Representatives and our Company’s
professional advisers in Hong Kong, including our legal advisers in Hong Kong and
the Compliance Adviser, to keep abreast of any correspondences and/or enquiries
from the Stock Exchange and report to our executive Directors to further facilitate
communication between the Stock Exchange and our Company.
W AIVER IN RESPECT OF JOINT COMPANY SECRETARIES
Pursuant to Rules 3.28 and 8.17 of the Listing Rules, a new applicant for listing on the
Stock Exchange must appoint a company secretary who, by virtue of his/her academic or
professional qualifications or relevant experience, is, in the opinion of the Stock Exchange,
capable of discharging the functions of the company secretary.
Note 1 to Rule 3.28 of the Listing Rules provides that the Stock Exchange considers the
following academic or professional qualifications to be acceptable:
(a) a member of The Hong Kong Chartered Governance Institute;
(b) a solicitor or barrister as defined in the Legal Practitioners Ordinance (Chapter 159
of the Laws of Hong Kong); and
(c) a certified public accountant as defined in the Professional Accountants Ordinance
(Chapter 50 of the Laws of Hong Kong).
Note 2 to Rule 3.28 of the Listing Rules further provides that the Stock Exchange
considers the following factors in assessing the “relevant experience” of the individual:
(a) length of employment with the issuer and other issuers and the roles he/she played;
(b) familiarity with the Listing Rules and other relevant laws and regulations including
the SFO, the Companies Ordinance, the Companies (Winding Up and Miscellaneous
Provisions) Ordinance and the Takeovers Code;
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(c) relevant training taken and/or to be taken in addition to the minimum requirement
under Rule 3.29 of the Listing Rules; and
(d) professional qualifications in other jurisdictions.
Our Company has appointed Ms. Li Lingmei (ૠ) and Mr. Lee Chung Shing (ϓ)
(“Mr. Lee ”) as our joint company secretaries. See the section headed “Directors, Supervisors
and Senior Management” for their biographical details.
Ms. Li Lingmei is our executive Director and secretary to the Board. Ms. Li Lingmei has
extensive experience in corporate governance, capital markets affairs and board matters. The
Company believes that it would be in the best interests of the Company and the corporate
governance of the Group to have as its joint company secretary a person such as Ms. Li
Lingmei who is the secretary of Board and has day-to-day knowledge of the Company’s affairs.
Ms. Li Lingmei has the necessary nexus to the Board and close working relationship with
management of the Company in order to perform the function of a joint company secretary and
to take the necessary actions in the most effective and efficient manner. However, Ms. Li
Lingmei presently does not possess any of the qualifications under Rules 3.28 and 8.17 of the
Listing Rules, and may not be able to solely fulfill the requirements of the Listing Rules.
Therefore, we have appointed Mr. Lee who is an associate member of the Hong Kong Institute
of Certified Public Accountant and a fellow member of the Association of Chartered Certified
Accountants, and who fully meets the requirements stipulated under Rules 3.28 and 8.17 of the
Listing Rules, to act as the other joint company secretary and to provide assistance to Ms. Li
Lingmei for an initial period of three years from the Listing Date to enable Ms. Li Lingmei to
acquire the “relevant experience” under Note 2 to Rule 3.28 of the Listing Rules so as to fully
comply with the requirements set forth under Rules 3.28 and 8.17 of the Listing Rules.
Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange has
granted, a waiver from strict compliance with the requirements under Rules 3.28 and 8.17 of
the Listing Rules such that Ms. Li Lingmei may be appointed as a joint company secretary of
our Company.
Pursuant to paragraph 13 of Chapter 3.10 of the Guide for New Listing Applicants, the
waiver will be for a fixed period of time (“ Waiver Period ”) and on the following conditions:
(i) the proposed company secretary must be assisted by a person who possesses the
qualifications or experience as required under Rule 3.28 of the Listing Rules and is appointed
as a joint company secretary throughout the Waiver Period; and (ii) the waiver can be revoked
if there are material breaches of the Listing Rules by the issuer. Accordingly, the waiver is valid
for an initial period of three years from the Listing Date, and is granted on the condition that
Mr. Lee, as a joint company secretary of our Company, will work closely with Ms. Li Lingmei
to jointly discharge the duties and responsibilities as company secretaries and assist Ms. Li
Lingmei in acquiring the relevant experience as required under Rules 3.28 and 8.17 of the
Listing Rules. Mr. Lee will also assist Ms. Li Lingmei in organizing Board meetings and
Shareholders’ meetings of our Company as well as other matters of our Company which are
incidental to the duties of a company secretary. Mr. Lee is expected to work closely with Ms.
W AIVERS
–9 7–


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Li Lingmei and will maintain regular contact with Ms. Li Lingmei, the Directors and the senior
management of our Company. In addition, Ms. Li Lingmei will comply with the annual
professional training requirement under Rule 3.29 of the Listing Rules and will enhance her
knowledge of the Listing Rules during the three-year period from the Listing. Ms. Li Lingmei
will also be assisted by (a) the Compliance Adviser, particularly in relation to compliance with
the Listing Rules; and (b) the Hong Kong legal advisers of our Company, on matters
concerning our Company’s ongoing compliance with the Listing Rules and the applicable laws
and regulations.
Pursuant to Chapter 3.10 of the Guide for New Listing Applicants, the waiver will be
revoked immediately if Mr. Lee ceases to provide assistance to Ms. Li Lingmei as a joint
company secretary for the three-year period after the Listing Date or where there are material
breaches of the Listing Rules by our Company.
Before the end of the three-year period, the Company must demonstrate and seek the
Stock Exchange’s confirmation that Ms. Li Lingmei, having had the benefit of Mr. Lee’s
assistance during the three-year period, has attained the relevant experience under Note 2 to
Rule 3.28 of the Listing Rules and is capable of discharging the functions of company secretary
so that a further waiver would not be necessary.
See “Directors, Supervisors and Senior Management” for the biographical information of
Ms. Li Lingmei and Mr. Lee.
W AIVERS
–9 8–


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DIRECTORS
Name Address Nationality
Executive Directors
D r .X uQ i(೘) Room 2001, Unit 1, Building 6
East Park, Landsea International Block
27th Street, Qiantang District
Hangzhou, Zhejiang
PRC
Chinese (Hong
Kong)
Dr. Li Xiang ( ҽಱ) Room 2801, Unit 1, Building 1
East Park, Landsea International Block
27th Street, Qiantang District
Hangzhou, Zhejiang
PRC
American
Ms. Li Xiangli ( ҽಱ஁) Room 604, Block 14, Bihaiyuan
Duolanshui’an Community
Baiyang Street, Qiantang District
Hangzhou, Zhejiang
PRC
Chinese
Ms. Cheng Tao 16424 Daysailor Trail, Bradenton
FL 34202
United States
American
Ms. Li Lingmei (ૠ) Room 702, Building 6
Lvcheng Chunfengjinsha Community
Xiasha Street, Qiantang District
Hangzhou, Zhejiang
PRC
Chinese
Non-executive Director
Mr. Wu Yihui ( юɓฯ) No. 13-3, Binjiang Xixi Pearl
Baijiayuan Road, Xihu District
Hangzhou, Zhejiang
PRC
Chinese
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
–9 9–


--- page 109 ---
Name Address Nationality
Independent non-executive Directors
Dr. Y u Cheung Hoi ( ɲ੬ऎ) Flat B, 18/F, Block 3, Court B
Dragons Range, 33 Lai Ping Road
Sha Tin, New Territories
Hong Kong
Chinese (Hong
Kong)
Dr. Zhu Xun ( ϡԘ) Room 402, Building 33, Y uming Villa
Guangsheng Road, Jiangangshan
Baoan District, Shenzhen
PRC
Chinese
Mr. Xia Xinsheng (ː᳅) Room 201, No. 9
Fangtadongsan Village
Songjiang District, Shanghai
PRC
Chinese
SUPERVISORS
Name Address Nationality
Ms. Y an Xiya ( ᕙఃԭ) Room 1702, Unit 4, Building 9
East Park, Landsea International Block
27th Street, Qiantang District
Hangzhou, Zhejiang
PRC
Chinese
Mr. Wu Haigang (࡝No. 404, Block 27-01
Y efeng Haitian City
Qiantang District, Hangzhou
Zhejiang
PRC
Chinese
Ms. Fu Hongying (ߵߎRoom 2803, Unit 2, Building 16
Fengya Qiantang
No. 1076 Y ueming Road
Binjiang District, Hangzhou
Zhejiang
PRC
Chinese
See the section headed “Directors, Supervisors and Senior Management” for further
details of our Directors and Supervisors.
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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PARTIES INVOLVED IN THE GLOBAL OFFERING
Joint Sponsors Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
CITIC Securities (Hong Kong) Limited
18/F, One Pacific Place, 88 Queensway
Hong Kong
Sponsor-Overall Coordinators and
Overall Coordinators
Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
CLSA Limited
18/F, One Pacific Place, 88 Queensway
Hong Kong
Joint Global Coordinators, Joint
Bookrunners and Joint Lead Managers
Morgan Stanley Asia Limited
46/F, International Commerce Centre
1 Austin Road West
Kowloon
Hong Kong
CLSA Limited
18/F, One Pacific Place, 88 Queensway
Hong Kong
Joint Bookrunners and
Joint Lead Managers
(in alphabetical order)
China Everbright Securities (HK) Limited
33/F, Everbright Centre
108 Gloucester Road
Wan Chai
Hong Kong
Prime Securities Limited
Room 1602, 16/F, Kai Tak Commercial
Building 317-319 Des V oeux Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 111 ---
Soochow Securities International
Brokerage Limited
Level 17, Three Pacific Place
1 Queen’s Road East
Hong Kong
Joint Lead Manager Aristo Securities Limited
Room B, 11/F, Golden Star Building
22 Lockhart Road
Wanchai
Hong Kong
Legal advisers to our Company As to Hong Kong and United States laws:
Davis Polk & Wardwell
10/F, The Hong Kong Club Building
3A Chater Road
Central
Hong Kong
As to PRC laws:
Grandall Law Firm (Hangzhou)
Grandall Building
No. 2 & No. 15 Block B, Baita Park
Old Fuxing Road
Hangzhou, Zhejiang
PRC
As to PRC law in respect of data
compliance:
Han Kun Law Offices
9/F, Office Tower C1
Oriental Plaza, 1 East Chang An
Avenue, Beijing
PRC
As to U.S. laws in respect of certain aspects
of legal compliance matters:
MagStone Law, LLP
415 S Murphy Ave
Sunnyvale CA 94086
U.S.
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 102 –


--- page 112 ---
Legal advisers to the Joint Sponsors and
the Underwriters
As to Hong Kong and United States laws:
Herbert Smith Freehills Kramer
23/F, Gloucester Tower
15 Queen’s Road Central
Hong Kong
As to PRC laws:
Commerce & Finance Law Offices
12-14th Floor, China World Office 2
No. 1 Jianguomenwai Avenue
Beijing 100004
China
Auditor and Reporting Accountants Ernst & Y oung
Certified Public Accountants and
Registered Public Interest Entity Auditor
27/F, One Taikoo Place
979 King’s Road
Quarry Bay
Hong Kong
Industry Consultant Frost & Sullivan (Beijing) Inc., Shanghai
Branch Co.
2504 Wheelock Square
1717 Nanjing West Road
Shanghai 200040
China
Compliance Adviser Altus Capital Limited
21 Wing Wo Street
Central
Hong Kong
Receiving Banks Bank of China (Hong Kong) Limited
1 Garden Road
Hong Kong
China CITIC Bank International Limited
61-65 Des V oeux Road Central
Hong Kong
DIRECTORS, SUPERVISORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 113 ---
Registered Office Room 501-11, Building 6
Yinhai Kechuang Center
Xiasha Street, Qiantang District
Hangzhou, Zhejiang
the PRC
Headquarters and Principal Place of
Business in the PRC
No. 69, 12 Street
Qiantang District
Hangzhou, Zhejiang
the PRC
Principal Place of Business in Hong Kong 46/F, Hopewell Centre
183 Queen’s Road East
Wanchai
Hong Kong
Company’s Website medtideinc.com
(the information contained on this website
does not form part of this Prospectus)
Joint Company Secretaries Ms. Li Lingmei (ૠ)
No. 69, 12 Street
Qiantang District
Hangzhou, Zhejiang
the PRC
Mr. Lee Chung Shing (ϓ)
(CP A of HKICP A, FCCA of ACCA)
46/F, Hopewell Centre
183 Queen’s Road East
Wanchai
Hong Kong
Authorized Representatives Ms. Li Lingmei (ૠ)
No. 69, 12 Street
Qiantang District
Hangzhou, Zhejiang
the PRC
Mr. Lee Chung Shing (ϓ)
46/F, Hopewell Centre
183 Queen’s Road East
Wanchai
Hong Kong
CORPORATE INFORMATION
– 104 –


--- page 114 ---
Audit Committee Mr. Xia Xinsheng (ː᳅) (Chairperson)
Dr. Y u Cheung Hoi ( ɲ੬ऎ)
Dr. Zhu Xun ( ϡԘ)
Remuneration Committee Dr. Zhu Xun ( ϡԘ) (Chairperson)
D r .X uQ i(೘)
Mr. Xia Xinsheng (ː᳅)
Nomination Committee D r .X uQ i(೘) (Chairperson)
Dr. Y u Cheung Hoi ( ɲ੬ऎ)
Mr. Xia Xinsheng (ː᳅)
H Share Registrar Computershare Hong Kong Investor
Services Limited
Shops 1712-1716
17th Floor
Hopewell Centre
183 Queen’s Road East
Wanchai, Hong Kong
Principal Banks Bank of China
Building 18, 12th Avenue
Hangzhou Economic & Technological
Development Area
Zhejiang, the PRC
Bank of Hangzhou
Innovation Building, 3850 Jiangnan Avenue
Binjiang District, Hangzhou
Zhejiang, the PRC
CORPORATE INFORMATION
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--- page 115 ---
The information and statistics set out in this section and other sections of this
Prospectus were extracted from the Frost & Sullivan Report, which was commissioned
by us, and from various official government publications and other publicly available
publications. We engaged Frost & Sullivan to prepare the Frost & Sullivan Report, an
independent industry report, in connection with the Global Offering. The information
from official government sources has not been independently verified by us, the Joint
Sponsors, the Overall Coordinators, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers, the Underwriters, any of their respective
directors and advisers, or any other persons or parties involved in the Global Offering,
and no representation is given as to its accuracy.
OVERVIEW OF TIDES DRUGS AND CRDMO MARKETS
TIDES drugs primarily consist of peptide drugs and oligonucleotide drugs. Peptide drugs
are peptides with specific therapeutic effects obtained by biosynthesis or chemical synthesis.
Oligonucleotide drugs are a versatile class of sequence-programmable drugs to modulate gene
expression or correct genetic defects contributing to disease.
Outsourcing has emerged as an increasingly prominent trend within the pharmaceutical
industry. This shift is underscored by the proliferation of pertinent business models, such as
CRDMO, and CDMO. CRDMO is an organization that provides pharmaceutical research,
development, production and manufacturing services, which is an integrated, end-to-end drug
development model. It provides complete coverage of the needs of pharmaceutical research,
development and production. Through customized solutions, both preclinical studies and
experiments, process scale-up and pilot manufacture required during the clinical phase, and
post-market scale-up manufacture can be met individually or in their entirety. The rise of
CRDMO companies is propelled by the imperative for pharmaceutical and biotech companies
to streamline R&D and production process and reduce costs, enabling them to concentrate on
their core activities. Leveraging their R&D and production capabilities, CRDMO assists
pharmaceutical and biotech companies in minimizing the effort and costs associated with
transitioning products from the experimental phase to commercial production. Furthermore,
these services contribute to reducing manufacturing costs and enhancing production efficiency
and scale during the commercial-stage production phase following market launch.
INDUSTRY OVERVIEW
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Oligonucleotide drug products exhibit numerous parallels with peptide drug products in
drug synthesis techniques, pharmacology, and drug development. The following chart sets forth
an overview of TIDES CRDMO services.
TIDES
• Enquiry and Evaluation
• Process Establishment
and Product Synthesis
• Specifications
• API Manufacturing (1)
• Process Development and Validation
• Analytics Development
• Stability Studies
• Formulation Development
• CMC Documentation
• Phase I to III
(2)
• Permission to market by the authorities
CommercialNDAClinicalINDPreclinicalResearch
-LAUNCH--DEVELOPMENT--DISCOVERY -
• GMP Batch for
Commercialization
• On-going Stability Studies
•D M F
TIDES CRDMO SERVICE
Notes:
(1) Non-GMP manufacturing batches are used for animal testing and are mainly applied in the preclinical stage,
while GMP manufacturing batches are used for human trials and applied in clinical and commercial stages.
(2) A Phase IV trial, also known as a postmarketing surveillance trial or drug monitoring trial, may be required
by regulatory authorities or voluntarily undertaken by sponsors.
Source: Frost & Sullivan analysis, Literature review
Global, China and the United States TIDES CRDMO Market
The global TIDES CRDMO market by sales revenue grew from US$2.1 billion in 2018
to US$5.5 billion in 2023, representing a CAGR of 20.9%, and is expected to further grow to
US$37.3 billion by 2032, representing a CAGR of 23.8%. The TIDES CRDMO market by sales
revenue in China grew from US$0.2 billion in 2018 to US$0.8 billion in 2023, representing a
CAGR of 37.1%, and is expected to further grow to US$6.2 billion by 2032, representing a
CAGR of 25.5%. The TIDES CRDMO market by sales revenue in the United States grew from
US$0.5 billion in 2018 to US$1.5 billion in 2023, representing a CAGR of 26.2%, and is
expected to further grow to US$12.0 billion by 2032, representing a CAGR of 25.9%. The
following charts set forth the global, China and the United States TIDES CRDMO market sizes
by sales revenue.
INDUSTRY OVERVIEW
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--- page 117 ---
Global TIDES CRDMO Market Size, 2018-2032E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
2.1 2.8 3.3 4.0 4.7 5.5 6.5 7.8
12.4
16.4
20.7
25.6
31.1
37.3
9.6
Billion USD
CAGR
2018-2023
2023-2032E
20.9%
23.8%
China TIDES CRDMO Market Size, 2018-2032E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
0.2 0.1 0.1 0.3 0.5
0.8 1.0 1.2
2.1
2.6
3.3
4.2
5.1
6.2
1.6
Billion USD
CAGR
2018-2023
2023-2032E
37.1%
25.5%
INDUSTRY OVERVIEW
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--- page 118 ---
United States TIDES CRDMO Market Size, 2018-2032E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
0.5 0.7 0.9 1.1 1.3 1.5 1.8 2.1
3.6
4.8
6.1
7.6
9.6
12.0
2.7
Billion USD
CAGR
2018-2023
2023-2032E
26.2%
25.9%
Source: Annual report, Expert interview, Public information, Frost & Sullivan analysis
Key Barriers in the R&D, Production and Commercialization of TIDES Drugs
TIDES drugs R&D, production and commercialization barriers include:
R&D challenges:
 Synthesis and purification difficulty . The synthesis processes of TIDES drugs are
inherently complex, involving multiple intricate steps and delicate reaction
conditions. In the realm of peptides, the identification and control of multi-ring
peptide impurities resulting from disulfide bonds have long posed significant
challenges in the industry. Moreover, synthesizing oligonucleotides demands
high-precision automated instrumentation and intricate purification steps. In the
case of peptides, limitations often stem from the synthesis process efficiency and the
purity of the final products. The structural complexity and sensitivity of the
molecules further exacerbate purification difficulties. Consequently, effectively
monitoring impurities and efficiently purifying TIDE APIs emerge as critical
hurdles in TIDE drug development.
 Delivery System . TIDES drugs face challenges in effectively crossing cell
membranes and entering the cell interior. As such, the development of safe, effective
and stable delivery systems has emerged as a significant technical hurdle. This
requires consideration of several aspects such as drug stability, biocompatibility, and
targeting.
INDUSTRY OVERVIEW
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Production challenges:
 Scale-up and efficiency . Scaling up the production process of TIDES APIs from
laboratory scale to commercial production scale presents significant challenges. It
involves optimization of reaction conditions, equipment, and adjustment of
production processes. Simultaneously, maintaining product quality while enhancing
production efficiency is a critical problem to address. In addition, for peptide
compounds, the complexity of side chain modifications (use of unusual amino acids
and cyclic structures) adds further hurdles to efficient production. Another challenge
lies in the inherent complexity of peptide structures, often characterized by intricate
sequences and specific folding patterns critical to their biological activity. Striking
a balance between optimal synthesis efficiency and high purity levels remains an
ongoing challenge, particularly with longer or modified peptide sequences.
Accordingly, the production cost of TIDES APIs is also usually high.
Commercialization challenges:
 Regulations and policies . In various countries and regions, drug regulatory policies
exhibit variations, and these policies are in a constant state of flux. For example, The
CDE on February 17, 2023 issued and implemented the “Chemical Synthesis Peptide
Drug Pharmacy Research Technical Guidelines (for Trial Implementation)” ( ʷኪ
ۆࡡ(༊Б)), for the guidance of chemical
synthesis peptide drug pharmacy, to provide reference to the technical standards.
The FDA published two new general chapters: USP1503 addressing specific quality
considerations for synthetic peptide drug substances and USP1504 (Official date:
December 1, 2023) providing recommendations on the minimum quality attributes
for starting materials used in the manufacture of synthetic peptides. On May 19,
2021, FDA published ANDAs for Certain Highly Purified Synthetic Peptide Drug
Products That Refer to Listed Drugs of rDNA Origin Guidance for Industry
Guidance. This guidance is intended to assist potential applicants in determining
when an application for a synthetic peptide drug product (synthetic peptide) that
refers to a previously approved peptide drug product of recombinant DNA origin
(peptide of recombinant DNA origin) should be submitted as an ANDA under
section 505(j) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) rather than
as an NDA under section 505(b) of the FD&C Act. On October 18, 2023, EMA
published a guidance on the Development and Manufacture of Synthetic Peptides for
public consultation to cover synthetic peptides with more than 4 amino acids. In
addition, oligonucleotides, as an emerging therapeutic class, require robust
regulation through a well-established system. The U.S. FDA has highlighted several
challenges in regulating oligonucleotide drugs, including the absence of clear
guidelines for quality studies and standard-setting. To address these challenges,
regulatory agencies worldwide are taking proactive steps. For instance, Japan’s
Pharmaceuticals and Medical Devices Agency (PMDA) issued the “Guideline for
Preclinical Safety Assessment of Oligonucleotide Therapeutics” in 2020. Similarly,
the U.S. FDA released guidance on IND submissions for ASO drug products in 2021.
INDUSTRY OVERVIEW
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In the future, regulatory policies will likely continue to evolve and become more
stringent as the field of oligonucleotide drugs advances. Consequently,
pharmaceutical and biotech companies must thoroughly understand and adhere to
these evolving regulatory frameworks.
 Patient acceptance . As a cutting-edge therapeutic class, TIDES drugs require
recognition by both patients and physicians. Currently, injection remains the
predominant delivery method for approved peptide drugs. However, injections pose
challenges due to the suboptimal patient experience and associated risks. In the
future, advancements in peptide drug technology, particularly the development of
GLP-1 agonist oral delivery systems, will enhance the drug delivery cycle and
enable long-lasting effects. These innovations are poised to significantly improve
patient willingness to adhere to long-term medication regimens, enhance overall
medication experiences, and promote better medication adherence.
Value Proposition of TIDES CRDMO
TIDES CRDMO has the following value propositions:
 Accelerating R&D Process. TIDES CRDMOs are typically equipped with cutting-
edge R&D and production facilities. These include automated synthesis systems,
high-performance liquid chromatographs, ensuring efficient, high-quality and high-
purity production of peptide and oligonucleotides. CRDMOs have established
streamlined processes for TIDES development, saving time and resources.
Additionally, CRDMOs can handle multiple stages of development simultaneously,
further expediting the R&D timeline.
 Risk Mitigation. CRDMOs typically maintain teams with extensive experience and
expertise in peptide and oligonucleotide R&D, production and quality control. In
addition, CRDMOs adhere to stringent regulatory standards and quality control
measures to ensure the safety, efficacy, and consistency of the products they
manufacture. These CRDMOs provide expertise, resources, and support to navigate
complex development processes, ensuring project success. By partnering with
CRDMOs, pharmaceutical and biotech companies can mitigate risks associated with
technical challenges, resource constraints, and regulatory compliance.
 Scalability and Flexibility. TIDES CRDMOs have the ability to seamlessly scale up
production as needed, from small-scale research to large-scale commercial batch
production. This scalability ensures continuity in the drug development process and
facilitates a smooth transition from early development to commercial production.
INDUSTRY OVERVIEW
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 Cost Control. The specificity of TIDES drug production process leads to high cost
associated with establishing a complete set of hardware facilities solely for TIDES
drug R&D and production. CRDMOs offer more flexible capacity and reduce fixed
costs for service companies. Compared with self-development and production,
TIDES CRDMOs efficiently complete projects through their professional
technology and experience, which can help customers save on labor, material and
time costs. TIDES CRDMOs provide scale-up production services, leading to lower
per-unit production costs.
Growth Drivers of the TIDES CRDMO Market
The following drivers mainly contribute to the growth of the TIDES CRDMO market:
 Unmet Needs in GLP-1 Drug Markets. GLP-1 is a pleiotropic hormone with
multifaceted metabolic functions. GLP-1 holds great promise as a candidate for
developing pharmacotherapies to address conditions such as obesity, diabetes, and
other chronic ailments. The increasing prevalence of such diseases among the aging
population, coupled with the rising demand for personalized medicines and
precision therapies, underscores the necessity for GLP-1 drugs. In this landscape,
TIDES CRDMOs play a pivotal role in manufacturing expertise, scale-up
capabilities, and regulatory compliance to meet the growing demand for GLP-1 drug
markets.
 More TIDES Approvals. TIDES have indeed established a distinctive therapeutic
niche, demonstrating robust momentum because they explore new indications and
advance through various stages of research. Notably, an increasing number of
peptides are now synthesized chemically rather than relying solely on recombinant
methods. For instance, tirzepatide, an exciting GLP-1 analogue, has been developed
by Eli Lilly using chemical synthesis.
 New Formulations Require Higher Drug Substance Amount and Production
Capacity. Currently, injectables serve as the primary method for administering
peptide drugs. However, alternative administration routes, such as oral delivery, are
gaining significant attention. The adoption of these alternative forms has the
potential to expand the use of peptide drugs into additional disease areas, including
inflammation. Oral delivery necessitates larger drug substance amount for patients
compared to injectables. This shift in administration methods requires increased
production of drug substances with enhanced capabilities and capacities. CRDMOs
play a pivotal role in meeting this demand by offering consistent and reliable supply
across the spectrum of low- to high-volume peptide production. Moreover,
CRDMOs provide flexibility and tailor development processes to meet the specific
requirements of their clients.
INDUSTRY OVERVIEW
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 Manufacturing Complexity and Technological Advancement. Given the intricate
nature of TIDES APIs synthesis and the stringent quality standards in the
pharmaceutical industry, many pharmaceutical and biotech companies opt to
outsource the production of TIDES drugs to CRDMOs. These CRDMOs possess the
necessary technological capabilities and regulatory expertise, driving market
growth. Continuous advancements in TIDES synthesis technologies are
revolutionizing the efficiency and cost-effectiveness of the manufacturing process.
Innovative enzymatic and solid-phase synthesis methods are emerging, making
peptide manufacturing increasingly scalable and economical. Notably, some long
peptides, such as insulin and GLP-1, that were previously manufactured solely
through complex recombinant rDNA processes can now be synthesized using
chemical methods. These technological breakthroughs empower peptide CRDMOs
to offer pharmaceutical and biotech companies a more cost-effective alternative to
in-house production.
 Outsourcing Strategies of TIDES Pharmaceutical and biotech Companies. The
global TIDES CRDMO services market has experienced consistent growth over the
past few years, driven by the expanding global TIDES drug market. Pharmaceutical
and biotech companies are increasingly turning to CRDMOs to outsource process
development and manufacturing. By doing so, these companies can focus on their
core competencies, including drug discovery, clinical development, and
commercialization. Large pharmaceutical companies, such as Eli Lilly and others,
prefer to collaborate with CRDMOs for manufacturing. CRDMOs offer
manufacturing capabilities and technologies that may not be available in-house,
enabling pharmaceutical companies to produce TIDES drug substances more
cost-effectively. Additionally, TIDES drugs represent an emerging therapy, and the
leading players in this field are primarily biotech companies. Given their strong
propensity for outsourcing, this trend creates significant opportunities for CRDMOs
specializing in TIDES drug development and manufacturing.
Future Trends of the TIDES CRDMO Market
The following is a summary of future trends of the TIDES CRDMO market:
 Advancement in Complex and Large-Scale Manufacturing. TIDES drug
manufacturing involves various techniques, each customized to the specific
characteristics of the TIDES being produced. Due to the diverse nature of TIDES,
synthesis methods can vary significantly, resulting in a more complex manufacturing
process. Furthermore, the increasing demand for TIDES manufacturing highlights
the need for expertise in process scale-up and large-scale production from
CRDMOs. These organizations should have the capability to produce TIDES at a
large scale, typically achieving GMP batch sizes ranging from hundreds of
kilograms to several tons.
INDUSTRY OVERVIEW
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 Market Scale Expansion. As the biopharmaceutical sector continues to flourish, the
demand for TIDES drugs, as a promising therapeutic modality, is expected to soar.
This trend will fuel the expansion of the CRDMO market size globally, driven by the
increasing need for outsourcing R&D and manufacturing services for TIDES drugs.
Furthermore, the growing demand for personalized medicine and precision
therapies, along with the progressive development of therapeutic areas from rare
diseases to common chronic diseases, will create more opportunities for the TIDES
drug CRDMO market. This evolving landscape underscores the pivotal role that
CRDMOs will play in meeting the growing demands of the TIDES drug
development and production ecosystem.
 Integrated Service. CRDMOs strategically focus on acquiring differentiated
capabilities to enhance their value proposition. One such approach involves
adopting the one-stop-shop model, aligning with the trend among major
pharmaceutical and biotech companies. These companies are consolidating their
supplier base and transitioning from outsourcing providers to strategic partners.
Leading CRDMOs actively pursue the goal of becoming fully integrated players
capable of offering comprehensive services across the entire drug life cycle and
supply chain. Their services span from drug substance development to packaging
and distribution, covering all key geographical regions. This strategic direction
enables CRDMOs to provide enhanced support to their clients and establish
long-term, collaborative partnerships that drive mutual success in the dynamic
pharmaceutical landscape.
 Increasing Specialization of CRDMO Providers. The peptide CRDMO market has
witnessed a trend towards consolidation, resulting in a decrease in the number of
players over the past one or two decades. This consolidation enables companies to
specialize in the peptide CRDMO field, allowing them to capture a larger portion of
the overall market share and capitalize on synergies within their operations. By
concentrating their efforts and resources in this specialized area, these major players
can enhance their competitiveness and better meet the evolving needs of their clients
in the peptide drugs industry.
Entry Barriers of the TIDES CRDMO Market
Despite the value propositions discussed above, significant entry barriers remain in the
TIDES CRDMO market:
 Advanced Technologies and Cost for Plant Set-Up. The development and
production of TIDES drugs is highly demanding in terms of technology, equipment
and environment, requiring a high degree of technical expertise and sophisticated
equipment. In addition, manufacturing complexity of peptides increases
exponentially with each added amino acid, requiring the establishment of large GMP
compliant manufacturing facilities. These entail significant costs, which escalate
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further when setting up global sites. TIDES drugs have lengthy R&D cycles,
substantial, high investment and high risks. CRDMO companies must allocate
substantial capital for equipment acquisition, R&D expenditures, clinical trials, and
market expansion.
 Stringent Regulations. The TIDES drug market is subject to stringent regulatory
standards, requiring companies to undergo rigorous certification processes and
scrutiny before market entry. For instance, manufacturing facilities producing
TIDES drugs must adhere to stringent GMP requirements to ensure a clean
environment. Also, the increasing stringency of regulations related to commercial
manufacturing, poses a key challenge for contract manufacturers. Obtaining GMP
certification and building factories is a multi-year process that hinders new entrants
from accessing the market.
 Experience Accumulation and Capturing Clients. The synthesis of TIDES drugs
generates by-products and impurities, making quality control and purification
challenging. This requires extensive experience and knowledge. In addition, TIDES
CRDMOs need to build trust with clients. Due to the specificity of TIDES
molecules, customers tend to prefer working with experienced and reputable
CRDMOs. To compete and attract clients, new TIDES CRDMO players need to
build and maintain a large pool of highly qualified talent and acquire expensive and
complex technology. Despite differences in molecular structure, peptide and
oligonucleotide drugs share many similarities in synthesis, pharmacology, and drug
development. Enterprises with peptide related research and production experience
have more advantages than new entrants when expanding into the oligonucleotides.
 Supply Chain. The R&D and production of TIDES APIs involves a number of
processes, including raw material procurement, manufacturing. Establishing a stable
and reliable supply chain is crucial to ensure timely access to key raw materials,
such as protected amino acids and nucleoside monomers, that meet quality
standards.
OVERVIEW OF PEPTIDE DRUGS
Introduction of Peptides
Peptides, comprising 2-99 natural amino acids in living organisms, are organic
compounds with a molecular weight of less than 10,000 Da. Peptides represent a distinct class
of pharmaceutical compounds, molecularly positioned between small molecules and proteins,
yet biochemically and therapeutically distinct from both. Since the approval of insulin as the
first peptide drug, peptides have gained prominence in the treatment of diabetes. Peptides can
be broadly categorized into insulin peptides and non-insulin peptides, each offering unique
therapeutic applications.
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Functioning as intrinsic signaling molecules for a variety of physiological processes,
peptides offer a therapeutic avenue closely aligned with natural pathways in human beings. The
utilization of peptides in therapeutics has undergone significant evolution alongside changes in
drug development and treatment approaches in recent years. Peptides have been investigated
across the therapeutic spectrum, reflecting the potential utility across a wide range of
indications, particularly for chronic disorders such as metabolic, oncology and inflammatory
musculoskeletal diseases.
Peptide drugs have some advantages compared with small molecular drugs or antibodies,
such as heightened target specificity and potency, fewer side effects, and easier delivery. The
history of peptide drug development dates back to the early 20th century. In recent years the
field has experienced significant growth and diversification. Researchers are now exploring
peptide drugs for a wide array of medical conditions, including urinary system, respiratory
system, digestive system, endocrine system, central nervous system, cardiovascular diseases,
musculoskeletal system diseases, and viral and bacterial infections. Notable peptide drugs such
as Leuprorelin, Goserelin, Cetrorelix, Degarelix, and Octreotide have shown efficacy in
treating different cancers, underlining their potential in targeted therapy.
One of the most transformative developments has been the emergence of GLP-1 drugs,
which have significantly impacted the landscape of metabolic disease treatment. GLP-1 is a
hormone produced in the intestines in response to food intake. It plays a crucial role in
regulating blood sugar levels by stimulating insulin release from pancreatic beta cells and
inhibiting glucagon secretion from pancreatic alpha cells. Additionally, GLP-1 slows down
gastric emptying, which helps control appetite and promote satiety. In recent years,
pharmaceutical companies have developed GLP-1 drugs, which mimic the effects of GLP-1, as
therapeutic agents for type 2 diabetes and obesity. These GLP-1 drugs have demonstrated
efficacy in lowering blood sugar levels, reducing body weight, and improving cardiovascular
outcomes, making them valuable therapeutics in the treatment of metabolic disorders.
Notably, RDC, or radioligand therapy, which consists of a peptide linked to a radioactive
isotope, utilize radioisotopes to emit therapeutic radiation, causing damage to cells, while the
target ligand selectively binds to specific markers on target cells. RDCs have demonstrated
notable advantages in targeting specificity across various indications and a number of RDCs
have achieved strong commercial performance. Novartis has made significant investments in
RDC space, with two approved therapeutic RDCs. Pluvicto was approved in 2022 and achieved
sales of US$271 million in its first year of launch. Novartis has invested over US$7 billion in
RDCs since 2017, including the acquisition of Advanced Accelerator Applications (“ AAA”) for
Lutathera and NetSpot of US$3.9 billion and Endocyte for Pluvicto of US$2.1 billion. In
March 2023, Novartis further invested US$1.7 billion in Bicycle for collaboration in novel
RDC candidates, further emphasizing the significance of RDCs in the pharmaceutical industry.
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Global, China and the United States Peptide Drug Market
Peptide drug market size measures the domestic market by the value of drugs approved
by local authority and sold within a country or region. The global peptide drug market by sales
revenue grew from US$60.7 billion in 2018 to US$89.5 billion in 2023, representing a CAGR
of 8.1%, and is expected to further grow to US$261.2 billion in 2032, representing a CAGR
of 12.6%. The peptide drug market by sales revenue in China grew from US$7.3 billion in 2018
to US$8.4 billion in 2023, representing a CAGR of 3.0%, and is expected to further grow to
US$35.5 billion in 2032, representing a CAGR of 17.3%. The peptide drug market by sales
revenue in the United States grew from US$30.9 billion in 2018 to US$52.5 billion in 2023,
representing a CAGR of 11.2%, and is expected to further grow to US$141.1 billion in 2032,
representing a CAGR of 11.6%. The following chart sets forth the global market by sales
revenue of peptide drugs by regions:
Breakdown of Global Peptide Drug Market, 2023
58.6%
16.7%
15.2%
9.4% US
EU
China
ROW
Note: ROW means “rest of the world”
Source: NMP A, FDA, EMA, Annual Report, Frost & Sullivan analysis
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The following chart sets forth the global, China and the United States peptide drug market
by sales revenue by patented and generic drugs:
Breakdown of Global Peptide Drug Market by Patented Drugs and Generic Drugs,
2018-2032E
Patented Generic
CAGR Patented Drug Generic Drug Total
2018-2023
2023-2032E
9.0%
13.4%
5.8%
10.3%
8.1%
12.6%
Billion USD
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
60.7 61.7 62.8 67.7 75.6
89.5
106.9
126.1
146.4
167.6
189.0
209.7
229.0
246.3
261.2
18.5 19.5 21.2
24.4
27.9
32.2
36.6
40.5
45.1
49.4
52.9
56.3
58.9
18.418.4
42.3 43.3 44.3 48.2 54.4 65.2 79.1 93.8 109.8 127.1 143.9 160.3 176.1 190.0 202.3
Breakdown of China Peptide Drug Market by Patented Drugs and Generic Drugs,
2018-2032E
Patented Generic
CAGR
2018-2023
2023-2032E
Patented Drug
6.1%
18.8%
Generic Drug
-1.9%
13.9%
Total
3.0%
17.3%
Billion USD
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
4.2 4.6 5.2 6.1 5.7 5.6 6.2 7.3 9.1 11.3 13.9 16.7
19.8
23.1
26.5
3.1 3.2 3.3 3.5 3.1 2.8 2.9 3.3
3.8
4.5
5.4
6.2
7.1
8.0
9.0
7.3 7.8 8.5 9.6 8.8 8.4 9.1 10.6
12.9
15.8
19.2
22.9
26.9
31.1
35.5
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Breakdown of United States Peptide Drug Market by
Patented Drugs and Generic Drugs, 2018-2032E
Patented Generic
CAGR
2018-2023
2023-2032E
Patented Drug
11.4%
12.0%
Generic Drug
9.5%
8.1%
Total
11.2%
11.6%
Billion USD
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
6.0
6.6
7.3
7.8
8.4
9.1
9.7
10.3
10.7
30.9 32.0 33.3 38.1 41.3
52.5
63.2
74.2
85.3
96.7
107.4
116.8
125.6
133.8
141.1
3.4 3.6 3.8 4.4 4.5
5.3
27.5 28.5 29.5 33.7 36.8 47.2 57.2 67.6 78.0 88.9 99.0 107.7 115.9 123.5 130.4
Source: NMP A, FDA, Annual report, Frost & Sullivan analysis
Peptides can be divided into two categories, namely, insulin peptides and non-insulin
peptides. The following charts set forth the global, China and the United States market by sales
revenue of peptide drug by insulin and non-insulin:
Breakdown of Global Peptide Drug Market by Insulin and Non-insulin,
2018-2032E
Insulin Non-insulin
CAGR Insulin Drug Non-insulin Drug Total
2018-2023
2023-2032E
-7.4%
-9.2%
17.1%
15.4%
8.1%
12.6%
Billion USD
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
60.7 61.7 62.8 67.7 75.6
89.5
106.9
126.1
146.4
167.6
189.0
209.7
229.0
246.3
261.2
27.2 26.5 23.6 19.7 17.0 14.9 13.3 12.0 11.0 10.2 9.5 8.9 8.3
31.7 33.8 35.7 41.1 52.0 69.8 90.0 111.2 133.1 155.5 177.9 199.5 219.5 237.5 252.9
27.929.0
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Breakdown of China Peptide Drug Market by Insulin Drugs and Non-insulin Drugs,
2018-2032E
Insulin Non-insulin
CAGR
2018-2023
2023-2032E
Insulin Drug
-5.7%
-9.9%
Non-insulin Drug
8.9%
21.8%
Total
3.0%
17.3%
Billion USD
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
3.5 3.7 4.1 4.5 3.5 2.6 2.1 1.8 1.6 1.4 1.3 1.2 1.1 1.1 1.0
3.8 4.1 4.4 5.1 5.3 5.8 7.0 8.8 11.3 14.4
17.9
21.7
25.8 30.1
34.5
7.3 7.8 8.5 9.6 8.8 8.4 9.1
10.6
12.9
15.8
19.2
22.9
26.9
31.1
35.5
Breakdown of United States Peptide Drug Market by Insulin and Non-insulin,
2018-2032E
Insulin Non-insulin
CAGR
2018-2023
2023-2032E
Insulin Drug
-11.7%
-9.8%
Non-insulin Drug
22.1%
13.3%
Total
11.2%
11.6%
Billion USD
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
14.4 13.7 13.2 12.2 10.3 7.8 6.6 5.7 5.1 4.6 4.2 3.8 3.5 3.3 3.1
16.5 18.3 20.1 25.9 31.0 44.7 56.6 68.5 80.2 92.1 103.2 113.0 122.1 130.5 138.1
30.9 32.0 33.3 38.1 41.3
52.5
63.2
74.2
85.3
96.7
107.4
116.8
125.6
133.8
141.1
Source: NMP A, FDA, Annual report, Frost & Sullivan analysis
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GLP-1 drugs has changed the drug landscape for the treatment of metabolic diseases. The
global GLP-1 drug market by sales revenue grew from US$9.3 billion in 2018 to US$38.9
billion in 2023, representing a CAGR of 33.2%, and is expected to further grow to US$129.9
billion in 2032, representing a CAGR of 14.3%. The global non-GLP-1 drug market by sales
revenue slightly decreased from US$51.4 billion in 2018 to US$50.6 billion in 2023,
representing a CAGR of -0.3%, and is expected to further grow to US$131.3 billion in 2032,
representing a CAGR of 11.2%. The following chart sets forth the global market size by sales
revenue of peptide drugs by GLP-1 and non-GLP-1:
Breakdown of Global Peptide Drug Market by GLP-1 and Non-GLP-1,
2018-2032E
GLP-1 Non-GLP-1
CAGR
2018-2023
2023-2032E
GLP-1 Drug
33.2%
14.3%
Non-GLP-1 Drug
-0.3%
11.2%
Total
8.1%
12.6%
Billion USD
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
60.7 61.7 62.8 67.7 75.6
89.5
106.9
126.1
146.4
167.6
189.0
209.7
229.0
246.3
261.2
13.1 17.0 25.4 38.9 53.6 65.6 77.6 89.4 98.8 107.7 115.0 122.4 129.9
51.4 50.4 49.7
50.250.7
50.6
53.3
60.4
68.8
78.2
102.0
90.2
114.0 123.9
131.3
9.3 11.49.3
Source: NMP A, FDA, Annual report, Frost & Sullivan analysis
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The GLP-1 drug market by sales revenue in China grew from US$0.1 billion in 2018 to
US$1.3 billion in 2023, representing a CAGR of 65.3%, and is expected to further grow to
US$23.2 billion by 2032, representing a CAGR of 37.3%. The non-GLP-1 drug market by sales
revenue in China slightly decreased from US$7.2 billion in 2018 to US$7.1 billion in 2023,
representing a CAGR of -0.2%, and is expected to grow to US$12.3 billion by 2032,
representing a CAGR of 6.3%. Significant growth potential is anticipated in the China GLP-1
market moving forward, because (i) the GLP-1 market in China is in a relatively nascent and
fast-growing stage, compared to those in other developed countries, such as the United States;
(ii) the approval process for obesity treatments using GLP-1 drugs, such as semaglutide and
tirzepatide, in China is notably expedited; (iii) there is a time lag in China when it comes to
the use and marketing of innovative GLP-1 peptide drugs, as compared to global markets (e.g.
tirzepatide was approved for marketing in the U.S. in 2022, and approved for marketing in
China in 2024); (iv) numerous clinical pipelines targeting the GLP-1 receptor are currently in
development in China.
The following chart sets forth the China market size by sales revenue of peptide drugs by
GLP-1 and non-GLP-1:
Breakdown of China Peptide Drug Market by GLP-1 and Non-GLP-1,
2018-2032E
GLP-1 Non-GLP-1
CAGR
2018-2023
2023-2032E
GLP-1 Drug
65.3%
37.3%
Non-GLP-1 Drug
-0.2%
6.3%
Total
3.0%
17.3%
0.2 0.2 0.5 0.8
Billion USD
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
7.3 7.8 8.5 9.6 8.8 9.1
10.6
8.4
12.9
15.8
19.2
22.9
26.9
31.1
35.5
3.62.2
5.7 7.7 10.0
12.9
16.3
19.8
23.2
7.2 7.6 8.3 9.2 7.9 7.1 6.9
7.0
7.3
8.2
9.2
10.0
10.6
11.4
12.3
0.1 1.3
Source: NMP A, Annual report, Frost & Sullivan analysis
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The GLP-1 drug market by sales revenue in the United States grew from US$7.4 billion
in 2018 to US$28.7 billion in 2023, representing a CAGR of 31.2%, and is expected to further
grow to US$83.8 billion by 2032, representing a CAGR of 12.7%. The non-GLP-1 drug market
by sales revenue in the United States slightly grew from US$23.5 billion in 2018 to US$23.8
billion in 2023, representing a CAGR of 0.3%, and is expected to grow to US$57.4 billion by
2032, representing a CAGR of 10.3%. The CAGR in the United States reflects the extensive
development history and mature usage of GLP-1 drugs in the country. On one hand, the demand
for GLP-1 drugs is expected to continue rising. On the other hand, the Inflation Reduction Act,
passed in August 2022, may impose a cap on cost-sharing of insulin, which is the primary type
of peptide drug. The price of insulin in the United States has decreased accordingly. As a result,
the United States market for GLP-1 drugs is likely to maintain a stable market share within the
overall peptide drug market.
The following chart sets forth the United States market size by sales revenue of peptide
drugs by GLP-1 and non-GLP-1:
Breakdown of United States Peptide Drug Market by GLP-1 and Non-GLP-1,
2018-2032E
GLP-1 Non-GLP-1
CAGR
2018-2023
2023-2032E
GLP-1 Drug
31.2%
12.7%
Non-GLP-1 Drug
0.3%
10.3%
Total
11.2%
11.6%
Billion USD
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
30.9 32.0 33.3 38.1 41.3
52.5
63.2
74.2
85.3
96.7
107.4
116.8
125.6
133.8
141.1
10.5 12.2 17.3 28.7 35.5 42.3 48.0 55.8 62.5 68.6 74.0 79.0 83.8
8.87.4
23.5 23.2 22.7
23.925.9
23.8
27.7
31.9
37.3
40.9
48.2
44.9
51.6
54.8
57.4
Source: FDA, Annual report, Frost & Sullivan analysis
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Competitive Landscape of Peptide Drugs
Between January 1, 2015 and the Latest Practicable Date, a total of 76 non-insulin peptide
drugs received regulatory approval globally. Specifically, during this period, 56 non-insulin
peptide drugs were approved in countries or regions outside of China, which included 11
GLP-1 peptide drugs and 45 non-GLP-1 peptide drugs. In China, 36 non-insulin peptide drugs
were approved, comprising 11 GLP-1 peptide drugs and 25 non-GLP-1 peptide drugs. Among
the 36 non-insulin peptide drugs approved in China and 56 approved outside China, 16 drugs
were approved in both China and other countries or regions between January 1, 2015 and the
Latest Practicable Date. Between January 1, 2015 and the Latest Practicable Date, the total
number of company-initiated Phase II or Phase III clinical trials for peptide drug pipelines
reached 360. The following chart sets forth the distribution by disease area of all company-
initiated Phase II or Phase III clinical trials for peptide drugs between January 1, 2015 and the
Latest Practicable Date. The indications targeted by a trial in the following chart may involve
multiple therapeutic areas and therefore the total number of clinical trials exceeds 340.
Distribution of Phase II and beyond Clinical Trials by Disease Area
36,
6.8%
36, 6.8%
13, 2.5%
Endocrine and
metabolic diseases
Tumors
Digestive system
diseases
Immune system
diseases
Urinary system
diseases
Others
173, 32.9%
52, 9.9%
216, 41.1%
Notes:
1. Numbers of clinical trials each year are calculated according to the first posted date.
2. Trials include ongoing clinical trials initiated by the corporate side.
3. The number of clinical trials in 2025 is counted up to the Latest Practicable Date.
Source: Frost & Sullivan analysis, Clinical trials
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The following table illustrates global top 10 non-insulin peptide drugs in terms of sales
revenue in 2023:
Global Top 10 Non-insulin Peptide Drugs in Terms of Sales Revenue in 2023
INN Name
Total Sales
Revenue
(Million USD)
Brand Name
(FDA Approval) Company Sales Revenue
(Million USD) Major Indication Therapeutic
Area
Semaglutide 21,162.1
Ozempic
(2017) Novo Nordisk 13,891.9 Type 2 Diabetes Mellitus Metabolism
Wegovy
(2021) Novo Nordisk 4,548.9 Obesity/Overweight Metabolism
Rybelsus
(2019) Novo Nordisk 2,721.3 Type 2 Diabetes Mellitus Metabolism
Dulaglutide 7,132.6 Trulicity
(2014) Eli Lilly 7,132.6 Type 2 Diabetes Mellitus Metabolism
Tirzepatide 5,338.9
Mounjaro
(2022) Eli Lilly 5,163.1 Type 2 Diabetes Mellitus Metabolism
Zepbound
(2023) Eli Lilly 175.8 Obesity/Overweight Metabolism
Liraglutide 2,750.7
Saxenda
(2014) Novo Nordisk 1,493.3 Obesity/Overweight Metabolism
Victoza
(2010) Novo Nordisk 1,257.4 Type 2 Diabetes Mellitus Metabolism
Carfilzomib 1,403.0 Kyprolis
(2012) Amgen 1,403.0 Multiple Myeloma Oncology
Goserelin 952.0 Zoladex
(1989) AstraZeneca 952.0 Prostate Cancer; Breast
Cancer; Endometriosis
Oncology;
Reproductive
System
Leuprorelin 753.0 Leuplin/Enantone
(1989) Takeda 753.0 Prostate Cancer, Breast
Cancer, Central
Precocious Puberty
Oncology;
Endocrine
Octreotide 1,314.0 Sandostatin
(1988) Novartis 1,314.0 Carcinoid Tumors and
Acromegaly Oncology
Linaclotide 1,154.3 Linzess
(2012) Astellas 46.3 Constipation Digestive
system
Lanreotide 1,153.0 Somatuline
(2007) Ipsen 1,153.0 GEP-NETs; Carcinoid
Syndrome  Oncology
Linzess/Constella
(2012) Abbvie 1,108.0 Constipation Digestive
system
Note: Calculate at the exchange rate of 1 USD=6.8902 DKK, 1 USD=0.9242 EURO, and 1 USD=140.5107 JPY .
Source: Frost & Sullivan analysis, Annual reports
OVERVIEW OF PEPTIDE CRDMO MARKET
Global, China and the United States Peptide CRDMO Market
Peptide CRDMO market size measures the value of services produced by companies
headquartered in a given country or region, including their services provided to customers in
the same country or region, as well as those provided to customers in other countries or
regions. For instance, the value of services provided by CRDMOs headquartered in China to
customers in the United States is measured as within the China CRDMO market. The global
peptide CRDMO market by sales revenue grew from US$1.6 billion in 2018 to US$3.1 billion
in 2023, representing a CAGR of 14.8%, and is expected to further grow to US$18.8 billion
by 2032, representing a CAGR of 22.0%. The peptide CRDMO market by sales revenue in
China grew from US$0.2 billion in 2018 to US$0.5 billion in 2023, representing a CAGR of
26.8%, and is expected to further grow to US$4.3 billion by 2032, representing a CAGR of
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25.9%. The peptide CRDMO market by sales revenue in the United States grew from US$0.2
billion in 2018 to US$0.4 billion in 2023, representing a CAGR of 16.0%, and is expected to
further grow to US$4.9 billion by 2032, representing a CAGR of 30.9%.
The higher CAGR for the global peptide CRDMO market from 2023 to 2032, compared
with that from 2018 to 2023, is primarily driven by the rapid development of the downstream
peptide drug market and the anticipated increase in demand for APIs resulting from the
expiration of patents on some popular products, such as dulaglutide, carfilzomib and
semaglutide. This trend is expected to lead to greater outsourcing demand by potential
customers in the future. Additionally, peptide CRDMOs offer significant advantages, and
pharmaceutical companies demonstrate a strong willingness to collaborate with CRDMOs,
further driving the CRDMO markets. The U.S. and China peptide CRDMO markets are
primarily driven by peptide drug markets. The U.S. peptide CRDMO markets have high
expected growth potential. U.S. peptide pharmaceutical companies commonly collaborate with
CRDMOs to outsource R&D and manufacturing. Driven by the booming peptide drug market
in the U.S. and influenced by the geopolitical fluctuations, such as potential increase of tariffs
and impact of the proposed BIOSECURE Act (see “Regulatory Overview—Other Foreign
Regulations—Laws and Regulations concerning International Trade-Proposed BIOSECURE
Act”), the demand for CRDMOs in the U.S. is expected to grow. It is further expected that part
of the production capacity for CRDMOs will be shifted back to the U.S. going forward,
accommodating such increasing customer demand. Many U.S. CRDMO companies have
actively built factories in the U.S. to expand their production capacity in recent years, and
many plan to. For instance, some CRDMO companies, including Almac Group, Corden Pharma
and Thermo Fisher Scientific, plan to expand their manufacturing, packaging and/or production
capacity in the U.S.
The following tables set forth the global peptide CRDMO market size during the years
indicated.
Global Peptide CRDMO Market Size, 2018-2032E
1.6 1.8 2.1 2.3 2.6 3.1 3.8
4.7
7.0
9.0
11.0
13.3
15.8
18.8
5.7
Billion USD
CAGR
2018-2023
2023-2032E
14.8%
22.0%
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
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GLP-1 in Focus: the Impact of Patent Expiration
In case semaglutide related patents expire in 2026 in China and 2032 in the United States,
such expiration is expected to lead to an increase in generic drugs, which would lead to an
increase in demand for APIs which we sell. In addition, the impending expiration of
semaglutide patents also encourages the development and innovation of next-generation of
drug products to compete with semaglutide-related generic drugs, which may lead to an
increase in demand for CRO services for NCE discovery and CDMO services during CMC
development (i.e. demand for APIs).
Further, the expiration of semaglutide patents will lower barriers for entry in the field of
GLP-1, which is expected to increase competition among generic drug manufacturers.
However, as a CRDMO service provider who focuses on sales of APIs, we do not directly
compete with generic drug manufacturers. While it is also possible that the expiration of
semaglutide patents may also lead to an increase in competition in the CDMO industry, we
believe our established technical and operational expertise in peptide synthesis and the high
technical barriers in manufacturing complex peptides put us in a favorable position to compete
against potential competitors.
The expiration of semaglutide’s patent is expected to reshape the peptide drug market. We
consider this as an opportunity to strengthen our position and drive growth through by
implementing the following strategies:
 Expand production capacity : in anticipation of the increased demand for
semaglutide APIs after patent expiration, we plan to scale our manufacturing
capabilities to capture such increase, leveraging our established capabilities in the
synthesis and purification of complex peptides to provide sufficient, high-quality
and reliable supply of such APIs.
 Enhance differentiated capabilities : we plan to leverage our rich experience in DMF
submissions and relevant regulatory compliance under multiple jurisdictions and
under different international standards to support our customers in entering more
markets worldwide.
 Strengthen business development capabilities . we plan to expand our business
development efforts to target new NCE projects. We intend to proactively engage
with leading innovators in the industry to secure collaborations in next-generation
peptide discovery and development, leveraging our established technical and
operational expertise in peptide CRO and CDMO.
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The following tables set forth China and the United States peptide CRDMO market size
during the years indicated.
China Peptide CRDMO Market Size, 2018-2032E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
0.2 0.1 0.1 0.2 0.3 0.5 0.7 0.9
1.5
1.9
2.4
3.0
3.6
4.3
1.2
Billion USD
CAGR
2018-2023
2023-2032E
26.8%
25.9%
United States Peptide CRDMO Market Size, 2018-2032E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
0.2 0.2 0.3 0.3 0.4 0.4
0.6 0.7
1.2
1.7
2.2
2.9
3.8
4.9
0.9
Billion USD
CAGR
2018-2023
2023-2032E
16.0%
30.9%
Note: Cosmetic peptides are not included.
Source: Annual report, Expert interview, Public information, Frost & Sullivan analysis
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Global Peptide-focused CRDMO Competitive Landscape
There are approximately 150 peptide CRDMO service providers in the global peptide
CRDMO market. Among them, there are approximately 30 peptide-focused market players in
the global peptide CRDMO market. The following table illustrates the market share of major
peptide-focused CRDMO players in terms of revenue in 2023:
Company Background
Bachem
PolyPeptide
Medtide
Ambio
USV Peptide
BCNpeptides
Headquartered in Switzerland, which specializes in the development
and production of peptides and oligonucleotides, and its services
can be divided into three main categories, Commercial API, chemical
manufacturing and control development, research & specialties
Headquartered in  Switzerland, which specializes in the development
and manufacturing of synthetic peptides and oligonucleotides used
as API  or intermediates in therapeutic products
Headquartered in China, the third largest peptide-focused CRDMO
worldwide in terms of sales revenue in 2023
Headquartered in the U.S., a full-service peptide manufacturing
company
Headquartered in India, which focuses on peptide NCE, providing
manufacturing and regulatory support, generic peptide development/
scaling up and commercial production
Headquartered in Spain, which is an API manufacturing company,
focusing on the GMP manufacturing of bioactive peptides for
pharmaceutical, veterinary, and cosmetic applications
Main Business Area
Revenue Generated
from Peptide
in 2023
(Million USD)
2023
Market
Share
Europe, the U.S.
and Asia
Europe, the Americas,
Asia Pacific
the U.S., China, Japan,
Europe, South Korea
and Australia
the U.S., China
and Europe
North America,
Australia, South Korea,
and MENA region
Europe, the U.S.
and Asia
431.5
313.6
47.5
38.6
36.6
24.9
13.8%
10.0%
1.5%
1.2%
1.2%
0.8%
Venue of
the exchange
SIX Swiss
Exchange
SIX Swiss
Exchange
–
–
–
–
Notes:
(1) Peptide-focused CRDMOs refer to companies where peptide CRDMO services contribute over 50% of
their revenues.
(2) 2023 market share is calculated as revenue generated from peptide-related business of the peptide-
focused CRDMO in 2023 divided by global peptide CRDMO market size by sales revenue in 2023.
Source: Annual reports, Expert interview, Frost & Sullivan analysis
Price Trends of Raw Materials
According to Frost & Sullivan, the raw materials used by peptide CRDMOs primarily
include protected amino acids. The prices of such raw materials remained relatively stable
during the Track Record Period. Similarly, the primary raw material for our peptide CRDMO
service is protected amino acids. Our purchase price of protected amino acids experienced a
slight decline since the second half of 2023. The cost of raw materials typically accounted for
15%-17% of our revenue during the Track Record Period, and the price fluctuations in raw
materials had a very limited impact on our business.
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OVERVIEW OF OLIGONUCLEOTIDE DRUGS
Introduction of Oligonucleotides and Oligonucleotide Drugs
Oligonucleotides represent a class of synthetic nucleic acid polymers, typically consisting
of single- or double-stranded molecules with around 20 nucleotides. They are utilized for
modulating gene expression through various mechanisms, including ASO, RNAi, and
aptamers, among others. These oligonucleotide-based therapies encompass several major
types, such as RNAi, ASO, siRNA, shRNA, dsRNA, piRNA, PMO and CpG oligonucleotides.
Between January 1, 2015 and the Latest Practicable Date, a total of 18 oligonucleotide drugs
have been approved for marketing worldwide, such as primary hyperoxaluria and primary
hypercholesterolaemia, and neurodegenerative diseases, such as amyotrophic lateral sclerosis.
The following diagram illustrates the main types of oligonucleotides.
The main types of oligonucleotides
RNA interference (RNAi)
Comparison of the major oligonucleotides
RNA interference (RNAi) is a naturally occurring posttranscriptional pathway of
gene silencing mediated by short fragments of double-stranded RNA, which
combine with homologous sequences in mRNAs and induce their breakdown.
/g190
Antisense oligonucleotides (ASO)
An ASO is a single-stranded deoxyribonucleotide, which is complementary to the
mRNA target.
The goal of the antisense approach is the downregulation of a molecular target,
usually achieved by induction of RNase H endonuclease activity that cleaves the
RNA-DNA hetero-duplex with a significant reduction of the target gene translation.
/g190
RNAi ASO
The first step of RNAi involves processing and cleavage of longer
double-stranded RNA into siRNAs, generally bearing a 2 nucleotide
overhang on the 3’-end of each strand. When formed, siRNAs are bound by
a multiprotein component complex referred to as RISC (RNA induced
silencing complex).
Within the RISC complex, siRNA strands are separated and the strand with
the more stable 5’-end is typically integrated to the active RISC complex.
The antisense single-stranded siRNA component then guides and aligns the
RISC complex on the target mRNA and through the action of catalytic RISC
protein, a member of the argonaute family (Ago2), mRNA is cleaved.
• By induction of endogenous RNase H activity (ASO-RNase H) that cleaves
the mRNA-ASO hetero-duplex which leads to degradation of the target
toxic mRNA and leaves the ASO intact; or
Binding to the RNA and causing translational inhibition by steric hindrance,
exon skipping, exon inclusion, destabilization of pre-mRNA in the nucleus,
or targeting the destruction of microsomal RNAs that control the expression
of other genes.
•
•
Mechanism
of action
Structure
and length
Features
20-25 nucleotides, double-stranded• Usually 15 to 30 nucleotides, single-stranded•
The presence of two strands of RNA may bring a higher off-target effect in
siRNA-based drugs since both the sense and antisense strands could be active
•
Double-stranded confers on siRNAs a greater stability, making it more
appealing for in vitro studies as compared with ASOs
•
Relatively easier to obtain a potent siRNA since unmodified RNA works with
high potency as opposed to ASOs
•
Easier to deliver ASOs in vivo, since they do not need a vector and a simple
chemical modification can increase their resistance to nucleases
•
Since ASOs are single stranded, as opposed to siRNA, they have lower cost
of production
•
Source: Frost & Sullivan analysis, Literature research
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Oligonucleotide Drug Market Size
The global market of oligonucleotide drugs, a novel type of chemical drug with
significant growth potential, by sales revenue, grew from US$2.0 billion in 2018 to US$4.5
billion in 2023, representing a CAGR of 16.9%, and is expected to further grow to US$45.9
billion by 2032, representing a CAGR of 29.6%. The oligonucleotide drug market by sales
revenue in China grew from US$0.002 billion in 2019 to US$0.1 billion in 2023, representing
a CAGR of 155.3%, and is expected to further grow to US$0.9 billion in 2032, representing
a CAGR of 28.7%. The oligonucleotide drug market by sales revenue in the United States grew
from US$1.2 billion in 2018 to US$2.3 billion in 2023, representing a CAGR of 14.4%, and
is expected to further grow to US$20.0 billion in 2032, representing a CAGR of 27.3%. The
following chart provides breakdown of the global oligonucleotide drug market by regions:
Breakdown of Global Oligonucleotide Drug Market, 2023
51.2%
36.1%
10.5%
2.2%
US
EU
China
ROW
Note: ROW means “rest of the world”
Source: NMP A, FDA, EMA, Annual report, Frost & Sullivan analysis
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Competitive Landscape of Oligonucleotide Drugs
Between January 1, 2015 and the Latest Practicable Date, a total of 18 oligonucleotide
drugs had been approved for marketing worldwide, among which three oligonucleotide drugs
had been approved in China. Oligonucleotide drug with highest sales revenue in 2023 was
Spinraza (Nusinersen), an ASO drug developed by Ionis Pharmaceuticals, Inc., at US$1,741.2
million, followed by a siRNA drug Amvuttra (Vutrisiran) developed by Alnylam
Pharmaceuticals, Inc. with US$557.8 million sales revenue in 2023. The following chart sets
forth certain oligonucleotide drugs approved between January 1, 2020 and the Latest
Practicable Date, which includes five ASO drugs, five siRNA drugs and one aptamer.
Category Brand Name Product Target Company Indication First Approval Date
siRNA Qfitlia Fitusiran SERPINC1 Alnylam Pharmaceuticals Hemophilia A or Hemophilia B 2025/3/28 (FDA)
ASO TRYNGOLZA Olezarsen APOC3 Ionis Pharmaceuticals Familial chylomicronemia syndrome (FCS) 2024/12/19 (FDA)
ASO Wainua Eplontersen TTR Ionis Pharmaceuticals

Akcea Therapeutics
Polyneuropathy of hereditary transthyretin-
mediated amyloidosis 2023/12/21 (FDA)
siRNA Rivfloza Nedosiran LDHA Dicerna Pharmaceuticals,
Novo Nordisk Pharmaceuticals Primary hyperoxaluria type 1 (PH1) 2023/9/29 (FDA)
Aptamers IZE RVAY Avacincaptad
pegol C5 Archemix Geographic atrophy 2023/8/4 (FDA)
ASO QALSODY Tofersen SOD1 Ionis Pharmaceuticals Amyotrophic Lateral Sclerosis (ALS) 2023/4/25 (FDA)
2024/9/26 (NMPA)
siRNA AMVUTTRA Vutrisiran TTR Alnylam
Hereditary Transthyretin-mediated (hATTR)
amyloidosis, polyneuropathy of hereditary
transthyretin-mediated amyloidosis
2022/6/13 (FDA)
2022/9/15 (EMA)
2022/9/26 (Japan)
ASO Amondys 45 Casimersen DMD Sarepta T herapeutics Duchenne muscular dystrophy (DMD) 2021/2/25 (FDA)
siRNA Leqvio Inclisiran PCSK9 Alnylam
Primary hypercholesterolaemia
(heterozygous familial and non-familial)
or mixed dyslipidaemia
2020/12/9 (EMA)
2021/12/22 (FDA)
2023/8/22 (NMPA)
siRNA Oxlumo Lumasiran HAO1 Alnylam Primary hyperoxaluria type 1 (PH1) 2020/11/19 (EMA)
2020/11/23 (FDA)
ASO VILTEPSO Viltolarsen DMD Nippon Shinyaku, NS Pharma Duchenne muscular dystrophy (DMD) 2020/3/25 (Japan)
2020/8/12 (FDA)
Notes:
1. Products that were withdrawn from the market are not included.
2. Filter conditions: (1) first approval date since 2020/1/1, up to the Latest Practicable Date.
Source: FDA, EMA, NMP A, PMDA, Frost & Sullivan analysis
OVERVIEW OF OLIGONUCLEOTIDE CDMO MARKET
Global, China and the United States Oligonucleotide CDMO Market
The global oligonucleotide CDMO market by sales revenue grew from US$0.5 billion in
2018 to US$2.3 billion in 2023, representing a CAGR of 33.8%, and is expected to further
grow to US$18.4 billion in 2032, representing a CAGR of 26.0%. The oligonucleotide CDMO
market by sales revenue in China grew from US$0.001 billion in 2019 to US$0.3 billion in
2023, representing a CAGR of 300.1%, and is expected to further grow to US$1.8 billion in
2032, representing a CAGR of 24.5%. The oligonucleotide CDMO market by sales revenue in
the United States grew from US$0.3 billion in 2018 to US$1.1 billion in 2023, representing a
CAGR of 32.4%, and is expected to further grow to US$7.0 billion in 2032, representing a
CAGR of 23.3%. The following charts set forth the global, China and the United States
oligonucleotide CDMO market by sales revenue.
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Global Oligonucleotide CDMO Market Size, 2018-2032E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
0.5 1.0 1.3 1.6 2.0 2.3 2.6 3.1
5.3
7.4
9.7
12.2
15.1
18.4
3.9
Billion USD
CAGR
2018-2023
2023-2032E
33.8%
26.0%
China Oligonucleotide CDMO Market Size, 2019-2032E
2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
0.0 0.0
0.1
0.3 0.3 0.3 0.3
0.4
0.7
0.9
1.2
1.5
1.8
0.5
Billion USD
CAGR
2019-2023
2023-2032E
300.1%
24.5%
US Oligonucleotide Drug CDMO Market Size, 2018-2032E
2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E
0.3 0.5 0.6 0.8 1.0 1.1 1.2 1.4
2.3
3.1
3.9
4.7
5.8
7.0
1.7
Billion USD
CAGR
2018-2023
2023-2032E
32.4%
23.3%
Source: Annual report, Expert interview, Public information, Frost & Sullivan analysis
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REPORT COMMISSIONED BY FROST & SULLIV AN
We commissioned Frost & Sullivan, an independent consulting firm, to conduct detailed
research on the global peptide and oligonucleotide drug markets and the outsourcing services
industry. We have agreed to pay a fee of RMB450,000 to Frost & Sullivan in connection with
the preparation of the Frost & Sullivan Report. We have extracted certain information from the
Frost & Sullivan Report in this section, as well as in the sections headed “Summary,” “Risk
Factors,” “Business,” “Financial Information” and elsewhere in this Prospectus to provide our
potential investors with a more comprehensive presentation of the industry in which we
operate.
During the preparation of the Frost & Sullivan Report, Frost & Sullivan performed both
primary and secondary research, and obtained knowledge, statistics, information and industry
insights on the industry trends of the global peptide and oligonucleotide drug markets and the
global peptide and oligonucleotide outsourcing services market, as well as major players in the
global peptide and oligonucleotide outsourcing services industry. Primary research involved
discussing the status of the industry with leading industry participants and industry experts.
Secondary research involved reviewing annual reports of public companies, independent
research reports and Frost & Sullivan’s proprietary databases. The Frost & Sullivan Report was
compiled based on the assumptions that (i) the global economies, in particular, the United
States and China, are likely to maintain a steady rate of growth in the next decade; (ii) the key
growth drivers mentioned in this section are likely to drive the growth of the global peptide and
oligonucleotide drug markets and the peptide and oligonucleotide outsourcing market from
2022 to 2032, and (iii) there is no force majeure or industry regulation that affects any of such
markets dramatically or fundamentally. For the avoidance of doubt, the impacts of COVID-19
have been considered when compiling information in the Frost & Sullivan Report. In this
section, Frost & Sullivan presents historical market information for six years (i.e., from 2018
to 2023) which is longer than the Track Record Period and, we believe, is a more accurate
reflection of the trends that affect our markets.
Our Directors confirmed that, after taking reasonable care, as of the Latest Practicable
Date, there had been no adverse change in the market information set forth herein since the date
on which the Frost & Sullivan Report was issued.
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This section sets forth a summary of the principal laws, rules and regulations in the PRC
that are relevant to our business.
MAJOR REGULATORY AUTHORITIES AND RELEV ANT ORGANIZATIONS
The operations of the Company in the PRC are mainly supervised and regulated by the
following authorities, in addition to the authorities generally administering the companies in
the PRC:
National Medical Products Administration (NMPA)
The NMPA is subordinate to and supervised by the State Administration of Market
Supervision, and is the main regulatory body for the supervision and management of drugs and
related affairs in China. It is responsible for drug safety supervision and management,
formulating supervision and management policy planning, organizing the drafting of draft laws
and regulations, managing drug standards, organizing the formulation of national
pharmacopoeia and other industry standards, organizing the formulation of classified
management system, and supervising the implementation. The NMPA is also in charge of drug
registration management, formulating the registration management system, strictly reviewing
and approving the listing, managing the risks after the listing of drugs, undertaking the
emergency management of drug safety according to law, organizing and guiding drug
supervision and inspection, investigating and handling illegal activities in drug registration
according to law, organizing and guiding the investigation and handling of illegal activities in
production according to responsibilities, and guiding the supervision of local governments on
drugs. As an integrated CRDMO service provider, focusing on the global peptide and
oligonucleotide drug market, the company is managed and supervised by National Medical
Products Administration and local drug regulatory authorities.
National Development and Reform Commission (NDRC)
The NDRC is a component of the PRC State Council, which implements the principles,
policies, and decision-making arrangements for development and reform. It is mainly
responsible for formulating and organizing the implementation of national economic and social
development strategies, and drafting relevant laws and regulations on national economic and
social development, economic system reform and opening up, which has a great impact on drug
research and development, production and service industries. Besides, as the Company
established enterprises overseas, it is also subject to NDRC’s supervision in regards to overseas
investment.
REGULATORY OVERVIEW
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Ministry of Commerce of the PRC (MOFCOM)
The MOFCOM is the department in charge of the PRC’s domestic & international trade
and international economic cooperation. It is responsible for formulating development
strategies and policies for domestic and foreign trade and international economic cooperation,
drafting laws and regulations and formulating departmental rules and regulations on domestic
and foreign trade, foreign investment, outward foreign investment and outward foreign
economic cooperation; formulating foreign investment policies and reform programmes and
organizing their implementation; and approving, in accordance with the law, the establishment
of and changes in foreign-invested enterprises. It also approves the establishment and changes
of foreign-invested enterprises in accordance with the law, and approves the contracts and
articles of association of major foreign-invested projects and major changes as specifically as
stipulated by the law. As a foreign-invested joint stock company, the company is subject to the
daily supervision of the commerce department.
General Administration of Customs of the PRC
The General Administration of Customs of the PRC is a directly affiliated institution of
the State Council which is responsible for customs supervision, collection and management of
import and export duties and other taxes, entry-exit health quarantine, statutory inspection of
import and export commodities, national import and export trade and other customs statistics,
and comprehensive national anti-smuggling work. The company is subject to the management
and supervision of the customs department when importing and exporting goods.
LA WS AND REGULATIONS OF THE PRC
Drug Research and Development & Registration Services
Regulations on Research and Development of New Drugs
Pursuant to the Drug Administration Law of the PRC ()
which was promulgated by the Standing Committee of the National People’s Congress (the
“SCNPC ”) on September 20, 1984, became effective on July 1, 1985 and amended on February
28, 2001, December 28, 2013, April 24, 2015 and August 26, 2019, activities engaged in the
development, production, operation and use of drugs shall comply with laws, regulations, rules,
standards and norms, and ensure that information on the entire process is true, accurate,
complete and traceable. Those engaged in drug development activities shall comply with the
code of practice for the quality management of non-clinical studies of drugs and code of
practice for the quality management of clinical trials of drugs, and ensure that the whole
process of drug development continuously meets the statutory requirements.
REGULATORY OVERVIEW
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Pursuant to the Regulations of Implementation of the Drug Administration Laws of the
PRC (ૢԷ) which was promulgated by the State Council
on August 4, 2002, became effective on September 15, 2002 and amended on March 2, 2019
and December 6, 2024, respectively, clinical trials of drugs, the production of drugs and the
import of drugs shall comply with the provisions of the Drug Administration Law and the
Regulations for Implementation of the Drug Administration Law, and shall be examined and
approved by the drug supervision and administration department of the State Council; The
pharmaceutical supervisory and administrative department of the State Council may entrust the
pharmaceutical supervisory and administrative departments of the people’s governments of
provinces, autonomous regions and municipalities directly under the Central Government to
review the development and conditions of the declared drugs, review the application materials
in form, and test the trial-produced samples. The pharmaceutical supervisory and
administrative department shall supervise and inspect the development, production, marketing
and use of drugs according to law.
The CDE on February 17, 2023 issued and implemented the “Chemical Synthesis Peptide
Drug Pharmacy Research Technical Guidelines (for trial implementation)” ( ʷኪΥϓε㹻ᖹ
ۆࡡ(༊Б)), for the guidance of chemical synthesis peptide drug
pharmacy, to provide reference to the technical standards.
Drug Manufacturing
Pursuant to the Drug Administration Law of the PRC, a drug manufacturing enterprise is
required to obtain a Drug Manufacturing License (͛ପ஢̙ᗇ). According to the
Measures for the Supervision and Administration of Pharmaceutical Production (͛ପ္
), the “ Pharmaceutical Production Measures ”) which was promulgated by
CFDA on August 5, 2004 with effect from the same date, revised on November 17, 2017 and
January 22, 2020 respectively, to produce preparations, APIs, an applicant shall, in the light of
Pharmaceutical Production Measures and the requirements of NMPA for application materials,
file an application with the medical products administrative department of the province where
it is located. The medical products administrative department of a province shall, within 30
days of the date of acceptance, make a decision. Where the provisions are complied with upon
examination, approval shall be granted and a drug production license shall be issued within 10
days of the date when the decision of written approval is made; and where the provisions are
not complied with, a written decision of disapproval shall be made and the reasons shall be
explained. The Drug Manufacturing License is valid for five years and shall be renewed at least
six months prior to its expiration date upon a re-examination by the relevant authority.
Pursuant to the Drug Administration Law of the PRC, undertaking of drug manufacturing
shall comply with drug manufacturing quality management norms, establish and improve upon
a drug manufacturing quality management system, ensure the whole drug manufacturing
process continuously comply with statutory requirements. The legal representative and the key
person-in-charge of a drug manufacturing enterprise shall be fully responsible for
the enterprise’s drug manufacturing activities. GMP for Pharmaceutical Products
(͛ପሯඎ၍ଣ஝ᇍ) which was promulgated on December 28, 1992 with effect from
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--- page 147 ---
the same date and amended on June 18, 1999 and January 17, 2011, respectively, comprises a
set of detailed standard guidelines governing the manufacture of the drugs, including
institution and staff qualifications, production premises and facilities, equipment, hygiene
conditions, production management, quality controls, product operation, raw material
management, maintenance of sales records and manner of handling customer complaints.
According to the Announcement on Implementing the Drug Administration Law of PRC
issued by National Medical Products Administration on November 29, 2019, GMP certification
will be cancelled on December 1, 2019, GMP certification applications will no longer be
accepted and GMP certification certificates will no longer be issued. However, according to the
Drug Administration Law of PRC, drug manufacturers still have to abide by GMP , establish
and improve GMP system, and ensure that the whole drug production process always conforms
to the legal provisions.
On May 24, 2021, NMPA promulgated the Measures for the Administration of Drug
Inspection (for Trial Implementation) (ج(༊Б)) (which came into effect
on the same day, and was amended on July 19, 2023). The Measures for the Administration of
Drug Inspection (for Trial Implementation) stipulates that drug manufacturers applying for a
Drug Manufacturing License for the first time shall carry out on-site inspections in accordance
with the GMP requirements. For an application for re-issuance of a Drug Manufacturing
Permit, the examination shall be carried out in light of the enterprise’s compliance with laws
and regulations on drug administration, GMP and operation of quality system under the
principles of risk management, and GMP conformity inspection may be conducted if
necessary.The GMP conformity inspection shall be conducted in case of new construction,
reconstruction or expansion of a workshop or production line at the original address or at
another place.
Drug Registration
Pursuant to the Measures for the Administration of Drug Registration (ൗ̅၍ଣ፬
) promulgated by State Administration for Market Regulation (the “ SAMR ”) on
January 22, 2020, the Measures shall apply to those engaging in drug development and
registration within the territory of the PRC. The term “drug registration” shall mean the
activities of drug registration applicants (applicant(s)) applying for clinical trial of drugs, drug
marketing authorisation, re-registration etc as well as supplementary applications, in
accordance with the statutory procedures and the relevant requirements, and the drug
administrative authorities conducting examination of safety, effectiveness and quality control
etc based on laws and regulations and the current scientific knowledge, and deciding on
approval or non-approval of the applications.
Pursuant to the Announcement on adjusting the examination and approval items of APIs,
pharmaceutical excipients and packaging materials (ࡡ
ʮѓ) and the Measures for the Administration of
Drug Registration, the NMPA shall establish a bundling review examination and approval
system for APIs, excipients and packaging materials and containers which come into direct
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contact with drug. When a pharmaceutical preparation is being reviewed and examined, APIs
and the relevant excipients, packaging materials and containers which come into direct contact
with drug shall be subject to bundling review. The Center for Drug Evaluation shall establish
an information registration platform for APIs, excipients and packaging materials and
containers which come into direct contact with drug, and announce the relevant registration
information, for the applicant or the holder to choose, and carry out bundling review for review
of application for registration of the relevant pharmaceutical preparation.
Product Liability
The Product Quality Law of the PRC () promulgated by
the SCNPC on February 22, 1993, became effective on September 1, 1993, amended on July
8, 2000, August 27, 2009 and December 29, 2018 respectively, is the principal governing law
relating to the supervision and administration of product quality. According to the PRC Product
Quality Law, if a defect in a product causes physical injury or damage to property other than
the defective product (third party property), the producer shall bear liability for compensation.
A producer may not bear liability for compensation if any of the following circumstances is
proven: (i) the product has not been put into circulation; (ii) the defect causing the damage did
not exist when the product was put into circulation; (iii) when the product was put into
circulation, the level of science and technology at the time was not sufficient to detect the
existence of the defect. Where a product is defective due to a mistake made by the seller and
such defect causes physical injury or damage to third party property, the seller shall bear
liability for compensation. If a seller is unable to identify the producer of a defective product
and is also unable to identify the supplier thereof, the seller shall bear liability for
compensation.
Pursuant to the Civil Code of the PRC (Պ), which was adopted
by the National People’s Congress on May 28, 2020 and came into force on January 1, 2021,
In the event of product defects which have caused damage to others, the manufacturer shall
bear tortious liability. If the damage caused to others due to product defect, the infringed may
seek compensation from the manufacturer of the products or may also seek compensation from
the seller of the products. Where the product defect is caused by the producer, the seller may,
after paying compensation, claim the same from the producer. Where the product defect is
caused by the fault of the seller, the producer may, after paying compensation, claim the same
from the seller. In the event of product defects which compromise the personal and property
security of others, the infringed shall have the right to request the manufacturer and the seller
to bear tortious liability such as cessation of infringement, removal of obstruction, elimination
of danger, etc.
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Regulations on Environmental Protection, Health and Safety
Environmental Protection
The Environmental Protection Law of the PRC (),
promulgated by the SCNPC on December 26, 1989 with effect from the same date and last
amended on April 24, 2014, summarizes the rights and responsibilities of environmental
protection regulatory authorities. The competent department of environmental protection in the
State Council is responsible for formulating national environmental quality standards and
pollutant discharge standards, and the people’s governments of provinces, autonomous regions
and municipalities directly under the Central Government may formulate local environmental
quality standards and pollutant discharge standards that are stricter than the national standards.
In this case, the company concerned must comply with national and local standards.
Environmental Impact Assessment
According to the Environmental Impact Assessment Law of the PRC ( ʕശɛ͏΍ձ਷
), promulgated by the SCNPC on October 28, 2002, became effective on
September 1, 2003, amended on July 2, 2016 and December 29, 2018, respectively, for
construction projects that have an impact on the environment, entities shall prepare an
environmental impact report, environmental impact statement or registration form in
accordance with the severity of the impact that the project may have on the environment.
According to the Regulations on the Administration of Construction Project
Environmental Protection (ᚐ၍ଣૢԷ), promulgated by the State
Council on November 29, 1998 with effect from the same date and last amended on July 16,
2017, the construction entity shall submit an environmental impact report or an environmental
impact statement, or fill in a registration form, as applicable, depending on the degree of
impact the construction project has on the environment. For a construction project for which
an environmental impact report or environmental impact statement shall be prepared, the
construction entity shall submit the environmental impact report and environmental impact
statement to the competent administrative authority of environmental protection for approval
before the commencement of the construction. If the environmental impact assessment
documents of a construction project have not been reviewed by the competent administrative
authority in accordance with the law or have not been granted approval after the review, the
construction entity shall be prohibited from commencing construction works of such project.
Completion and Acceptance
The Interim Measures for Acceptance of Environmental Protection upon Completion of
Construction Projects (), promulgated and
implemented by the former Ministry of Environmental Protection (now the MEE) on November
20, 2017, regulate the procedures and standards for environmental protection acceptance by
construction entities upon the completion of construction projects.
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Pollution Discharge
Pursuant to Regulations on the Administration of Pollutant Discharge Permits ( રϮ஢
̙၍ଣૢԷ), promulgated by the State Council on January 24, 2021 and became effective
on March 1, 2021, Enterprises, public institutions and other producers and business operators
that are subject to pollutant discharge permit administration in accordance with laws shall
apply for and obtain a pollutant discharge permit in accordance with the Regulations. The
entities that fail to obtain a pollutant discharge permit shall not discharge any pollutants.
The Measures for the Administration of Pollutant Discharge Permit (ج)
promulgated by Ministry of Ecology and Environment on April 1, 2024 (effective on July 1,
2024) stipulates that enterprises, institutions and other producers and operators that implement
the management of pollutant discharge permits according to the law shall apply for obtaining
pollutant discharge permits according to the law and discharge pollutants according to the
provisions of the pollutant discharge permits; No pollutant shall be discharged without
obtaining a pollutant discharge permit.
Pursuant to the Notice of the General Office of the State Council on Issuing the
Implementation Plan for the Control of Pollutant Release Permit System (׵
) promulgated on November 10, 2016 and the
Classification Administration List of Pollutant Discharge Permitting for Fixed Pollution
Sources (2019) (๕રϮ஢̙ʱᗳ၍ଣΤ፽(2019وpromulgated by the MEE
on December 20, 2019, the state implements a focused management and a simplification of
emission permits based on the pollutant-discharging enterprises and other manufacturing
businesses’ amount of pollutants, emissions and the extent of environmental damage. The
manufacturing of drug substance and manufacturing dose for chemical drugs are industries that
shall obtain the discharge permit in accordance with the prescribed time limit.
According to the Regulations on Urban Drainage and Sewage Treatment (ᕄર˥ၾ
Ϯ˥ஈଣૢԷ), promulgated by the State Council on October 2, 2013 with effect from
January 1, 2014, urban entities and individuals shall dispose of sewage through urban drainage
facilities covering their geographical area in accordance with the law. Companies or other
entities engaging in industrial activities shall apply for a sewage disposal drainage license
(Ϯ˥રɝર˥၍ၣ஢̙ᗇ) before disposing sewage into urban drainage facilities.
Sewage-disposing entities and individuals shall pay sewage treatment fees in accordance with
the law.
The Law of the PRC on Prevention and Treatment of Water Pollution ( ʕശɛ͏΍ձ਷
), promulgated by the SCNPC on May 11, 1984, became effective on
November 1, 1984 and last amended on June 27, 2017, requires that new construction projects
and reconstruction or expansion projects and other installations on water that directly or
indirectly discharge pollutants to water bodies shall be subject to environmental impact
assessment in accordance with the law. The facilities for prevention and control of water
pollution shall be designed, constructed and put to use simultaneously with the main parts of
a construction project. The facilities for prevention and control of water pollution shall
conform to the requirements of the approved or filed environmental impact assessment
documents.
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Regulations on Work Safety
Work Safety
According to the Safety Production Law of the PRC (),
promulgated by the SCNPC on June 29, 2002 and effect from November 1, 2022 and amended
on August 31, 2014 and June 10, 2021, respectively, a producers and business operators shall
abide by this Law and other laws and regulations concerning work safety, strengthen work
safety management, establish and improve the all-staff work safety responsibility system and
work safety rules and regulations, increase investment in funds, materials, technologies and
personnel for work safety, improve the conditions for work safety, strengthen the standardized
and information technology development of work safety, establish a dual prevention
mechanism of graded management and control of safety risks and the screening and handling
of hidden dangers, improve the risk prevention and resolution mechanism, and improve the
level of work safety so as to ensure work safety. Enterprises that do not have the conditions
for safe production shall not engage in production and business activities.
According to the Measures for the Supervision and Administration of “Three
Simultaneities” Requirements for the Safety Facilities of Construction Projects (ணධͦτ
݄“ࣛ”), which were promulgated by the former State Administration
of Work Safety (now the Ministry of Emergency Management (the “ MEM”)) on April 2, 2015
and became effective on May 1, 2015, the safety facilities of a construction project must be
designed, constructed and put into operation simultaneously with the major construction works
of the construction project.
Hazardous Chemicals
The Regulation on Safety Administration of Hazardous Chemicals (τΌ၍
ଣૢԷ, the “ Hazardous Chemicals Regulation ”) was promulgated by the State Council on
January 26, 2002, became effective on March 15, 2002 and amended on March 2, 2011 and
December 7, 2013, respectively. An entity using hazardous chemicals shall comply with the
provisions of laws and administrative regulations and the requirements of national standards
and industrial standards in in terms of use conditions (including techniques), and shall, in
accordance with the types and hazard characteristics of the used hazardous chemicals as well
as the amount and mode of use, establish and perfect the safety administration regulations and
safety operating rules for the use of hazardous chemicals so as to guarantee the safe use of
hazardous chemicals.
The Regulation on the Administration of Precursor Chemicals (၍ଣૢ
Է) promulgated by the State Council on August 26, 2005, became effective on November
1, 2005 and amended on February 6, 2016 and September 18, 2018 respectively, stipulates and
regulates the production, operation, purchase, transportation, import and export of precursor
chemicals. The precursor chemicals are classified into three categories. Category I includes the
major materials that can be used for producing drugs. Categories II and III include the chemical
agents that can be used for producing drugs. An entity that applies for purchasing the precursor
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chemicals in Category I shall submit the following certificates to the competent administrative
department for examination and approval, and obtain the purchase license therefrom upon
approval. An entity that is to purchase any chemical liable to producing drugs in Category II
or III shall, prior to the purchase, file an information about the type and quantity in demand
for record, with the public security organ of the local people’s government at the county level.
The Measures for the Administration of Public Security of Explosive Hazardous
Chemicals () promulgated by the Ministry of Public
Security on July 6, 2019 and came in to effect on August 10, 2019, stipulates that the selling
and purchasing units of explosive hazardous chemicals shall report the variety, quantity and
flow information of explosive hazardous chemicals sold and purchased to the local county-
level public security organ for the record within five days after the sale and purchase.
Fire Prevention
According to the Fire Prevention Law of the PRC ()o rt h e
Fire Prevention Law, promulgated by the SCNPC on April 29, 1998, became effective on
September 1, 1998 and amended on October 28, 2008, April 23, 2019 and April 29, 2021,
respectively, the design and construction of the fire control facilities for a construction work
shall comply with the national fire control technical standards. The developer, designer,
constructors and project supervisor of a construction project shall be responsible for the quality
of the design and construction of the fire control facilities for the construction work according
to the relevant laws.
According to the Fire Prevention Law and the Interim Provisions on Design Inspection
and Acceptance of Fire Protection of Construction Works (᜕ϗ၍ଣ
) or the interim Provisions on Fire Protection, (promulgated by the Ministry of
Housing and Urban-Rural Development on April 1, 2020 and effective as of June 1, 2020,
amended on August 21, 2023). The developer shall bear the primary responsibility for the fire
protection design and construction quality of the construction project according to law.
Regulations on Labor
Labor
Pursuant to the Labor Law of the PRC () which was
promulgated by the SCNPC on July 5, 1994, became effective on January 1, 1995, and
subsequently amended on August 27, 2009 and December 29, 2018, the Labor Contract Law
of the PRC () which was promulgated by the SCNPC on June
29, 2007, became effective on January 1, 2008 and subsequently amended on December 28,
2012 and the Implementing Regulations of the Labor Contract Law of the PRC ( ʕശɛ͏
ૢԷ) which was promulgated by the State Council on September 18,
2008, labor contracts in written form shall be needed to establish labor relationships between
employers and employees. Wages cannot be lower than the local standards of minimum wages.
Employers must establish and improve labour safety and hygiene systems, strictly implement
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national labour safety and hygiene regulations and standards, and educate workers about labour
safety and hygiene. Employers must provide workers with labour safety and hygiene conditions
and the necessary labour protective equipment in accordance with State regulations, and
workers engaged in occupationally hazardous work should undergo regular health checks.
Social Insurance and Housing Accumulation Fund
Under the Social Insurance Law of the PRC () which was
promulgated by the SCNPC on October 28, 2010, became effective on July 1, 2011 and
amended on December 29, 2018, the Administrative Regulations on the Housing Provident
Fund (၍ଣૢԷ) which was promulgated by the State Council on April 3, 1999
with effect from the same date and amended on March 24, 2002 and March 24, 2019
respectively, employers are required to contribute, on behalf of their employees, to a number
of social security funds, including funds for basic pension insurance, unemployment insurance,
basic medical insurance, occupational injury insurance, maternity insurance and to housing
provident funds. These payments are made to local administrative authorities and any employer
who fails to contribute may be fined and ordered to make good the deficit within a stipulated
time limit.
The General Office of the Central Committee of CPC and the General Office of the State
Council jointly issued the Reform Program of the State Tax and Land Tax Collection and
Management System () on July 20, 2018, which stipulates that
from January 1, 2019, the tax department is responsible for the collection of social insurance
premiums. According to the Circular on Doing the Work Relating to the Collection and
Administration of Social Insurance Premiums in a Steady and Orderly Manner (ᖢѼϞ
) issued by the State Administration of Taxation on
September 13, 2018 and Emergency Notice on Implementing the Spirit of the Executive
Meeting of the State Council to Effectively Do a Good Job in Stabilizing the Collection of
Social Insurance Premiums (൬ᅄϗʈ
), issued by the Ministry of Human Resources and Social Security on
September 21, 2018, all local departments responsible for collecting social insurance are
strictly prohibited from centrally clearing enterprises’ historical arrears on their own. The
Circular on the Implementation of Certain Measures to Further Support and Serve the
Development of the Private Economy (݄ٙ
) issued by the State Administration of Taxation on November 16, 2018 reiterated that
tax agencies at all levels are not allowed to organize on their own to carry out centralized
clearing of fees owed by contributors, including private enterprises, for previous years. The
Circular on the Issuance of the Comprehensive Plan for Reducing Social Insurance Premium
Rates (Ι೯<ࣩ>), issued by the General Office of
the State Council on April 1, 2019, generally reduces the burden of social insurance payment
on enterprises and re-emphasizes that local authorities shall not carry out centralized clearing
of historical arrears of fees and charges owed by enterprises on their own.
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Prevention and Control of Occupational Diseases
According to the Law of the PRC on the Prevention and Control of Occupational Diseases
() which was promulgated on October 27, 2001, became
effective as of May 1, 2002 and amended on December 31, 2011, July 2, 2016, November 4,
2017 and December 29, 2018, the prevention and control of occupational diseases shall follow
the guideline of “focusing on prevention and combining prevention with control.” An employer
shall: (i) establish and improve the accountability system for prevention and treatment of
occupational diseases, enhance management of, and raise the level in this field, and bear
responsibility for the occupational disease hazards produced; (ii) contribute to occupational
injury insurance; (iii) provide facilities for the effective prevention and protection of
occupational diseases, and provide materials to employees for personal use against
occupational diseases; (iv) provide alarm equipment, allocate on-spot emergency treatment
materials, washing equipment, emergency safety exits and necessary safety zones for work
places where acute occupational injuries are likely to take place due to poisonous and harmful
elements therein; and (v) inform the employees of, and specify in the labor contracts with the
employees the potential harm of, occupational disease as well as the consequences thereof, and
the prevention and protection measures and treatment against occupational diseases when
signing the labor contracts with employees.
According to the Law of the PRC on the Prevention and Control of Occupational
Diseases, in the event that any newly built, expanded or renovated construction project, or
technology renovation or introduction project (hereinafter the “ Construction Project ”) may
generate occupational disease hazards, the owner shall conduct the assessment of occupational
disease hazards during the feasibility study stage. The occupational disease hazard pre-
assessment report shall assess the Construction Project as to possible occupational disease
hazard factors and their impact on the workplace and health of the workers, and determine the
type of the hazards and the measures for protection against occupational diseases. Pursuant to
the Classified Management Catalog for the Risks of Occupational Disease Hazards at
Construction Projects (ᎈʱᗳ၍ଣͦ፽) which was promulgated
on March 12, 2021 with effect from the same date, the manufacturing of APIs of chemical drug
falls within the “serious” category.
Regulations on Self-Owned Real Properties
According to the Civil Code of the PRC or the PRC Civil Code properties referred to in
this law include real property and personal property. Establishment, modification, assignment
and extinguishment of real rights to immovables shall be effective upon registration pursuant
to law. The construction land use right may be established through assignment or allotment,
etc. The holder of the construction land use right shall reasonably use the land and may not
alter the use purpose.
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According to the Land Administration Law of the PRC ( ʕശɛ͏΍ձ਷ɺή၍ଣ
), promulgated by the SCNPC on June 25, 1986, became effective on January 1, 1987 and
last amended on August 26, 2019, China implements “socialist public ownership of land”, that
is, ownership by the whole people or collective ownership by the working masses. The State
formulates an overall land utilization plan to stipulate land use, classifying land into
agricultural land, construction land, or unused land. Entities or individuals using land must use
the land strictly in accordance with the purposes of land use determined in the overall land
utilization plan.
Regulations on Real Estate Leasing
According to the Civil Code of the PRC or the PRC Civil Code, a lease contract is a
contract whereby the lessor delivers to the lessee the item for the latter’s use or benefit
therefrom, and the lessee pays the lease expense. The contents of a lease contract generally
include terms such as the name, quantity and purpose of the leased property, lease term, lease
expense as well as time limit and method for its payment, and maintenance of the leased
property.
According to Administrative Measures on Leasing of Commodity Housing (܊גۜ
) promulgated by the Ministry of Housing and Urban-Rural Development of
PRC on December 1, 2010 and became effective on February 1, 2011, the lessor and the lessee
shall complete property leasing registration and filing formalities within 30 days from
execution of the property lease contract with the development (real estate) department of the
People’s Government of the centrally-administered municipality, municipality or county where
the leased property is located. Failure to comply with the above requirements may subject the
relevant lessors and lessees to administrative penalties, including orders to make corrections
within a certain period of time and fines.
Regulations on Intellectual Property
Patents
Pursuant to the Patent Law of the PRC (, the “ PRC Patent
Law”), promulgated by the SCNPC on March 12, 1984, became effective on April 1, 1985 and
amended on September 4, 1992, August 25, 2000, December 27, 2008 and October 17, 2020,
respectively, and the Implementation Rules of the Patent Law of the PRC ( ʕശɛ͏΍ձ਷
) which was last amended by the State Council on December 11, 2023, there
are three types of patents in the PRC: invention patent, utility model patent and design patent.
The term of a patent for an invention shall be 20 years, the term of a patent for a utility model
shall be 10 years, and the term of a patent for a design shall be 15 years, all commencing from
the date of filing of application. Any individual or entity that utilizes a patent or conducts any
other activity in infringement of a patent without prior authorization of the patentee shall pay
compensation to the patentee and is subject to a fine imposed by relevant administrative
authorities and, if constituting a crime, shall be held criminally liable in accordance with the
law. According to the PRC Patent Law, for the purpose of public health, the patent
administrative department under the PRC State Council may grant mandatory licensing for
patented drugs manufactured and exported to countries or regions which comply with the
provisions of the relevant international treaty participated by the People’s Republic of China.
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Trademarks
According to the Trademark Law of the PRC () which was
promulgated by the SCNPC on August 23, 1982, became effective on March 1, 1983, amended
on February 22, 1993, October 27, 2001, August 30, 2013 and April 23, 2019, the period of
validity for a registered trademark is 10 years, commencing from the date of registration. Upon
expiry of the validity period of a registered trademark, where the trademark registrant intends
to continue using the trademark, it shall complete renewal formalities pursuant to the
provisions within the 12-month period before the expiry date; where renewal formalities are
not completed within the stipulated period, a six-month extension may be allowed. The validity
period of each renewal shall be 10 years, commencing from the date following expiry of the
preceding validity period of the said trademark. Where renewal formalities are not completed
upon expiry of the validity period, the registered trademark shall be canceled. The trademark
bureaux shall gazette renewed registered trademarks. Infringement of the exclusive right to use
registered trademarks, the administration for industry and commerce has the right to
investigate and deal with in accordance with the law, suspected of committing a crime, the
administration for industry and commerce shall promptly transfer to the judicial organs in
accordance with the law.
Domain Name
In accordance with the Administrative Measures for Internet Domain Names ( ʝᑌၣਹ
) promulgated by the Ministry of Industry and Information Technology (the
“MIIT ”) on August 24, 2017 with effect from November 1, 2017, the corresponding permit
shall be obtained pursuant to these Measures from the MIIT or the communication
administrative bureau of the province, autonomous region or centrally-administered
municipality for establishment of domain name root servers and domain name root server
operating organizations, domain name registration management organizations and domain
name registration service organizations. Domain name registration service organisations
providing domain name registration services shall require applicants for domain name
registration to provide true, accurate and complete domain name registration information of the
domain name holder such as the identity information etc.
Regulations on Taxation
PRC Enterprise Income Tax
The PRC Enterprise Income Tax, or EIT, is calculated based on the taxable income
determined under the Enterprise Income Tax Law of the PRC
(, the PRC EIT Law), which was promulgated on March 16,
2007, became effective on January 1, 2008 and amended on February 24, 2017 and December
29, 2018, respectively. The PRC EIT Law generally imposes a uniform enterprise income tax
rate of 25% on all resident enterprises in China, including foreign-invested enterprises. The
PRC EIT Law and its implementation rules permit the enterprises qualified as “High and New
Technologies Enterprises”, or HNTEs, to enjoy a reduced 15% enterprise income tax rate.
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PRC V alue Added Tax
On March 23, 2016, Ministry of Finance of PRC (the “ MOF”) and the State
Administration of Taxation (the SA T) jointly issued the Circular on the Pilot Program for
Overall Implementation of the Collection of V alue Added Tax Instead of Business Tax ( ᗫ
) (the “ Circular 36 ”), which took effect on May 1,
2016 and was last amended with effect from April 1, 2019 following the enactment of the
Announcement 39 (as defined below). According to the Circular 36, all of the companies
operating in construction, real estate, finance, modern service or other sectors which were
required to pay business tax are required to pay V alue-added Tax, or V A T, in lieu of business
tax. A V A T rate of 6% applies to revenue generated from the provision of certain services.
On March 20, 2019, the MOF, the SA T and the General Administration of Customs of the
PRC issued the Announcement on Policies for Deepening the V A T Reform (೼
ʮѓ) (the “ Announcement 39 ”), which came into effect on April 1, 2019,
to further slash V A T rates. According to Announcement 39, (i) the 16% or 10% V A T rate
previously imposed on sales and imports by general V A T taxpayers is reduced to 13% or 9%
respectively; (ii) the 10% V A T deduction rate previously allowed for the procured agricultural
products is reduced to 9%; (iii) for the agricultural products procured for production or
commissioned processing with a 13% V A T rate, the amount of input V A T shall be calculated
at the 10% V A T deduction rate; and (iv) the 16% or 10% export V A T refund rate previously
granted to the exportation of goods or labor services is reduced to 13% or 9%, respectively.
Regulations on Import and Export
Promulgated by The General Administration of Customs of the PRC on November 19,
2021 and effective January 1, 2022, Administrative Provisions of the Customs of the People’s
Republic of China on Record-filing of Customs Declaration Entities ( ʕശɛ͏΍ձ਷ऎᗫ
) stipulates that consignors or consignees of imported or exported
goods or customs declaration enterprises that apply for record-filing shall obtain market entity
qualifications; in the case of consignors or consignees of imported or exported goods applying
for record-filing, they shall also complete the record-filing formalities for foreign trade dealers.
If the record-filing materials are complete and meet the record-filing requirements for a
customs declaration entity upon review, the Customs shall approve the record-filing within
three business days. The record-filing information shall be made public via the Import and
Export Credit Information Publicity Platform of the Customs of China.
Regulations on Foreign Investment and Outbound Investment
Foreign Investment
Companies with limited liability and joint stock companies established in the PRC shall
be subject to the Company Law of the PRC (, the “ PRC Company
Law”), which was promulgated by the SCNPC on December 29, 1993 (effective as from July
1, 1994) and was last amended on December 29, 2023 and came into effect on July 1, 2024.
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The PRC Company Law provides general regulations for companies’ incorporation and
operation in the PRC including the foreign-invested companies. Unless otherwise provided in
the Foreign Investment Law of the PRC (, the “ PRC Foreign
Investment Law ”), the provisions in the PRC Company Law shall prevail.
Foreign investors in the PRC are subject to certain restrictions regarding the types of
industries they can invest in. The Special Administrative Measures for the Access of Foreign
Investment (2024) (the “ Negative List ”) (݄(૶ఊ)(2024 ϋ
و)) was promulgated by the MOFCOM and the NDRC on September 6, 2024 and came into
effect on November 1, 2024. The Negative List set out the restrictive measures in a unified
manner, such as the requirements on shareholding percentages and management, for the access
of foreign investments, and the industries that are prohibited for foreign investment. The
Negative List covers 11 industries, and any field not falling in the Negative List shall be
administered under the principle of equal treatment to domestic and foreign investment.
Pursuant to the Measures for the Reporting of Foreign Investment Information ( ̮ਠҳ
) promulgated by the MOFCOM and the SAMR on December 30, 2019 and
effective as from January 1, 2020, a listed foreign-funded company may, when the change of
foreign investors’ shareholding ratio accumulatively exceeds 5% or the foreign party’s
controlling or relatively controlling status changes, report the information on the modification
of investors and the shares held by them.
Outbound Investment
According to the Measures for the Administration of Overseas Investment of Enterprises
(), which was promulgated by the NDRC on December 26, 2017
and became effective on March 1, 2018, to make outbound investment, any investor shall go
through the formalities to have a proposed overseas investment project approved or filed on the
record, report relevant information, and cooperate with supervision and inspection. Overseas
investment projects that involve any sensitive country or region or any sensitive industry need
to be approved by the NDRC. Overseas investment projects other than those specified above
are subject to filing administration. The NDRC promulgated the List of Sensitive Sectors for
Outbound Investment (2018) ( ྤ̮ҳ༟ઽชБุͦ፽(2018و)) on January 31, 2018
and effective as from March 1, 2018 to list the current sensitive industries in detail.
According to the Administrative Measures for Outbound Investment ( ྤ̮ҳ༟၍ଣ፬
), which was promulgated by the MOFCOM on March 16, 2009, became effective on May
1, 2009 and amended on September 6, 2014, outbound investment refers to the activities of
possessing non-financial enterprises or acquiring the ownership of, the control over, the
operation and management right of, and other rights of and interests in, the existing
non-financial enterprises outbound through consolidation, merger and acquisition, or otherwise
conducted by enterprises that are established in the PRC in accordance with the law. The
MOFCOM and the provincial departments in charge of commerce shall conduct archive filing
and verification management according to different circumstances of outbound investment of
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an enterprise. Where the outbound investment carried out by an enterprise involves sensitive
countries and regions and sensitive industries, verification management shall be implemented.
Archive filing management shall be implemented for other circumstances of outbound
investment of an enterprise.
Pursuant to the Provisions on the Foreign Exchange Administration of Overseas
Investment of Domestic Institutions () promulgated
by the State Administration of Foreign Exchange (̮ි၍ଣ҅, the “ SAFE ”) on July 13,
2009, which became effective on August 1, 2009 and the Notice of the SAFE on Further
Simplifying and Improving the Foreign Exchange Management Policies for Direct Investment
() promulgated by the SAFE on
February 13, 2015, upon obtaining approval for overseas investment, a PRC enterprise shall
apply for foreign exchange registration for its overseas direct investments with the banks in the
place where it’s registered. According to the Guidelines for Foreign Exchange Business under
the Capital Account (2024 Edition) (ˏ(2024و)) promulgated by
SAFE on April 3, 2024, and became effective on May 6, 2024, the proceeds received from
overseas offering and listing by domestic companies shall in principle be promptly repatriated
to the domestic territory, the use of such proceeds for outbound direct investments, overseas
securities investments, cross-border lending, and other related activities shall comply with
applicable foreign exchange regulations requirements.
Regulations on Foreign Exchange and Dividend Distribution
Foreign Exchange Control
The PRC Regulations for the Foreign Exchange Administration ( ʕശɛ͏΍ձ਷̮ි
၍ଣૢԷ), which were promulgated by the State Council on January 29, 1996, became
effective on April 1, 1996 and amended on January 14, 1997 and August 5, 2008, established
the regulatory framework of the administration on foreign currency exchange in China.
The Provisions on the Administration of Foreign Exchange in Domestic Direct
Investments by Foreign Investors (), which were
promulgated by SAFE on May 10, 2013, became effective on May 13, 2013 and amended on
October 10, 2018 and December 30, 2019, respectively, regulate and clarify the administration
over foreign exchange administration in foreign investors’ direct investments, and provide that
the administration by SAFE or its local branches over direct investment by foreign investors
in China shall be conducted by way of registration and banks shall process foreign exchange
business relating to the direct investment in China based on the information recorded with the
SAFE and its branches.
According to the Circular of the State Administration of Foreign Exchange on Further
Improving and Adjusting the Foreign Exchange Policies on Direct Investment (̮ි၍
) and its appendix promulgated on
November 19, 2012, became effective on December 17, 2012 and amended on May 4, 2015,
October 10, 2018 and December 30, 2019 by the SAFE, the foreign exchange procedures are
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further simplified: (i) the opening of and payment into foreign exchange accounts under direct
investment are no longer subject to approval by the SAFE; (ii) reinvestment with legal income
of foreign investors in China is no longer subject to approval by SAFE; (iii) the procedures for
capital verification and confirmation that foreign-invested enterprises need to go through are
simplified; (iv) purchase and external payment of foreign exchange under direct investment are
no longer subject to approval by SAFE; (v) domestic transfer of foreign exchange under direct
investment is no longer subject to approval by SAFE; and (vi) the administration over the
settlement of foreign exchange capital of foreign-invested enterprises is improved. Later, the
SAFE issued the Circular on Further Simplifying and Improving Foreign Exchange
Administration Policies in Respect of Direct Investment (ટҳ༟̮
) on February 13, 2015 which became effective on June 1, 2015 and
amended on December 30, 2019, prescribed that the banks instead of the SAFE can directly
handle foreign exchange registrations under foreign direct investment and outbound investment
while the SAFE and its branches indirectly supervise the foreign exchange registration under
foreign direct investment through the bank.
According to the Circular on Optimizing Administration of Foreign Exchange to Support
the Development of Foreign-related Business (ஷ
) issued by the SAFE on April 10, 2020, eligible enterprises are allowed to make domestic
payments by using their funds received by way of capital contribution, foreign debts and
overseas listing, with no need to provide the evidentiary materials concerning authenticity of
such payment to banks in advance, provided that their capital use shall be authentic and
compliant, and conform with the prevailing administrative regulations on the use of income
under capital accounts. The concerned bank shall conduct ex post spot check and the local
branches of the SAFE shall strengthen monitoring analysis and interim and ex post regulation
in accordance with the relevant requirements.
Dividend Distribution
According to the PRC Company Law, companies shall contribute 10% of the profits into
their statutory capital reserve (ږupon distribution of their post-tax profits of the
current year. A company may discontinue the contribution when the aggregate sum of the
statutory capital reserve is more than 50% of its registered capital. Where the balance of the
statutory capital reserve of a company is insufficient to make good its losses in the previous
year, the company shall make good such losses using its profits of the current year before
making contribution to the statutory capital reserve. Upon contribution to the statutory capital
reserve with its post-tax profits, a company may make further contribution to the capital
reserve with its post-tax profits upon a resolution made by the shareholders’ meeting.
The SAFE issued the Notice on Improving the Check of Authenticity and Compliance to
Further Promote Foreign Exchange Administration Reform (ࠧ
) on January 26, 2017, which stipulates several capital control
measures with respect to outbound remittance of profits from domestic entities to offshore
entities, including the following: (i) under the principle of genuine transaction, banks shall
check board resolutions regarding profit distribution, the original version of tax filing records
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and audited financial statements for any remittance of profits of more than (not excluding)
USD50,000; and (ii) domestic entities shall hold income to account for previous years’ losses
before remitting the profits. Moreover, domestic entities shall make detailed explanations of
sources of capital and utilization arrangements, and provide board resolutions, contracts and
other proof when completing the registration and outward remittance procedures in connection
with an outbound investment.
Dividend Withholding Tax
The PRC EIT Law stipulates that the income tax payable by non-resident enterprises for
income derived from China shall be withheld at the source, and the payer shall be the
withholding agent. The tax shall be withheld by the withholding agent from the amount paid
or due each time it is paid or due. According to the Implementation Regulations for the PRC
EIT Law (ૢԷ) promulgated and implemented by the
State Council on April 23, 2019 and amended on December 6, 2024, if a non-resident enterprise
has no office or premises established in China or the income derived or accrued has no de facto
relationship with the office or premises established, the enterprise income tax will be levied at
a reduced rate of 10%.
According to the Notice of the SA T on Issues Related to Withholding and Paying
Corporate Income Tax by China Resident Enterprises to Overseas H-share Non-resident
Enterprise Shareholders (͏ΆุΣྤ̮Hٰ
) issued and implemented by the the SA T on
November 6, 2008, when China Resident Enterprises distribute dividends to overseas H-share
non-resident enterprise shareholders in 2008 and beyond, they will uniformly withhold and pay
corporate income tax at the rate of 10%.
Pursuant to the Arrangement between the Mainland of China and the Hong Kong Special
Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income (ᅄ೼
τર) (the “ Arrangement for Avoidance of Dual Taxation ”), if a Hong
Kong enterprise directly holds at least 25% of the equities in a Chinese resident enterprise and
meets certain conditions (including): (i) the Hong Kong enterprise must directly hold specified
percentages of the shares and voting rights of the Chinese resident enterprise; and (ii) the Hong
Kong enterprise must directly hold such specified percentages within 12 months prior to
receiving the dividend, then, the income tax rate for the income tax withheld by the Chinese
resident enterprise on the dividend distributed to the Hong Kong enterprise can be reduced
from the standard tax rate of 10% to 5%.
According to the Circular on Relevant Issues relating to the Implementation of Dividend
Clauses in Tax Treaty Agreements () issued
by the SA T on February 20, 2009, if the relevant Chinese tax authority determines a certain
company benefits mainly from the reduced income tax rate under the tax-driven structure or
arrangement as the case may be, it can adjust the preferential tax treatment. Also, if the
operating activity of an applicant doesn’t constitute the substantive operating activity, it may
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not be identified as the “beneficial owner”, and finally, the applicant will have no right to enjoy
the reduced income tax rate of 5% said above according to the Arrangement for Avoidance of
Dual Taxation, according to the Notice on Issues relating to “Beneficial Owners” in Tax
Conventions (ʕ“Ϟɛ”ʮѓ) issued by the State
Administration of Taxation on February 3, 2018 and put in effect since April 1, 2018.
Equity Incentive Plan
According to the Notice of the State Administration of Foreign Exchange on Issues
concerning the Foreign Exchange Administration of Domestic Individuals’ Participation in
Equity Incentive Plans of Overseas Listed Companies (ɛਞၾྤ
), which was promulgated by the SAFE
on February 15, 2012 and other relevant rules, PRC citizens or non-PRC citizens residing in
China for a continuous period of not less than one year who participate in equity incentive
plans of the same overseas listed company shall, through the domestic company to which the
said company is affiliated, collectively entrust a domestic agency (the “ domestic agency ”) to
handle issues like foreign exchange registration, account establishment, funds transfer and
remittance, and entrust an overseas institution (the “ overseas trustee ”) to handle issues like
exercise of options, purchase and sale of corresponding stocks or equity, and transfer of
corresponding funds. In addition, in the case of any significant change in the equity incentive
plan of a company listed overseas (such as amendment to any key clauses of the original plan,
addition of a new plan, or any other change in the original plan arising out of the merger,
acquisition or reorganization of the overseas listed company or the domestic company or other
major events), the domestic agency or the overseas trustee shall, within three months of the
occurrence of such change, go through change registration procedures with the local office of
the SAFE on the strength of a written application, the original certificate of foreign exchange
registration for the equity incentive plan, a newly filled-out Foreign Exchange Registration
Form and materials which demonstrate the authenticity of relevant transactions.
Regulations on Information Security and Data Protection
Personal Data
On December 28, 2021, the Cyberspace Administration of China (“ CAC”), jointly with
the other 12 governmental authorities, promulgated the Measures for Cybersecurity Review
() (the “ MCR”), which became effective from February 15, 2022.
Pursuant to Article 2 of the MCR, besides the procurement of network products and services
by critical information infrastructure operators, any data processing activity by network
platform operators that affects or may affect national security shall be subject to the
cybersecurity review. In accordance with Article 7 of the MCR, network platform operators
mastering personal information of more than one million users must apply to the Cybersecurity
Review Office for cybersecurity review when listing abroad ( ਷̮ɪ̹).
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On May 7, 2024, our PRC data compliance adviser, Han Kun Law Offices conducted a
telephonic consultation with the China Cybersecurity Review, Certification and Market
Regulation Big Data Center (the “ Center ”). The Center is authorized by the Cybersecurity
Review Office of the CAC to accept public consultation and cybersecurity review submissions
and is the competent authority to provide views and interpretation relating to the MCR. Our
PRC data compliance adviser, Han Kun Law Offices is of the view that the staff who responded
our inquiries during such consultation is the duly designated person in the Center to respond
to public inquiries. According to the Center, (i) the listing in Hong Kong does not fall within
the scope of “listing abroad”; and (ii) critical information infrastructure operators are identified
by the governmental authorities of corresponding industry.
As of the Latest Practicable Date, (i) we have not been notified of the results of any
determination that we have been identified as a critical information infrastructure operator or
that any of our systems have been identified as critical information infrastructure by the
relevant governmental authorities; (ii) the MCR provides no further explanation or
interpretation for “online platform operator” and “list abroad”, and does not stipulate that an
online platform operator which intends to list in Hong Kong will be subject to cybersecurity
review; (iii) Hong Kong is not a foreign country or region and does not fall within the scope
of “abroad” under the MCR, and there is no specific guidance or implementation rules to
indicate otherwise; (iv) the MCR provides no further explanation or interpretation for “affect
or may affect national security”, which remains to be clarified and elaborated by the CAC, and
we have not received any notification of cybersecurity review from relevant governmental
authorities due to our impact or potential impact on national security; (v) the volume of
personal information we process is far less than one million; and (vi) we believe that our
collection and handling of the personal information do not constitute any data processing
activities that may affect national security. Therefore, as advised by our PRC data compliance
adviser Han Kun Law Offices, our Directors believe that as long as there is no material change
to our current business and if no further rules are introduced and no significant changes to the
enforcement of the MCR by governmental authorities, cybersecurity review under the article
2 and article 7 of the MCR shall not be applicable to us.
Furthermore, based on the fact that (i) the MCR came into effect recently and its
implementation and interpretation are subject to uncertainties and (ii) we have not been
involved in any investigations on cybersecurity review initiated by the CAC on such basis and
nor have we received any inquiry, notice, warning, or sanctions in such respect, with the
support of our PRC data compliance adviser Han Kun Law Offices, we are of the view that we
comply with such regulations in all material aspects and we believe such regulations would not
have a material adverse impact on our business operations or our Global Offering. Considering
that (a) we have not been involved in any cybersecurity review or investigation by the CAC
or other authorities with respect to the MCR; (b) we have not been informed that we are
recognized as a crucial information infrastructure operator by any relevant authority; (c) the
data processed by us has not been included in the effective core data and important data
catalogs by any authority; and (d) we have taken reasonable and adequate technical and
management measures to ensure data security, we are of the view that the likelihood that our
business operation or the Global Offering might give rise to national security risks is remote.
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However, the MCR was released in recent years, certain provisions of which are still
unclear and are subject to the finalization or clarifications by relevant authorities. As such, the
PRC regulatory authorities may have broad discretion in the interpretation of “affect or may
affect national security”. If we were deemed as a data processor that “affects or may affect
national security” by the PRC regulatory authorities under their broad discretion, we may be
subject to cybersecurity review. If we fail to pass such cybersecurity review, our Listing may
be impeded, our business operations may be adversely affected, and/or we may be subject to
other severe penalties and/or action by the competent government authorities.
Laws and Regulations on Overseas Securities Offering and Listing by Domestic Enterprises
On February 17, 2023, the China Securities Regulatory Commission (the “ CSRC ”)
released the Trial Administrative Measures for Overseas Securities Offering and Listing by
Domestic Companies () (the “ Trial
Measures ”) with effect from March 31, 2023. The Trial Measures comprehensively improve
and reform the existing regulatory regime for overseas offering and listing of PRC domestic
companies’ securities, and regulate both direct and indirect overseas offering and listing of
PRC domestic companies’ securities by adopting a filing-based regulatory regime. According
to the Trial Measures, PRC domestic companies that seek to offer and list securities in overseas
markets, either in direct or indirect means, are required to fulfill the filing procedure with the
CSRC within three (3) working days after submitting the listing application documents to the
overseas supervisory authorities and report relevant information.
H-share Full Circulation
“Full circulation” means listing and circulating on the stock exchange of the domestic
unlisted shares of an H-share listed company, including unlisted domestic shares held by
domestic shareholders prior to overseas listing, unlisted domestic shares additionally issued
after overseas listing, and unlisted shares held by foreign shareholders.
On August 10, 2023, the CSRC issued the Guidelines for the “Full Circulation” Program
for Domestic Unlisted Shares of H-share Listed Companies (revised in 2023) ( Hʮ̡ྤʫ
΅͡ሗ“ஷ”ˏ(2023ࠈࡌ)) (the “ Guidelines for the Full Circulation ”).
According to H-Guidelines for the Full Circulation, on the premise of complying with relevant
laws and regulations of state-owned assets management, foreign investment and industry
supervision, domestic unlisted shareholders can independently negotiate to determine the
number and proportion of shares to be circulated, and entrust H-share companies to file with
the CSRC. Shareholders of unlisted shares in China shall handle the share re-registration
business in accordance with the relevant business rules of China Securities Depository and
Clearing Co., Ltd. (the “ CSDC ”), handle the procedures of share registration and listing in
accordance with the relevant provisions of the Hong Kong market, and disclose information in
compliance with laws and regulations. H-share companies shall submit relevant reports to the
CSRC within 15 days after the shares involved in the application are settled in China and
registered.
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On December 31, 2019, CSDC and the Shenzhen Stock Exchange (“ SZSE ”) jointly
announced the Measures for Implementation of H-share Full Circulation Business ( Hٰ“Ό
ஷ”) (the “ Measures for Implementation ”). The businesses in relation to
the H-share full circulation business, such as cross-border transfer registration, maintenance of
deposit and holding details, transaction entrustment and instruction transmission, settlement,
management of settlement participants, services of nominal holders, etc. are subject to the
Measures for Implementation.
LA WS AND REGULATIONS RELATED TO OUR BUSINESS IN THE UNITED STATES
The research, development, testing, manufacture and marketing of drug products are
extensively regulated in the United States and the rest of the world. In the United States, drugs
are subject to rigorous regulations by the FDA. The Federal Food, Drug, and Cosmetic Act
(“FD&C Act ”) and other federal and state statutes and regulations govern, the research,
development, testing, quality control, approval, labeling, packaging, manufacture, storage,
record keeping, packaging, labeling, promotion and advertising, marketing, export and import,
and distribution of pharmaceutical products. The failure to comply with the applicable
regulatory requirements may subject a company to a variety of administrative or judicially-
imposed sanctions and the inability to obtain or maintain required approvals or to market
approved drug products.
Peptide Development Guidelines
The FDA published two new general chapters: USP1503 addressing specific quality
considerations for synthetic peptide drug substances and USP1504 (Official date: December 1,
2023) providing recommendations on the minimum quality attributes for starting materials
used in the manufacture of synthetic peptides. On May 19, 2021, the FDA published ANDAs
for Certain Highly Purified Synthetic Peptide Drug Products That Refer to Listed Drugs of
rDNA Origin Guidance for Industry Guidance. This guidance is intended to assist potential
applicants in determining when an application for a synthetic peptide drug product (synthetic
peptide) that refers to a previously approved peptide drug product of recombinant
deoxyribonucleic acid (“ rDNA ”) origin (peptide of rDNA origin) should be submitted as an
abbreviated new drug application (“ ANDA ”) under section 505(j) of the Federal Food, Drug,
and Cosmetic Act (FD&C Act) rather than as a new drug application (“ NDA”) under section
505(b) of the FD&C Act.
U.S. Drug Development Process
The process required by the FDA before a new drug product may be marketed in the
United States generally involves the following steps.
 completion of preclinical laboratory tests, animal studies and formulation studies in
accordance with Good Laboratory Practice regulations and other applicable
regulations;
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 submission to the FDA of an investigational new drug (“ IND”) application, which
must become effective before human clinical trials may begin;
 approval by an independent institutional review board (“ IRB”) at each clinical site
before each trial may be initiated;
 performance of adequate and well-controlled human clinical trials in accordance
with Good Clinical Practice requirements to establish the safety and efficacy of the
proposed drug for its intended use;
 submission to the FDA of an NDA after completion of all pivotal trials;
 satisfactory completion of an FDA advisory committee review, if applicable;
 satisfactory completion of an FDA inspection of the manufacturing facility or
facilities at which the drug is produced to assess compliance with current GMP
(cGMP) requirements to assure that the facilities, methods and controls are adequate
to preserve the drug’s identity, strength, quality and purity, and of selected clinical
investigation sites to assess compliance with GCP; and
 FDA review and approval of the NDA to permit commercial marketing of the
product for particular indications for use in the United States.
Once a pharmaceutical candidate is identified for development, it enters the preclinical
testing phase. Preclinical tests include laboratory evaluations of product chemistry, toxicity
and formulation, as well as animal studies if applicable. An IND sponsor must submit the
results of the preclinical tests, together with manufacturing information and analytical data, to
the FDA as part of the IND. An IND is a request for authorization from the FDA to administer
an investigational new drug product to humans. The sponsor will also include a protocol
detailing, among other things, the objectives of the first phase of the clinical trial, the
parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated, if the
first phase lends itself to an efficacy evaluation. Some preclinical testing may continue even
after the IND is submitted. An IND must become effective before human clinical trials may
begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the
FDA, within the 30-day time period, places the clinical trial on a clinical hold. In such a case,
the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial
can begin. Clinical holds also may be imposed by the FDA at any time before or during clinical
trials due to safety concerns about ongoing or proposed clinical trials or non-compliance with
specific FDA requirements, and the trials may not begin or continue until the FDA notifies the
sponsor that the hold has been lifted. Submission of an IND therefore may or may not result
in FDA authorization to begin a clinical trial.
Once an innovator new drug product is approved, after any applicable market
exclusivities and listed patents (discussed elsewhere) are no longer impediments to generic
drugs, there is generally a possibility for competitors to seek approval of an ANDA that relies
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upon the innovator NDA approval. The ANDA development process is generally less
time-consuming and complex than the NDA development process. It typically does not require
new preclinical and clinical studies, because it relies on the studies establishing safety and
efficacy conducted for an innovator products (referred to as a “ Reference Listed Drug ”)
previously approved through the NDA process. The ANDA process, however, does often
require one or more bioequivalence studies to show that the ANDA drug is bioequivalent to the
previously approved reference listed brand drug. Bioequivalence studies compare the
bioavailability of the proposed drug product with that of the RLD product containing the same
active ingredient. Bioavailability is a measure of the rate and extent to which the active
ingredient or active moiety is absorbed from a drug product and becomes available at the site
of action. Thus, a demonstration of bioequivalence confirms the absence of a significant
difference between the proposed product and the reference listed brand drug in terms of the rate
and extent to which the active ingredient or active moiety becomes available at the site of drug
action when administered at the same molar dose under similar conditions. An ANDA also
typically must show that the proposed generic drug is the same as the RLD in terms of active
ingredient(s), strength, dosage form, route of administration and labeling. Establishing the
sameness of complex active ingredients, such as complex peptide products, may require
extensive characterization testing or, if not amenable to chemical characterization methods,
potentially nonclinical (animal) or clinical testing.
In addition to the ANDA process, there are pathways that allow for modified new drug
products (e.g., changes in formulation, new indications) which rely on prior FDA
determinations. This process – generally referred to as the 505(b)(2) pathway – can
substantially reduce the burdens on the development of new products, and allow innovation
that the ANDA process generally does not afford. As with the ANDA process, market
exclusivities and patient protections may delay availability of this pathway as discussed
elsewhere. For both ANDA and 505(b)(2) NDA submissions, FDA may require preapproval
inspections, just as it does with original NDAs.
Both NDAs and ANDAs contain not only data and various administrative information, but
detailed information on CMC describing manufacturing processes for the drug product and its
components, such as APIs, and the various controls in place, including but not limited to
analytical testing, that ensure the identity, quality, purity, and strength of the finished drug
product for which approval is sought.
Drug substances, as they are not finished drug products, do not receive independent
approval from FDA, but API manufacturers may submit DMFs. These files are not approved
by FDA, but may be referenced by NDA or ANDA holders seeking approval of a new drug
product which incorporates an API. FDA may review information the API in the context of an
NDA or ANDA review.
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NDA Review and Approval Process
Assuming successful completion of all required testing in accordance with all applicable
regulatory requirements, the results of product development, preclinical and other nonclinical
studies and clinical trials, along with descriptions of the manufacturing process, analytical tests
conducted on the chemistry of the drug, proposed labeling and other relevant information are
submitted to the FDA as part of an NDA requesting approval to market the product. The
submission of an A/NDA is subject to the payment of substantial user fees; a waiver of such
fees may be obtained under certain limited circumstances. Additionally, no user fees are
assessed on NDAs for products designated as orphan drugs, unless the product also includes
a non-orphan indication.
The FDA reviews an NDA to determine, among other things, whether a product is safe and
effective for its intended use and if the CMC for manufacturing are adequate to assure and
preserve the product’s identity, strength, quality and purity. Under the Prescription Drug User
Fee Act (“ PDUFA”) guidelines that are currently in effect, the FDA has a goal of ten months
from the date of “filing” of a standard NDA for a new molecular entity to review and act on
the submission. This review typically takes twelve months from the date the NDA is submitted
to FDA because the FDA has approximately two months to make a “filing” decision after the
application is submitted. The FDA conducts a preliminary review of all NDAs within the first
60 days after submission, before accepting them for filing, to determine whether they are
sufficiently complete to permit substantive review The FDA may request additional
information rather than accept an NDA for filing, in which case the NDA must be resubmitted
with the additional information. Any resubmitted application is also subject to review before
the FDA accepts it for filing.
Before approving an NDA, the FDA will inspect the facility or facilities where the
product is manufactured. The FDA will not approve an application unless it determines that the
manufacturing processes and facilities are in compliance with cGMP requirements and
adequate to assure consistent production of the product within required specifications.
Additionally, before approving an NDA, the FDA may inspect one or more clinical trial sites
to assure compliance with GCP requirements. If the FDA determines that the application,
manufacturing process or manufacturing facilities are not acceptable, it will outline the
deficiencies in the submission and often will request additional testing or information.
Notwithstanding the submission of any requested additional information, the FDA ultimately
may decide that the application does not satisfy the regulatory criteria for approval.
After the FDA evaluates an NDA, it will issue an approval letter or a Complete Response
Letter. An approval letter authorizes commercial marketing of the drug with prescribing
information for specific indications. A Complete Response Letter indicates that the review
cycle of the application is complete and the application will not be approved in its present
form. A Complete Response Letter usually describes the specific deficiencies in the NDA
identified by the FDA and may require additional clinical data, such as an additional pivotal
Phase 3 trial or other significant and time-consuming requirements related to clinical trials,
nonclinical studies or manufacturing. If a Complete Response Letter is issued, the sponsor
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must resubmit the NDA or, addressing all of the deficiencies identified in the letter, or
withdraw the application. Even if such data and information are submitted, the FDA may
decide that the NDA does not satisfy the criteria for approval.
If a product receives regulatory approval, the approval may be significantly limited to
specific diseases and dosages or the indications for use may otherwise be limited, which could
restrict the commercial value of the product. In addition, the FDA may require a sponsor to
conduct Phase 4 testing, which involves clinical trials designed to further assess drug safety
and effectiveness after NDA approval, and may require testing and surveillance programs to
monitor the safety of approved products which have been commercialized. The FDA may also
place other conditions on approval including the requirement for a risk evaluation and
mitigation strategy (“ REMS ”) to assure the safe use of the drug. If the FDA concludes a REMS
is needed, the sponsor of the NDA must submit a proposed REMS. The FDA will not approve
the NDA without an approved REMS, if required. A REMS could include medication guides,
physician communication plans or elements to assure safe use, such as restricted distribution
methods, patient registries and other risk minimization tools. Any of these limitations on
approval or marketing could restrict the commercial promotion, distribution, prescription or
dispensing of products. Marketing approval may be withdrawn for non-compliance with
regulatory requirements or if problems occur following initial marketing.
Post-Approval Requirements
Any products manufactured or distributed pursuant to FDA approvals are subject to
pervasive and continuing regulation by the FDA such as requirements related to record-
keeping, reporting of adverse experiences, periodic reporting, product sampling and
distribution, and advertising and promotion of the product. After approval, many changes to the
approved product, such as adding new indications or other labeling claims, are subject to prior
FDA review and approval based on submission of a prior approval supplement, or a changes
being effected submission that can go into effect after a designated period of time if FDA does
not object. More minor change may be made through updates in annual reports to FDA. There
are also continuing, annual program fees for any marketed products. Drug manufacturers and
their subcontractors are required to register their establishments with the FDA and certain state
agencies, and are subject to periodic unannounced inspections by the FDA and certain state
agencies for compliance with cGMP , which impose certain procedural and documentation
requirements upon us and our third-party manufacturers. With respect to state regulation,
manufacturers may be required to be licensed by a state Board of Pharmacy or other regulatory
body in the state where they manufacture products, and in states where their products are
distributed. Changes to the manufacturing process are strictly regulated, and, depending on the
significance of the change, may require prior FDA approval before being implemented. FDA
regulations also require investigation and correction of any deviations from cGMP and impose
reporting requirements upon the manufacturer and any third-party manufacturers that we may
decide to use. Accordingly, manufacturers must continue to expend time, money and effort in
the area of production and quality control to maintain compliance with cGMP and other aspects
of regulatory compliance.
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The FDA may suspend or withdraw approval if compliance with regulatory requirements
and standards is not maintained or if problems occur after the product reaches the market, or
if material inaccuracies are identified in an application after approval. Later discovery of
previously unknown problems with a product, including adverse events of unanticipated
severity or frequency, or with manufacturing processes, or failure to comply with regulatory
requirements, may result in revisions to the approved labeling to add new safety information,
imposition of post-market studies or clinical studies to assess new safety risks, or imposition
of distribution restrictions or other restrictions under a REMS program. Other potential
consequences may include the following, among others.
 restrictions on the marketing or manufacturing of the product, complete withdrawal
of the product from the market or product recalls;
 fines, warning letters, or untitled letters;
 clinical holds on clinical studies;
 refusal of the FDA to approve pending applications or supplements to approved
applications, or suspension or revocation of product license approvals;
 product seizure or detention, or refusal to permit the import or export of products;
 consent decrees, corporate integrity agreements, debarment or exclusion from
federal healthcare programs;
 mandated modification of promotional materials and labeling and the issuance of
corrective information;
 the issuance of safety alerts, Dear Healthcare Provider letters, press releases and
other communications containing warnings or other safety information about the
product; or
 injunction or the imposition of civil or criminal penalties.
In addition, the FDA closely regulates the marketing, labeling, advertising and promotion
of drug products. A company can make only those claims relating to safety and efficacy, purity
and potency that are approved by the FDA and in accordance with the provisions of the
approved label. The FDA and other agencies actively enforce the laws and regulations
prohibiting the promotion of off-label uses. Failure to comply with these requirements can
result in, among other things, adverse publicity, warning letters, corrective advertising and
imposition of civil and/or criminal penalties.
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Environmental, Safety and Health Regulations
All manufacturing facilities in the United States are subject to regulation under federal,
state and local laws relating to hazard communication and employee right-to-know regulations,
and the safety and health of employees in accordance with the Occupational Safety and Health
Act of 1970 (“ OSHA ”) as administered by the Occupational Safety and Health Administration
within the United States Department of Labor. The United States Occupational Safety and
Health Administration has established extensive regulations relating to workplace safety for
employees, including but not limited to, work practice controls, protective clothing and
equipment, training, medical follow-up, vaccinations and other measures designed to minimize
exposure to chemicals, and transmission of blood-borne and airborne pathogens. Furthermore,
certain employees must receive initial and periodic training to ensure compliance with
applicable hazardous materials regulations and health and safety guidelines. Our United States
facilities are subject to applicable federal and state laws and regulations and licensing
requirements relating to the handling, storage and disposal of hazardous waste, radioactive
materials and laboratory specimens, including the regulations of the United States
Environmental Protection Agency, Nuclear Regulatory Commission, Department of
Transportation, National Fire Protection Agency and Drug Enforcement Administration.
Privacy and Security
Under the administrative simplification provisions of the federal Health Insurance
Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information
Technology for Economic and Clinical Health Act of 2009, or HITECH, the Department of
Health and Human Services, or HHS issued regulations that establish uniform standards
governing the conduct of certain electronic healthcare transactions and requirements for
protecting the privacy and security of protected health information, or PHI, used or disclosed
by covered entities. Covered entities and their business associates (and their covered
subcontractors) are subject to HIPAA and HITECH.
HIPAA and HITECH include privacy and security rules, breach notification requirements
and electronic transaction standards. The HIPAA Privacy Rule generally prohibits the use or
disclosure of PHI except as permitted under the rule. The rule also sets forth individual patient
rights, such as the right to access or amend certain records containing his or her PHI, or to
request restrictions on the use or disclosure of his or her PHI. The HIPAA Security Rule
requires those subject to HIPAA to safeguard the confidentiality, integrity, and availability of
electronically transmitted or stored PHI by implementing administrative, physical and
technical safeguards. Under HITECH’s breach notification rule, a covered entity must notify
individuals, the Secretary of the HHS, and in some circumstances, the media of breaches of
unsecured PHI.
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If found to be in violation of HIPAA as the result of a breach of unsecured PHI, a
complaint about their privacy practices or an audit by HHS, entities may be subject to
significant civil and criminal fines and penalties and/or additional reporting and oversight
obligations if such entities are required to enter into a resolution agreement and corrective
action plan with HHS to settle allegations of HIPAA non-compliance.
State laws may be more stringent, broader in scope or offer greater individual rights with
respect to health-related information or other personal information than HIPAA. California, for
example, has enacted the Confidentiality of Medical Information Act, or the CMIA, which sets
forth standards in addition to HIPAA and HITECH with which all California health care
providers like us must abide. In addition, the California Consumer Privacy Act, or the CCPA,
was signed into law on June 28, 2018, and went into effect January 1, 2020. The CCPA contains
new disclosure obligations (among other things) for covered businesses that collect personal
information about California residents and affords those individuals new rights relating to their
personal information that may affect our ability to use personal information. The CCPA
authorizes private lawsuits to recover statutory damages for certain data breaches. Although the
CCPA exempts health related information regulated by HIPAA or the CMIA and certain data
regarding clinical trials, the CCPA, to the extent applicable to our business and operations, may
increase compliance costs and potential liability with respect to other personal information we
maintain about California residents. Furthermore, the California Privacy Rights Act of 2020,
or the CPRA, amended the CCPA and added new additional privacy protections that began on
January 1, 2023. The CPRA will (among other things) give California residents the ability to
limit use of certain sensitive personal information, establish restrictions on the retention of
personal information, expand the types of data breaches subject to the CCPA ’s private right of
action, and establish a new California Privacy Protection Agency to implement and enforce the
new law. Other states in the United States have also enacted data privacy laws. For example,
Virginia recently passed its Consumer Data Protection Act, and Colorado recently passed the
Colorado Privacy Act, both of which differ from the CPRA and became effective in 2023.
Additionally, U.S. federal and state consumer protection laws may, among other things, require
us to publish statements that accurately and fairly describe how we handle personal
information and choices individuals may have about the way we handle their personal
information. Complying with these various state laws and regulations, which may differ from
state to state, requires significant resources and may complicate our compliance efforts.
Penalties for violation of any of these laws and regulations may include sanctions against a
laboratory’s licensure, as well as civil and/or criminal penalties.
The U.S. regulatory framework for privacy, data security and data transfers is rapidly
evolving, and there has been an increasing focus on privacy and data protection issues. As a
result, interpretation and implementation standards and enforcement practices are likely to
remain uncertain for the foreseeable future.
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OTHER FOREIGN REGULATIONS
In order to market any product outside of the United States, we would need to comply
with numerous and varying regulatory requirements of other countries and jurisdictions
regarding quality, safety and efficacy and governing, among other things, clinical trials,
marketing authorization, commercial sales and distribution of our products. Whether or not we
obtain FDA approval for a product, we would need to obtain the necessary approvals by the
comparable foreign regulatory authorities before we can commence clinical trials or marketing
of the product in foreign countries and jurisdictions. Although many of the issues discussed
above with respect to the United States apply similarly in the context of the European Union
(EU) the approval process varies between countries and jurisdictions and can involve
additional product testing and additional administrative review periods.
The time required to obtain approval in other countries and jurisdictions might differ from
and be longer than that required to obtain FDA approval. Regulatory approval in one country
or jurisdiction does not ensure regulatory approval in another, but a failure or delay in
obtaining regulatory approval in one country or jurisdiction may negatively impact the
regulatory process in others.
To market a medicinal product in the European Economic Area (“ EEA”) (which is
comprised of the 28 Member States of the EU plus Norway, Iceland and Liechtenstein), we
must obtain a Marketing Authorization (“ MA”). There are two types of marketing
authorizations as described below.
 Community MAs, which are issued by the European Commission through the
Centralized Procedure, based on the opinion of the Committee for Medicinal
Products for Human Use of the EMA and which is valid throughout the entire
territory of the EEA. The Centralized Procedure is mandatory for certain types of
products, such as biotechnology medicinal products, orphan medicinal products,
advanced therapy products, and medicinal products containing a new active
substance indicated for the treatment certain diseases, such as AIDS, cancer,
neurodegenerative disorders, diabetes, auto-immune and viral diseases. The
Centralized Procedure is optional for products containing a new active substance not
yet authorized in the EEA, or for products that constitute a significant therapeutic,
scientific or technical innovation or which are in the interest of public health in the
EU; and
 National MAs, which are issued by the competent authorities of the Member States
of the EEA and only cover their respective territory, are available for products not
falling within the mandatory scope of the Centralized Procedure. Where a product
has already been authorized for marketing in a Member State of the EEA, this
National MA can be recognized in another Member State through the Mutual
Recognition Procedure. If the product has not received a National MA in any
Member State at the time of application, it can be approved simultaneously in
various Member States through the Decentralized Procedure.
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Under the above described procedures, before granting the MA, the EMA or the
competent authorities of the Member States of the EEA make an assessment of the risk-benefit
balance of the product on the basis of scientific criteria concerning its quality, safety and
efficacy.
In the EEA, new products authorized for marketing, or reference products, qualify for
eight years of data exclusivity and an additional two years of market exclusivity upon
marketing authorization. The data exclusivity period prevents generic or biosimilar applicants
from relying on the preclinical and clinical trial data contained in the dossier of the reference
product when applying for a generic or biosimilar marketing authorization in the EU during a
period of eight years from the date on which the reference product was first authorized in the
EU. The market exclusivity period prevents a successful generic or biosimilar applicant from
commercializing its product in the EU until 10 years have elapsed from the initial authorization
of the reference product in the EU. The 10-year market exclusivity period can be extended to
a maximum of eleven years if, during the first eight years of those 10 years, the marketing
authorization holder obtains an authorization for one or more new therapeutic indications
which, during the scientific evaluation prior to their authorization, are held to bring a
significant clinical benefit in comparison with existing therapies.
Clinical trials of medicinal products in the European Union must be conducted in
accordance with European Union and national regulations and the International Conference on
Harmonization (“ ICH”) guidelines on GCPs. Additional GCP guidelines from the European
Commission, focusing in particular on traceability, apply to clinical trials of advanced therapy
medicinal products. If the sponsor of the clinical trial is not established within the European
Union, it must appoint an entity within the European Union to act as its legal representative.
The sponsor must take out a clinical trial insurance policy, and in most EU countries, the
sponsor is liable to provide ‘no fault’ compensation to any study subject injured in the clinical
trial. On October 18, 2023, EMA published a guidance on the Development and Manufacture
of Synthetic Peptides for public consultation to cover synthetic peptides with more than 4
amino acids.
Prior to commencing a clinical trial, the sponsor must obtain a clinical trial authorization
from the competent authority, and a positive opinion from an independent ethics committee.
The application for a clinical trial authorization must include, among other things, a copy of
the trial protocol and an investigational medicinal product dossier containing information
about the manufacture and quality of the medicinal product under investigation. Currently,
clinical trial authorization applications must be submitted to the competent authority in each
EU Member State in which the trial will be conducted. Under the new Regulation on Clinical
Trials, which is currently expected to take effect in 2019, there will be a centralized application
procedure where one national authority takes the lead in reviewing the application and the
other national authorities have only a limited involvement. Any substantial changes to the trial
protocol or other information submitted with the clinical trial applications must be notified to
or approved by the relevant competent authorities and ethics committees. Medicines used in
clinical trials must be manufactured in accordance with cGMP . Other national and European
Union-wide regulatory requirements also apply.
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Laws and Regulations concerning International Trade
The summary below addresses key U.S. legal and regulatory issues associated with
international trade. Our cross-border operations include the importation of goods into the
United States and the exportation of goods from the United States. As a result, our business
requires compliance with tariffs and other import controls, antidumping rules and regulations,
export controls, U.S. economic and other sanctions programs, and anti-bribery laws and
regulations.
Importation of Goods into the United States
Importation of goods into the customs territory of the United States is governed
principally by the Tariff Act of 1930, as amended, the Customs Modernization Act of 1983, and
the regulations of U.S. Customs and Border Protection (“ CBP”).
Under these laws and regulations, U.S. importers have primary legal responsibility for
initially valuing, classifying, and determining the rate of duty applicable to imported
merchandise. The importer is required to exercise “reasonable care” in entering merchandise
into the United States. This includes when providing to CBP information and documentation
necessary for it to assess duties on imported merchandise, collect accurate import statistics, and
determine whether an import complies with applicable laws.
Civil penalties may be assessed against any person who uses false or misleading
statements to enter goods into the United States. In determining the applicable penalty for such
a wrongdoing, CBP first determines the applicable degree of culpability of the offending party.
In general, higher penalties are assigned to more egregious offenses, which are classified
according to degree of culpability as due to negligence, gross negligence, or fraud. CBP
considers that a violation is a result of negligence “if it results from failure to exercise
reasonable care and competence: (a) to ensure that statements made and information provided
in connection with the importation of merchandise are complete and accurate; or (b) to perform
any material act required by statute or regulation.” Gross negligence and fraud are found in
more egregious cases where circumstances indicate more than a lack of due care. Gross
negligence is assigned where CBP finds a violation done “with actual knowledge of or wanton
disregard for the relevant facts and with indifference to or disregard for the offender’s
obligations under the statute.” Fraud is assigned where the act was “committed (or omitted)
knowingly, i.e. was done voluntarily and intentionally, as established by clear and convincing
evidence.” Where false statements affect the assessment of duties on imports, the statutory
maximum civil monetary penalties vary depending on whether the violation is due to fraud,
negligence, or gross negligence.
In addition to regulating the process of importation into the United States, CBP is charged
with enforcing the import and export-related regulations of approximately 40 other U.S. federal
agencies. Each such agency promulgates regulations governing importation of the products
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under their jurisdiction. CBP is charged with ensuring that imports (and exports) comply with
those regulations and is authorized, in many cases, to effect seizures, forfeitures, and rejection
of entry of non-conforming goods.
Antidumping Laws and Regulations
U.S. federal antidumping laws and regulations prohibit unfair global competition by
prohibiting non-U.S. entities from selling products in the U.S. for unreasonably low prices. The
usual test is whether the goods are being sold in the U.S. for less than they are sold for in the
home market. If a company is found to be violating antidumping regulations, U.S. customs can
impose additional duties on the imported goods.
Tariffs
The United States imposes a variety of tariffs on imported goods. While the U.S.
Constitution grants Congress the authority to impose tariffs, several statutes have shifted that
authority to the President under certain circumstances. Within the United States, agencies
involved in international trade regulation include the CBP , the U.S. International Trade
Commission (“ ITC”), and the Office of the U.S. Trade Representative (“ USTR ”). CBP is
responsible for collecting tariffs on goods imported to the United States during the customs
clearance process. The ITC is a quasi-judicial agency that administers U.S. laws governing
trade remedies and provides analysis, information, and other support concerning tariffs and
other international trade matters for the President, U.S. Congress, and the USTR. The ITC also
investigates alleged violations of U.S. trade law, including unfair trade practices under Section
337 of the Tariff Act of 1930, illegal foreign financial subsidies, and violations, and Section
201 of the Trade Act of 1974 (imports of goods into the U.S. at an increased quantity that is
a substantial cause of serious injury to a U.S. domestic industry). The USTR is a cabinet-level
position within the office of the President of the United States, and serves as the President’s
principal adviser, negotiator, and spokesperson regarding matters of international trade.
The USTR is authorized to take certain action under Section 301 of the Trade Act of 1974
(“Section 301 ”), including without limitation the imposition of tariffs or other restrictions on
imports, if it determines after investigation that a foreign government has engaged in unfair
trade practices. In 2018, following a USTR investigation and report, the United States imposed
tariffs on certain imported goods of Chinese origin. Section 301 tariffs are assessed and
collected in addition to any other duties that may apply (including, without limitation,
antidumping duties). Both the United States and China have brought claims against one another
before the World Trade Organization in connection with this trade dispute.
Recently, the United States announced broad tariffs on imports from all countries,
comprising a 10% baseline tariff and varying reciprocal tariffs on certain trade partners,
including a 125% tariff for most goods from China. Other countries, including China,
announced retaliatory actions or plans for retaliatory actions. On April 9, 2025, the United
States implemented a 90-day pause on the varying reciprocal tariffs except for those on
Chinese goods, leaving the 10% baseline tariff in place. On May 12, 2025, China and the
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United States jointly announced a 90-day suspension of certain of their trade restrictions, so
that the United States will impose tariffs of 30% on most Chinese imports during this period,
while China will impose tariffs of 10% on U.S. imports. The two sides agreed to continue
negotiations during this period.
Export Controls
The U.S. prohibits the export of controlled goods, services, and information through two
primary sets of laws. The International Traffic in Arms Regulations (“ ITAR”) were created by
the Arms Export Control Act of 1976. ITAR-controlled exports are regulated by the U.S. State
Department. A separate set of export controls is administered by the U.S. Department of
Commerce under the Export Administration Regulations (“ EAR”).
Both ITAR and EAR govern “exports” which are broadly defined to be a transfer of (a)
something that is controlled, (b) from a U.S. person, (c) to a non-U.S. person. Controlled
transfers include physical products, services, and technology. U.S. persons are defined as U.S.
citizens and lawful permanent residents along with companies incorporated in one or more U.S.
states. Non-U.S. persons are any individual, company, government, or other entity that does not
meet the definition of a U.S. person.
Exports subject to control under ITAR and EAR can be made by the physical transfer of
goods, or by visual, oral, or electronic transmission. Transfers of goods or information that take
place within the borders of the United States can still be subject to export control laws if the
transfer is to a non-U.S. person.
In order to legally export controlled goods, services, or information, the proposed
exporter must register with the State Department or Commerce Department and then obtain a
license prior to initiating the export. Penalties for non-compliance with U.S. export control
laws can be both civil and criminal and include substantial monetary fines.
Economic Sanctions
The U.S. imposes various economic sanctions against targeted countries, groups, and
individuals (collectively, the “ U.S. Sanctions Programs ”). Each sanctions program is
authorized under either the International Emergency Economic Powers Act (“ IEEPA”) or the
Trading with the Enemy Act of 1917 (“ TWEA ”). Most are administered by the U.S. Treasury
Department’s Office of Foreign Assets Control (“ OFAC”), while aspects of certain sanctions
programs are administered by the U.S. Department of State. Export-related aspects of
restrictions against certain countries are also under the jurisdiction of the EAR and
administered by the Department of Commerce.
The U.S. Sanctions Programs include both comprehensive trade restrictions, i.e.
embargoes, against countries or regimes, and selective sanctions measures, depending on
foreign policy and national security objectives sought to be achieved through sanctions. In
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some cases, sanctions are directed against designated groups or individuals, including terrorist
organizations, narcotics traffickers, weapons proliferators, and others, and include blocking
and asset freeze requirements related to sanctioned parties.
The U.S. maintains comprehensive embargoes against certain nations and areas including
Cuba, Iran, North Korea, Syria, and the Crimea region of Ukraine. Persons subject to U.S.
sanctions are prohibited from most transactions involving these countries, including exports,
imports, sales, services, and financial transactions that pertain to the sanctioned county or
persons in the sanctioned country. In addition, the U.S. Sanctions Programs against these
countries include blocking provisions that prohibit U.S. persons from dealing in any property
or property interest of certain designated persons or entities in each country.
In general, the comprehensive sanctions programs apply only to “U.S. Persons.” This is
defined to include “any United States citizen, permanent resident alien, entity organized under
the laws of the United States or any jurisdiction within the United States (including foreign
branches), or any person in the United States.” However, in recent years, OFAC, the President,
and the U.S. Congress have adopted measures to extend the reach of U.S. sanctions beyond just
U.S. persons and borders. This has been accomplished by targeting foreign sanctions evaders
and transactions that seek to evade or avoid, cause a violation of, or attempt to violate the
sanctions, and conspiracies formed for those purposes. In addition, the Cuban and parts of the
Iranian sanctions programs apply to non-U.S. subsidiaries of U.S. persons (i.e., entities owned
or controlled by a United States person and established under the laws of another nation or
maintained outside the United States).
In addition to the comprehensive sanctions programs, the U.S. maintains “list-based”
sanctions programs against targeted regimes, entities and individuals that have been found to
have taken actions contrary to the foreign policy or national security interests of the United
States.
In the United States, there are three primary sanctions lists that are maintained by OFAC.
The most extensive is the List of Specially Designated Nationals and Blocked Persons (the
“OFAC SDN List ”). The OFAC SDN List comprises persons and entities whose property or
interests in property are required to be blocked or “frozen” if in the U.S. or under U.S.
jurisdiction. OFAC is authorized to direct persons subject to U.S. jurisdiction to block or freeze
property in which a sanctions target (i.e., an SDN) has an interest, however remote.
Consequently, U.S. Persons are prohibited from virtually all transactions with SDNs or their
property (absent OFAC authorization).
Penalties for violations of the U.S. Sanctions Programs are prescribed under IEEPA. They
include civil penalties and criminal penalties up to US$1 million per violation and
imprisonment of up to 20 years.
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The Foreign Corrupt Practices Act and Other Anti-Bribery Laws
The U.S. federal Foreign Corrupt Practices Act (“ FCPA”) includes two key elements:
 Anti-bribery provisions . A person may not give or offer money, gifts, or anything of
value to a foreign government official to obtain or retain business.
 Accounting requirements . Companies must maintain accurate books and records and
adequate internal accounting controls to avoid disguising corrupt payments. The
U.S. Department of Justice and Securities and Exchange Commission enforce the
FCPA. This Note focuses on the FCPA ’s anti-bribery provisions.
The FCPA applies to two broad categories of persons: those with formal ties to the US and
those who take action in furtherance of a violation while in the U.S. Recently, foreign
companies in both categories have been the focus of an increasing number of enforcement
actions.
In addition to the FCPA, U.S. state criminal laws generally prohibit bribery of
government officials and private commercial actors.
Tax Law
Federal Government
The U.S. federal government can levy a variety of taxes on U.S. businesses, non-U.S.
businesses engaging in certain activities in the United States, and business owners and their
employees. Our business activities in the U.S. require us to pay U.S. federal income tax, taxes
on the sale of certain assets, income tax on dividends, distributions, and interest, sales and
other transfer taxes, employee payroll taxes, withholding obligations, and other taxes.
Federal and state tax laws are subject to change. For example, U.S. President’s
administration has proposed several changes to federal taxation of corporations, including
multinational corporations, and parts of the proposal are working their way through the
legislative process. Changes to federal and state taxation adopted into law after the date of this
prospectus could be material to our business. Our subsidiaries in the U.S. were subject to the
federal corporate income tax rate of 21% during the Track Record Period.
State and Local Governments
In addition to the federal government, the 50 U.S. states and their political subdivisions
play an important role in taxing and regulating business activity within their respective
jurisdictions. For example, our business activities within a U.S. state may be subject to the
state’s business and personal income tax, payroll tax, sales tax, real and personal property tax,
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franchise tax, withholding obligations, and other taxes. In addition, some local governments,
such as counties and cities, may impose their own similar taxes. Our subsidiaries in the U.S.
were subject to applicable state tax rates during the Track Record Period.
Registration and Regulation
There is no such thing as a “U.S. corporation.” Instead, corporations in the United States
are registered and organized in one of the 50 states. In addition to its legal formation in a
particular state, a corporation that does business in more than one state may need to qualify or
register to do business in other states if the corporation’s activities establish “minimum
contacts” for tax purposes in those states.
Individual state laws apply to business transactions occurring in each state, unless such
laws conflict with, or are superseded by, U.S. federal law, which takes precedence over state
and local law. For this reason, U.S. businesses frequently must comply with separate federal,
state and local regulations.
Transfer Pricing Rules
The U.S. federal government requires related parties to transact with each other using
arm’s length pricing. In effect, this prohibits multinationals from avoiding income tax on
U.S.-generated profits by overcharging their U.S. subsidiaries for foreign-made products. In
the event that this occurs, U.S. federal tax authorities will “readjust” the prices charged by the
non-U.S. entity to its wholly owned U.S. subsidiary.
Proposed BIOSECURE Act
On December 20, 2023, the U.S. Senate published proposed legislation to prohibit federal
contracting with certain biotechnology providers connected to foreign adversaries, commonly
referred to as the BIOSECURE Act. On March 6, 2024, the version of the legislation proposed
by the U.S. Senate was advanced to the full U.S. Senate. On January 24, 2024, the U.S. House
of Representatives proposed an analogous version of such legislation (the “ House version ”),
which was advanced to the full U.S. House of Representatives on May 15, 2024. On September
9, 2024, the U.S. House of Representatives passed the BIOSECURE Act. The BIOSECURE
Act, if enacted in the proposed form, would prohibit the U.S. government from procuring
biotechnology equipment or services from so-called “biotechnology companies of concern.”
The BIOSECURE Act, if enacted in the proposed form, would also prohibit U.S. federal loans
and grants to, and federal contracts (including contract extensions and renewals) with, any
entity that uses biotechnology equipment or services from one of these “biotechnology
companies of concern.” The most recent House version of the legislation names five specific
Chinese biotech companies as “biotechnology companies of concern,” and gives the U.S.
government the authority to identify other entities for inclusion as “biotechnology companies
of concern,” specifically any entity that is subject to the control or jurisdiction or acts on behalf
of a “foreign adversary” (defined by law to be China, Iran, North Korea, and Russia), provided
that the entity is involved in the manufacturing, distribution, provision, or procurement of a
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biotechnology equipment or service, and poses a risk to the national security of the U.S., based
on: (i) engaging in joint research with, being supported by, or being affiliated with a foreign
adversary’s military, internal security forces, or intelligence agencies; (ii) providing multiomic
data obtained via biotechnology equipment or services to the government of a foreign
adversary; or (iii) obtaining human multiomic data via the biotechnology equipment or services
without express and informed consent. The most recent House version of the legislation would
delay the application of the BIOSECURE Act’s provisions (i) until January 1, 2032, with
respect to biotechnology equipment or services provided or produced by one of the named
biotechnology companies of concern under a contract or agreement entered before the effective
date of the legislation; and (ii) for a period of five years after the identification of new
biotechnology companies of concern, with respect to biotechnology equipment and services
provided or produced by an entity that the government identifies in the future as a
biotechnology company of concern.
As of the Latest Practicable Date, we believe that the risk of our operations being affected
by the proposed BIOSECURE Act is low because we have not been named as a “biotechnology
companies of concern” as defined in the proposed BIOSECURE Act.
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OVERVIEW
Our history dates back to 2001 when Chinese Peptide was established in the PRC by
Dr. Li Xiang, our executive Director. Our Controlling Shareholders, Dr. Xu and Ms. Li, joined
Chinese Peptide in 2003 and 2005, respectively. Dr. Xu and Ms. Li co-founded our Company
in June 2020 to acquire Chinese Peptide. For details about historical shareholding changes of
Chinese Peptide and our Company, see “—Corporate Development and Major Shareholding
Changes” in this section. For the biography of Dr. Xu, Dr. Li Xiang and Ms. Li, see the section
headed “Directors, Supervisors and Senior Management.”
After more than two decades of development, we have become the third largest
peptide-focused CRDMO worldwide in terms of sales revenue in 2023, according to Frost &
Sullivan. We are also one of the most comprehensive peptide-focused CRDMO globally,
according to Frost & Sullivan, offering full-cycle services ranging from early-stage discovery,
preclinical research and clinical development to commercial-stage production. For details, see
the section headed “Business.”
MILESTONES
The following table summarizes the key development milestones of our Group:
Time Milestone
2001 Chinese Peptide ( ʕ㹻͛ʷ) was established in the PRC in August 2001.
2004 Our research center was named as the “Zhejiang Province High-Tech
Development Center (Ӻක೯ʕː)” by Science
Technology Department of Zhejiang (ኪҦஔᝂ).
2005 CPC Scientific, Inc. was established in Delaware, the United States.
2006 We successfully passed NMPA GMP inspection.
2009 We obtained the ISO13485:2003 quality management system
certification.
Our first API for generic drug LEUPROLIDE ACETA TE was successfully
used to obtain regulatory approvals from the NMPA.
2011-2016 We have successfully passed four consecutive FDA inspections without
any Form 483 observations, indicating our full compliance with FDA
regulatory standards and guidance.
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Time Milestone
2018 We successfully passed the GMP inspection of EMA.
We were named as “2018 Zhejiang Provincial International Science and
Technology Cooperation Base (2018ҦΥЪਿή)”
by Science Technology Department of Zhejiang (ኪҦஔᝂ).
2019 We successfully passed the GMP inspection of Ministry of Food and Drug
Safety of Korea (MFDS).
2020 Medtide Inc. was established.
We supported our client in obtaining a conditional marketing
authorization for a first-in-class peptide drug from the EMA.
2021 We officially initiated oligonucleotide CDMO operation.
2022 We acquired a site to construct our production facility in Rocklin,
California, to provide GMP production services for peptide APIs, and to
establish a global supply chain to support our customers worldwide.
2023 We successfully passed NMPA registration inspection and GMP
inspection.
We were recognized as a “specialized, refined, and innovative” small and
medium-sized enterprise in Zhejiang Province (ਖ਼ၚतอʕʃΆ
ุ).
2024 We obtained the GMP certificate issued by the TGA.
We were approved to establish a national postdoctoral research site ( ௹ɻ
ʈЪ१).
We successfully passed the fifth FDA on-site GMP inspection, indicating
our continuous full compliance with FDA regulatory standards and
guidance.
We were rated as a High-growth Company in the Biopharmaceutical
Industry of Zhejiang Province (Άุ).
We were also rated as a National-level Specialized, Excellent, Featured
and Innovative “Little Giant” Company (ॴਖ਼ၚतอ“ʃ̶ɛ”Άุ).
2025 We obtained marketing approval for Goserelin Acetate APIs.
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OUR SUBSIDIARIES
As of the Latest Practicable Date, we had six subsidiaries. Details of each of our
subsidiaries are set out below:
Name of subsidiary
Place of
incorporation
Date of
incorporation
and
commencement
of business Principal business
Shareholding
controlled
by our
Company
Chinese Peptide PRC August 27, 2001 R&D, manufacturing
and sales of products
100%
CPC Scientific, Inc. Delaware, the
United States
April 27, 2005 Business development
and sales of products
and services
100%
Incalinia Inc. Delaware, the
United States
January 2, 2013 Investment holding 100%
Gaodi Investment PRC January 29,
2014
Investment holding 100%
ACAPBIO Limited Hong Kong August 11, 2014 Import and export of
goods and trading
100%
Y uanxi Pharmaceutical PRC December 25,
2020
Research and
development and
production of products
100%
CORPORATE DEVELOPMENT AND MAJOR SHAREHOLDING CHANGES
(1) Establishment and Development of Chinese Peptide
Chinese Peptide, our principal subsidiary, was established in the PRC on August 27, 2001
with a registered capital of US$1.23 million, which was founded by UCPharm Company Ltd.,
a company wholly-owned by Dr. Li Xiang at the relevant time; and American Peptide
Company, a company co-founded by Dr. Li Xiang, respectively.
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In August 2012, after a series of shareholding changes of Chinese Peptide since its
establishment, Dr. Li Xiang transferred US$1,397,900 of the registered capital of Chinese
Peptide (representing 15.32% of the equity interests in Chinese Peptide at the time) to
Hangzhou Haidongqing Technology Co., Ltd.* (ʮ̡,“ Hangzhou
Haidongqing ”), a company wholly-owned by his sister, Ms. Li, at the consideration of
US$5,000.
In September 2012, Dr. Xu, the then general manager of Chinese Peptide, subscribed for
increased registered capital of Chinese Peptide of US$1,054,700 (representing 9.66% of the
equity interests in Chinese Peptide), at a consideration of US$1,054,700, through Senhai
Medical (as defined below), an investment holding company wholly-owned by Dr. Xu.
After completion of several rounds of share transfers and capital injections and
immediately prior to the 2015 Xinbang Acquisition (as defined below), Chinese Peptide was
held by the following shareholders (the “ Former Chinese Peptide Shareholders ”):
Former Chinese Peptide Shareholders
Registered
capital
subscribed
Corresponding
equity interest in
Chinese Peptide
(US$) (%)
UCPharm Company Limited (1) 4,906,594 37.3786
Qikang International (2) 3,258,990 24.8271
Hangzhou Haidongqing 1,397,900 10.6492
Senhai Medical
(2) 1,054,700 8.0347
Healthy Angel (2) 892,070 6.7958
Guizhou Guian New District Jinyu Investment Center (Limited
Partnership)* ((ਹҳ༟ʕː(Υྫ), “ Jinyu
Investment ”))(3) 984,506 7.5000
Super Glory Enterprise Limited (ʮ̡,
“Super Glory ”)(4) 327,500 2.4949
Jiaxing Kangde Investment Partnership (Limited Partnership)*
(ྗጳੰᅃҳ༟ΥྫΆุ(Υྫ), “ Jiaxing Kangde ”))(2)(5) 260,790 1.9867
Beijing Intetaike Technology Co., Ltd.* (ʮ
̡,“ Beijing Intetaike ”)(5) 43,700 0.3329
Total 13,126,750 100.0000
Notes:
(1) UCPharm Company Limited (“ UCPharm ”) is a company incorporated in Hong Kong. As of December 2024
and up to the Latest Practicable Date, UCPharm was wholly owned by Dr. Li Xiang.
(2) As of April 2015, each of Qikang International, Healthy Angel and Hangzhou Senhai Medical Technology
Consultation Co., Ltd.* (ʮ̡,“ Senhai Medical ”, currently known as Hangzhou
Chaohong Medical Technology Consultation Co., Ltd.* (ʮ̡)), was wholly owned
by Dr. Xu. In anticipation of the proposed 2015 Xinbang Acquisition, in April 2015, Dr. Xu acquired 24.8271%
and 6.7958% of the registered capital of Chinese Peptide through Qikang International and Healthy Angel,
respectively, from its then shareholders, which are financial investors and Independent Third Parties, at a total
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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consideration of RMB379,480,000. The consideration was determined based on arm’s-length negotiation
among the parties, considering (i) the consideration will be fully settled by cash, instead of Xinbang
Consideration Shares (as defined below), for which the holders of the Xinbang Consideration Shares were
subject to a lock-up period of 36 months since the listing of Xinbang Consideration Shares and the price and
trading volume of which would be subject to volatility in A shares market; (ii) consideration paid by such
financial investors for the investment in Chinese Peptide; (iii) the business performance of Chinese Peptide in
the previous year; and (iv) the market conditions at the relevant time.
(3) Jinyu Investment was a limited liability partnership established in the PRC, and was deregistered in July 2020.
In April 2015, UCPharm transferred 7.5% of the registered capital of Chinese Peptide to Jinyu Investment, at
a consideration of RMB150 million, which was determined based on arm’s-length negotiation among the
parties. Jinyu Investment was held by An Huailue, who was a director of Xinbang at the relevant time and
Kong Lingzhong, who has been director of Xinbang since May 2014. Prior to the 2015 Xinbang Acquisition,
Jinyu Investment held approximately 7.57% equity interests in Xinbang, and An Huailue held approximately
3.89% equity interests in Xinbang. Each of An Huailue and Kong Lingzhong is an Independent Third Party of
the Company.
(4) As of April 2015, Super Glory was held by three then employees of Chinese Peptide, each holding 33.33%
interests therein. Among the three then employees, as of the Latest Practicable Date, Tong Xiaohe is a current
employee of the Company, Zhang Puwen is a consultant of the Company, and the other individual is no longer
an employee of the Group and is an Independent Third Party.
(5) As of April 2015, Jiaxing Kangde was held by Dr. Xu as to 99% as its general partner and Ms. Cheng Tao as
to 1% as its limited partner. Beijing Intetaike was wholly-owned by Ms. Cheng Tao.
(2) 2015 Xinbang Acquisition
(i) Background : With a view to enriching and improving Xinbang’s business modules
and leveraging the synergistic development advantages of its platform, while providing a
financing platform to Chinese Peptide, Xinbang proposed to acquire the entire equity interests
in Chinese Peptide from the Former Chinese Peptide Shareholders in April 2015 at a total
consideration of RMB2 billion (the “ 2015 Xinbang Acquisition ”). Prior to the 2015 Xinbang
Acquisition, the business of Chinese Peptide comprised of the peptide business and in vitro
diagnostic reagent business. Xinbang is a company listed on the Shenzhen Stock Exchange
(stock code: 002390.SZ) and principally engaged in the traditional Chinese medicine (TCM)
manufacturing and sales of TCM pharmaceutical and the provision of medical services at the
time. Save for the relationship with Jinyu Investment, a minority shareholder of Chinese
Peptide as explained above, Xinbang was independent of our Group prior to the 2015 Xinbang
Acquisition.
(ii) Consideration : The consideration of RMB2 billion was settled (a) as to approximately
90%, by the issuance and allotment of a total of 232,202,577 new shares of Xinbang (the
“Xinbang Consideration Shares ”), representing approximately 13.55% of its total enlarged
issued share capital, at an issue price of RMB7.75 per share to the Former Chinese Peptide
Shareholders (except for Senhai Medical and Jiaxing Kangde), and (b) as to approximately
10%, by cash payment of RMB200,428,000 to Senhai Medical and Jiaxing Kangde.
The issue price of the Xinbang Consideration Shares was determined with reference to
90% of the average trading price of Xinbang’s shares on the A shares market over the 60
trading days prior to the benchmark date of April 28, 2015, as adjusted by Xinbang’s
subsequent dividend declaration and capital restructuring.
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(iii) Basis of consideration : The consideration of the 2015 Xinbang Acquisition was
determined after arm’s-length negotiation between the parties, based on the appraised value of
RMB2 billion of Chinese Peptide pursuant to an asset appraisal report issued by an independent
third-party appraisal institution with qualifications in securities and futures valuation in the
PRC (the “ 2015 Valuation Report ”). According to the 2015 V aluation Report, as of March 31,
2015, the valuation benchmark date of 2015 V aluation Report, the appraised value of Chinese
Peptide, including its peptide and in vitro diagnostic reagent businesses, was RMB2 billion,
determined using the income approach (جand the then audited net assets of Chinese
Peptide was approximately RMB241.8 million. The valuer of the 2015 V aluation Report
considered, among others, (i) the strong business relationships between Chinese Peptide and
leading multinational pharmaceutical companies established through years of development; (ii)
Chinese Peptide’s significant R&D and production experience accumulated more than a decade
since entering the peptide product field in 2001; (iii) between 2011 and 2014, Chinese Peptide
has passed FDA inspections three times with nil deficiency; and (iv) the large potential market
for the in vitro diagnostic reagent business at the time of the 2015 Xinbang Acquisition.
In addition, in the determination of the consideration of the 2015 Xinbang Acquisition,
the parties also took into consideration the facts that (a) approximately 90% of the
consideration of the 2015 Xinbang Acquisition were to be settled by the issuance and allotment
of Xinbang Consideration Shares, for which the holders of such shares were subject to a
lock-up period of 36 months since the listing of Xinbang Consideration Shares and the price
and trading volume of which would be subject to volatility of Xinbang’s shares that are
publicly traded in the A shares market during such lock-up period and prior to the disposal of
the Xinbang Consideration Shares by the relevant seller; (b) each of the Former Chinese
Peptide Shareholders provided performance guarantee in respect of Chinese Peptide to
Xinbang; and (c) the business synergy which might be brought to Chinese Peptide and Xinbang
through the 2015 Xinbang Acquisition.
(iv) Completion of the 2015 Xinbang Acquisition : As disclosed by Xinbang, the 2015
Xinbang Acquisition was duly approved by its shareholders and the CSRC in June 2015 and
December 2015, respectively. Upon completion of the 2015 Xinbang Acquisition in December
2015, (1) Chinese Peptide and its subsidiaries became wholly owned by Xinbang; (2) each of
Dr. Xu and Dr. Li Xiang became a director of Xinbang in May 2015; and (3) Xinbang was held
by among others, its then actual controller, an Independent Third Party, as to 25.06%, Jinyu
Investment as to 10.22%, UCPharm as to 5.63%, Qikang International as to 3.74%, Hangzhou
Haidongqing as to 1.60%, Healthy Angel as to 1.02%, Super Glory as to 0.38% and Beijing
Intetaike as to 0.05%.
(v) Subsequent development : In November 2018, considering the different business and
development focus, the in vitro diagnostic reagent business segment previously operated by
Chinese Peptide became operated by Prometheus Bio Inc. (ʮ̡,
“Prometheus Bio ”), a company established in the PRC with limited liability in November
2018, and wholly-owned by Xinbang.
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(3) Establishment of Our Company and Acquisition of Chinese Peptide
(i) Background : In early 2020, in light of the challenges imposed by the COVID-19
pandemic, the prevailing market conditions of the peptide business and in vitro diagnostic
reagent business at the time, the expectation that further development of Chinese Peptide and
Prometheus Bio requires significant additional investment in R&D and the establishment of
overseas production facilities, Xinbang decided to divest its interests in Chinese Peptide and
Prometheus Bio, in order to better align with its strategic focus on medical services, and
optimize its asset structure. In response, pursuant to the shareholders’ resolutions of Xinbang
in February 2020, Xinbang reduced the registered capital of Chinese Peptide and Prometheus
Bio by a total of approximately RMB630 million. Upon completion of the reduction in
registered capital, the registered capital of Chinese Peptide was reduced from RMB490 million
to RMB57.9 million, and the registered capital of Prometheus Bio was reduced from
RMB224.2 million to RMB26.5 million, respectively.
In the meantime, Dr. Xu, who joined Chinese Peptide in 2003, and then served as a
director of Xinbang and the president of Chinese Peptide, along with Ms. Li, who joined
Chinese Peptide in 2005, decided to establish our Company, with a view to acquiring Chinese
Peptide from Xinbang in order to lead its growth and expansion under their ownership and
continue to focus on developing a CRDMO with a global business footprint.
(ii) Establishment of our Company : On June 11, 2020, our Company was established as
a limited liability company under the laws of the PRC, with an initial registered capital of
RMB100 million. As of the date of its establishment, our Company was owned as to 51% by
Qikang International and 49% by Hangzhou Haiding, a company owned by Ms. Li and her
spouse as to 99% and 1%, respectively.
(iii) Principal terms of the 2020 Acquisition : In light of the above, on June 13, 2020,
Xinbang and our Company entered into share transfer agreements, pursuant to which Xinbang
agreed to sell, and our Company agreed to purchase, the entire equity interests of Chinese
Peptide and Prometheus Bio, at the consideration of RMB718.3 million and RMB31.7 million,
respectively (the “ 2020 Acquisition ”). Such consideration was determined after arm’s-length
negotiation between the parties, based on the appraised value of Chinese Peptide and
Prometheus Bio pursuant to two separate asset appraisal reports of Chinese Peptide and
Prometheus Bio issued by an independent third-party appraisal institution with qualifications
in securities and futures valuation in the PRC (the “ 2020 Valuation Reports ”). The
consideration of the 2020 Acquisition substantially matched the respective appraised values of
Chinese Peptide and Prometheus Bio pursuant to the 2020 V aluation Reports.
According to the 2020 V aluation Reports, as of March 31, 2020, the valuation benchmark
date of 2020 V aluation Reports, (a) the appraised value of Chinese Peptide for the purpose of
the 2020 Acquisition was approximately RMB718.6 million, determined using the income
approach (جand (b) the appraised value of Prometheus Bio for the purpose of the 2020
Acquisition was approximately RMB31.7 million, determined using the asset-based approach
(ج.)
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From March 31, 2015 (i.e. the benchmark date for determining the consideration for the
2015 Xinbang Acquisition) to March 31, 2020 (i.e. the benchmark date for determining the
consideration for the 2020 Acquisition), Chinese Peptide and Prometheus Bio had experienced
various challenges in its business operations and development, including, among others, (a)
shift in management strategies and development priorities of Xinbang to focus on its primary
business of provision of medical services; (b) changes in the macroeconomic environment, and
overall societal conditions including the rising labor, environmental and operational costs of
Chinese Peptide’s business; (c) impact of the COVID-19 pandemic; and (d) changes in industry
conditions and the competitive dynamics of the in vitro diagnostic reagent business. As
disclosed by Xinbang, it recorded an impairment loss for goodwill relating to the business of
Chinese Peptide and Prometheus Bio amounting to RMB1.537 billion for the year ended
December 31, 2018. The amount of impairment loss was determined based on an asset
appraisal and consulting report issued by an independent third-party appraisal institution with
qualifications in securities and futures valuation in the PRC. Such challenges experienced by
Chinese Peptide led to the decrease in the consideration for the 2020 Acquisition compared to
that for the 2015 Xinbang Acquisition.
The consideration of the 2020 Acquisition had been settled in full in December 2020
using our Group’s internal resources, with the assistance of convertible bonds and loans
received from our then Shareholders. As of the Latest Practicable Date, the convertible bonds
had been fully redeemed or repaid by our Company, and the relevant Shareholder loans had
been fully repaid by our Company. Our Directors consider that the 2020 Acquisition was
conducted on normal commercial terms and are beneficial to the Group and the Shareholders
as a whole.
(iv) PRC regulatory requirements : Our PRC Legal Adviser is of the view that the 2020
Acquisition did not violate the applicable PRC laws and regulations, and the relevant
regulatory registrations or approvals necessary in relation to the 2020 Acquisition had been
obtained in accordance with the PRC laws and regulations.
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(v) Group structure after the 2020 Acquisition : Upon completion of the 2020
Acquisition, Chinese Peptide, its then subsidiaries and Prometheus Bio became wholly owned
by our Company. Dr. Xu and Dr. Li Xiang resigned as directors of Xinbang in August 2020.
As of the Latest Practicable Date, to the best knowledge of our Directors, (a) Xinbang was an
Independent Third Party, and (b) save for UCPharm, which is wholly owned by Dr. Li Xiang,
none of the Former Chinese Peptide Shareholders held any equity interest in Xinbang. Below
is a diagram illustrating our structure immediately upon completion of the 2020 Acquisition:
The Company
(PRC)
Prometheus Bio(2)(3)
(PRC)
Chinese Peptide
(PRC)
Hangzhou
Acatide(3)
(PRC)
Gaodi
Investment
(PRC)
Hangzhou Kangyong
Biotech Co., Ltd. (3)
(PRC)
Incalinia
Inc.
(US)
ACAPBIO
Limited
(Hong Kong)
CPC
Scientific, Inc.
(US)
UCP
Biosciences Inc. (3)
(US)
100% 100% 100%
100% 100% 100%
100%
Qikang
International
Hangzhou
Haiding(1)
51% 49%
Healthy
Angel
Dr. Xu
100%
100%
Ms. Li(1)
99%
100% 100%
Notes:
(1) Hangzhou Haiding was held as to 99% by Ms. Li, and 1% by her spouse, Mr. Li Congyan (֧.)
2) Considering the in vitro diagnostic reagent business segment of Prometheus Bio was previously
operated by Chinese Peptide prior to the 2015 Xinbang Acquisition, the Company also acquired
Prometheus Bio as part of the 2020 Acquisition.
(3) After the completion of the 2020 Acquisition, in order to (i) streamline the Group’s business strategy
and focus on CRDMO business of the Group and (ii) improve the overall operation efficiency of our
Group, in early 2021, the Company deregistered and/or disposed Prometheus Bio, Hangzhou Kangyong
Biotech Co., Ltd. (“ Hangzhou Kangyong ”), Hangzhou Acatide Technology Corporation (“ Hangzhou
Acatide ”), and UCP Biosciences Inc. (“ UCP Biosciences ”) taking into consideration their principal
business and then operation status. Details are listed as follows:
(i) Prometheus Bio : it was primarily engaged in the provision of in vitro diagnostics reagent
business. In March 2021, in order to focus our resources on the development of our CRDMO
business, the Company disposed of the entire equity interests of Prometheus Bio to Hangzhou
Haiding at a consideration of RMB26,461,400. The aforementioned consideration was determined
based on arm’s-length negotiation amongst parties with reference to the actual paid up registered
capital of Prometheus Bio and the fact that Prometheus Bio was loss-making at the time of the
relevant transfer. Prior to the disposal, based on its unaudited management accounts, Prometheus
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Bio recorded revenue of approximately RMB4.4 million and net loss of approximately RMB3.6
million for the three months ended March 31, 2021, respectively. As the Group is mainly engaged
in CRDMO services, the Directors are of the view that the business of Prometheus Bio will not
compete with the Group.
(ii) Hangzhou Kangyong : it was established in the PRC in July 2012, and had not been involved in
any substantive business operation generating any revenue in 2019 and 2020 prior to the 2020
Acquisition. After the completion of the 2020 Acquisition, considering Hangzhou Kangyong did
not and was not expected to engage in any substantive business and did not hold any substantial
assets, it was deregistered in January 2021 in order to streamline our corporate structure. Prior
to the deregistration, Hangzhou Kangyong was loss-making based on its unaudited management
accounts.
(iii) Hangzhou Acatide : it was established in the PRC in February 2010, and had not been involved
in any substantive business operation prior to the 2020 Acquisition. In March 2021, in order to
streamline our corporate structure, the entire equity interest of Hangzhou Acatide was transferred
to Hangzhou Meisida Biotech Co., Ltd., which is an investment holding company held by Dr. Xu
and Ms. Li as to 90% and 10%, respectively, at a consideration of RMB2,425,855.82. The
aforementioned consideration was determined based on arm’s-length negotiation amongst parties
with reference to the registered capital of Hangzhou Acatide and the fact that Hangzhou Acatide
was loss-making at the time of the relevant transfer. Given Hangzhou Acatide was not engaged
in any substantive business operation during such period of time prior to the disposal, its profit
and loss statements for each of the years from 2019 to March 2021 only recorded certain
management expenses and finance costs in immaterial amounts.
(iv) UCP Biosciences : it was established in the United States in April 2003, and was primarily
engaged in the provision or sales of diagnostic services and products in the United States. In
March 2021, in order to focus our resources on the development of our CRDMO business, the
Company disposed of the entire equity interest of UCP Biosciences to Kleos Limited, a
wholly-owned investment holding company of Dr. Xu at the relevant time, at a consideration of
US$1. The aforementioned consideration was determined based on arm’s-length negotiation
amongst parties considering the fact that UCP Biosciences had negative net assets and was loss
making at the time of the relevant transfer. Prior to the disposal, based on its unaudited
management accounts, UCP Biosciences recorded revenue of US$0.9 million and net loss of
US$2.2 million for the year ended December 31, 2020, respectively. As the Group is mainly
engaged in CRDMO services, the Directors are of the view that the business of UCP Biosciences
will not compete with the Group.
None of Prometheus Bio, Hangzhou Kangyong, Hangzhou Acatide and UCP Biosciences was subject to
any material administrative penalties, nor had been involved in any non-compliance incidents prior to
the relevant disposals or deregistration.
(4) Establishment of the Employee Incentive Platforms
In recognition of the contributions of our employees and to incentivize them to further
promote our development, and in preparation for the future establishment of the Pre-IPO
Employee Incentive Scheme, Hangzhou Y uanxi and Hangzhou Xiyong were established as our
Employee Incentive Platforms in the PRC in December 2020. On December 25, 2020,
Hangzhou Haiding transferred RMB10 million of registered capital of the Company,
representing a total of 10% of the then total equity interests of the Company, to Hangzhou
Y uanxi and Hangzhou Xiyong, at an aggregate consideration of RMB40 million. The
aforementioned considerations were determined based on arm’s-length negotiation amongst
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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parties. Upon the completion of transfer of equity interest by Hangzhou Haiding to Employee
Incentive Platforms on December 30, 2020, our Company was owned as to 51% by Qikang
International, 39% by Hangzhou Haiding, 5% by Hangzhou Y uanxi and 5% by Hangzhou
Xiyong.
In December 2020, we adopted the Pre-IPO Employee Incentive Scheme. For more
details, please see “—Pre-IPO Employee Incentive Scheme” in this section.
(5) Pre-IPO Investments
See “—Pre-IPO Investments” below for further information of shareholding changes in
connection with the Pre-IPO Investments. Our PRC Legal Adviser has confirmed that, all the
shareholding changes as described in this section were properly and legally completed and all
necessary, filings and registrations from the relevant PRC authorities have been obtained and
completed.
(6) Further Changes in Registered Capital in 2021
On January 6, 2021, we passed shareholders’ resolutions and approved, among other
things, the decrease of the registered capital of the Company from RMB100 million to
RMB63.75 million, with registered capital of the Company held by each then Shareholders
decreased. Upon completion of the decrease of registered capital, the Company was held as to
80% by Qikang International, 10% by Hangzhou Haiding, 5% by Hangzhou Xiyong and 5% by
Hangzhou Y uanxi.
On November 2, 2021, we passed shareholders’ resolutions and approved, among other
things, the increase of the registered capital of the Company from RMB63.75 million to
RMB100 million, and each of Qikang International, Hangzhou Haiding, Hangzhou Xiyong,
Hangzhou Y uanxi and Ms. Li subscribed for RMB14,000,000, RMB8,625,000, RMB1,812,500,
RMB1,812,500 and RMB10,000,000 of the registered capital of the Company, respectively, at
a total consideration of RMB36,250,000. The aforementioned consideration was determined at
the par value of the registered capital, based on arm’s-length negotiation amongst parties. Upon
completion of the increase of registered capital, the Company was held as to 65% by Qikang
International, 15% by Hangzhou Haiding, 10% by Ms. Li, 5% by Hangzhou Xiyong and 5%
by Hangzhou Y uanxi.
Our PRC Legal Adviser has confirmed that all the capital decreases and increases
described above have been properly and legally completed and all necessary, filings and
registrations from the relevant PRC authorities have been obtained and completed.
(7) Conversion into a joint stock limited company
On October 30, 2022, our then Shareholders passed resolutions approving, among other
things, the conversion of our Company from a limited liability company into a joint stock
limited company (the “ Conversion ”). According to the report prepared and issued by an
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Independent Third Party auditor, on January 17, 2023, the total net asset value of our Company
as of August 31, 2022 was RMB873,940,500, of which (i) RMB125,000,000 was converted
into Shares with par value of RMB1 per Share, which were subscribed by all the then
Shareholders in proportion to their respective equity interests in our Company immediately
before the Conversion; and (ii) the remaining amount of approximately RMB748,940,500 was
converted into capital reserve.
The Conversion was completed on February 10, 2023. Upon completion of the
Conversion and as at the Latest Practicable Date, the registered capital of our Company
increased to RMB125,000,000, and our shareholding structure is as detailed in
“—Capitalization” below.
PRE-IPO EMPLOYEE INCENTIVE SCHEME
In December 2020, in recognition of the contributions of our management and employees
and to incentivize them to further promote our development, we adopted the Pre-IPO Employee
Incentive Scheme, which was further amended in November 2021 and November 2022. As of
the date of this Prospectus, all Shares subject to the Pre-IPO Employee Incentive Scheme were
granted to, vested in, and subscribed for by the participants. No further awards will be granted
under the Pre-IPO Employee Incentive Scheme following the Listing.
As of the date of this Prospectus, our Employee Incentive Platform, Hangzhou Xiyong
was held by Ms. Li, its sole general partner, as to approximately 0.60%, with the remaining
partnership interests being held by 42 limited partners of Hangzhou Xiyong, namely (i) Ms.
Cheng Tao (our executive Director and Chief Business Officer, holding 30.00% partnership
interests), (ii) Mr. Wu Haigang (࡝our Supervisor, holding 6.00% partnership interests),
(iii) Ms. Fu Hongying (ߵߎour Supervisor, holding 3.96% partnership interests), (iv) Ms.
Y an Xiya ( ᕙఃԭ) (our Supervisor, holding 2.60% partnership interests), and (v) Mr. Li
Congyan (֧a supervisor of Chinese Peptide and the spouse of Ms. Li, holding 1.00%
partnership interests), and (vi) 36 other employees and a former employee, who are not the
Directors, Supervisors, senior management or connected persons of our Company (holding
approximately 55.84% partnership interests of Hangzhou Xiyong in aggregate, with their
respective partnership interests less than 3%).
As of the date of this Prospectus, our other Employee Incentive Platform, Hangzhou
Y uanxi was held by Ms. Li, its sole general partner, as to 18.00%, with the remaining
partnership interests being held by 42 limited partners of Hangzhou Y uanxi, namely (i) Mr. Wu
Haigang (࡝our Supervisor, holding 3.89% partnership interests, (ii) Ms. Y an Xiya ( ᕙ
ఃԭ), our Supervisor, holding 7.20% partnership interests, (iii) Mr. Li Congyan (֧a
supervisor of Chinese Peptide, and the spouse of Ms. Li, holding 1.00% partnership interests,
(iv) Ms. Li Mingmei (ૠ), our executive Director and secretary to the Board, holding
9.73% partnership interests, (v) Mr. Xu Weiqun (ਃ໊), our senior management member and
finance director of our Company, holding 1.75% partnership interests, and (vi) 36 other
employees and a consultant of the Group, who are not the Directors, Supervisors, senior
management or connected persons of our Company (holding approximately 58.42% partnership
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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interests of Hangzhou Y uanxi in aggregate, with their respective interests no more than 10%).
Each of the limited partners of Hangzhou Xiyong and Hangzhou Y uanxi is entitled to
participate in the profit distribution and to receive economic benefits of the Shares held by
Hangzhou Xiyong and Hangzhou Y uanxi.
As of the Latest Practicable Date, Hangzhou Xiyong and Hangzhou Y uanxi owned
approximately 4.11% and 4.11% of the issued Shares. For further details of the Pre-IPO
Employee Incentive Scheme and our Employee Incentive Platforms, see “Statutory and
General Information—Pre-IPO Employee Incentive Scheme” in Appendix IV to this
Prospectus.
MAJOR ACQUISITIONS, DISPOSALS AND MERGERS
Save as disclosed in this Prospectus, we had not conducted any major acquisitions,
disposals or mergers that we consider to be material to us during the Track Record Period and
up to the Latest Practicable Date.
REASONS FOR THE LISTING
Our Company is seeking a listing of its H Shares on the Stock Exchange in order to raise
further capital for the development and expansion of our Company’s business, to strengthen
our Company’s working capital and further raise our business profile and global presence. For
further details of our future plans, please refer to the section headed “Future Plans and Use of
Proceeds.”
PRE-IPO INVESTMENTS
Overview
Convertible Bonds
On December 18, 2020, the Company entered into a convertible bonds investment
agreement with Hangzhou Heda New Pharmaceutical V enture Capital Partnership (Limited
Partnership) (ψձ༺อᔼᖹ௴ุҳ༟ΥྫΆุ(Υྫ)) (“ Hangzhou Heda Xinyiyao ”),
pursuant to which, (i) the Company issued convertible bonds (the “ 2020 Convertible Bonds ”)
to Hangzhou Heda Xinyiyao for a total principal amount of RMB100 million and for a period
of 12 months, and (ii) if the Company underwent financing other than the issuance of
convertible bonds with a total financing amount of no less than RMB100 million, Hangzhou
Heda Xinyiyao would be entitled to convert the convertible bonds it held to the Company’s
registered capital at a conversion price equivalent to 85% of the price per Company’s registered
capital of such round of financing.
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On December 8, 2021, pursuant to the 2021 Investment Agreement (as defined below),
Hangzhou Heda Xinyiyao converted the 2020 Convertible Bonds to an aggregate of
RMB5,228,758.17 increased registered capital of the Company, at a total conversion price of
RMB100 million (the “ 2020 CB Conversion ”). Upon completion of the 2020 CB Conversion,
the 2020 Convertible Bonds have been fully redeemed and converted to registered capital of
the Company.
In December 2020, the Company issued three-year 7.0% convertible bonds in an
aggregate principal amount of RMB300 million to Hangzhou Heda Kontide V enture Capital
Partnership (Limited Partnership) (ψձ༺ੰ㹻௴ุҳ༟ΥྫΆุ(Υྫ), “ Heda
Kontide ”), an Independent Third Party. On March 29, 2024, the Company had repaid the
principal amount of RMB300 million for such convertible bonds in full.
2021 Share Transfer
On December 8, 2021, pursuant to the 2021 Investment Agreement (as defined below),
Qikang International transferred RMB7,017,543.86 registered capital of the Company to
Quzhou Haibang Taida V enture Capital Partnership (Limited Partnership) ( ᜪψऎԞ㹻༺௴ุ
ҳ༟ΥྫΆุ(Υྫ)) (“ Haibang Taida ”), at a cash consideration of RMB150 million
(“2021 Share Transfer ”), which was determined based on arm’s-length negotiation amongst
parties.
2021 Share Subscription
On December 8, 2021, the Company, its then Shareholders, Lanxi Puhua Shuoyang
Xiaxing V enture Investment Partnership (Limited Partnership) (௴ุҳ༟Υ
ྫΆุ(Υྫ)) (“ Puhua Xiaxing ”), Hangzhou Haibang Boyuan V enture Capital
Partnership (Limited Partnership) (ψऎԞ௹๕௴ุҳ༟ΥྫΆุ(Υྫ)) (“ Haibang
Boyuan ”), Shenzhen Minhe Investment Co., Ltd.* (ʮ̡)( “ Shenzhen
Minhe Investment ”), Nanjing Outao Information Technology Co., Ltd.* (Ҧ
ʮ̡)( “ Nanjing Outao ”), Hainan Jingsheng Yiqi Private Equity Investment Fund
Partnership (Limited Partnership) (ΥྫΆุ(Υྫ))
(“Hainan Jingsheng Yiqi ”), Hangzhou Heda Xinyiyao and Haibang Taida entered into an
investment agreement (the “ 2021 Investment Agreement ”), pursuant to which, among others,
each of Puhua Xiaxing, Haibang Boyuan, Shenzhen Minhe Investment, Nanjing Outao and
Hainan Jingsheng Yiqi subscribed RMB8,888,888.89, RMB2,222,222.22, RMB2,666,666.67,
RMB1,333,333.33 and RMB1,333,333.33 of the increased registered capital of the Company
(the “ Share Subscription ”), at consideration of RMB200 million, RMB50 million, RMB60
million, RMB30 million and RMB30 million, respectively. The consideration was determined
based on arm’s-length negotiation amongst parties.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Principal terms of the Pre-IPO Investments
The below table summarizes the principal terms of the Pre-IPO Investments.
2020 Convertible
Bonds
2021 Share
Transfer
2021 Share
Subscription
Amount of registered capital
involved
RMB5,228,758.17 RMB7,017,543.86 RMB16,444,444.44
Amount of consideration paid RMB100 million RMB150 million RMB370 million
Date of the agreement December 8, 2020 December 8, 2021 December 8, 2021
Date of full settlement of
consideration
December 18, 2020 April 11, 2022 December 15, 2021
Cost per Share paid under the Pre-
IPO Investments
(approximation)
(1)
RMB19.13 RMB21.38 RMB22.50
Discount to the Offer Price
(approximation) (2)
29.10% 20.76% 16.60%
Basis of determination of the
valuation and consideration
The determination of the valuation and consideration is based on
arm’s-length negotiations between the relevant parties with
reference to among others, (i) the timing and market conditions of
the investments/equity transfers, (ii) the operation of our business,
the financial performance of our Group in the previous year, and (iii)
the prospects of our business.
Lock-up Period Pursuant to the applicable PRC law, within the 12 months following
the Listing Date, the Shares issued by the Company prior to the
Global Offering (including the Shares held by the Pre-IPO Investors
immediately prior to the Global Offering) are restricted from
transfer.
Use of proceeds from the Pre-IPO
Investments
We utilized the proceeds from the 2020 Convertible Bonds and 2021
Share Subscription for the operations and general working capital
purpose of our Group. As of the Latest Practicable Date, the funds
raised from the 2020 Convertible Bonds and 2021 Share
Subscription had been fully utilized. Our Company did not receive
any proceeds from the 2021 Share Transfer.
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2020 Convertible
Bonds
2021 Share
Transfer
2021 Share
Subscription
Strategic benefits to our Company
brought by the Pre-IPO Investors
We believed that our Group could benefit from the additional funds
raised from the Pre-IPO Investments, to strengthen our operation in
peptide facility expansion, scale our international operation, enrich
our business line, and recruit more key talent employees. In addition,
with the introduction of the Pre-IPO Investors, the management team
of our Group has become increasingly experienced in corporate
governance enhancement and shareholder communications.
Notes:
(1) The cost per Share is calculated based on the amount of investment made by the relevant Pre-IPO Investors
and the number of Shares of the Company held by them corresponding to the investment.
(2) The discount to the H Share Offer Price is calculated based on the assumption that the Offer Price is HK$29.50
per H Share, being the mid-point of the indicative Offer Price range.
Special Rights of the Pre-IPO Investors
The Pre-IPO Investors have been granted certain special rights in relation to our
Company, including among others, pre-emptive rights, co-sale right, redemption rights,
anti-dilution right, drag-along right, information rights, liquidation preferences, director
appointment rights and protective provisions.
Pursuant to the special rights termination agreement dated May 14, 2024 entered into
amongst all current Shareholders, all shareholders’ special rights granted shall be automatically
terminated upon Listing, except redemption rights which shall be automatically terminated
upon the first submission of listing application to the Stock Exchange, and automatically and
immediately reinstated and restored upon the earlier of (i) the date when the Company’s listing
application is rejected, returned, or voluntarily withdrawn by the Company; or (ii) if the Listing
has not taken place by December 31, 2026.
Compliance with Pre-IPO Investment Guidance
On the basis that (i) the consideration for the Pre-IPO Investments was settled more than
28 clear days before the first filing of the listing application by our Company with the Stock
Exchange, and (ii) the special rights granted to the Pre-IPO Investors have been terminated as
disclosed in “– Special Rights of the Pre-IPO Investors” above, the Joint Sponsors confirm that
the Pre-IPO Investments are in compliance with the Pre-IPO Investment Guidance as defined
in Chapter 4.2 of the Guide for New Listing Applicants.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Information about our Pre-IPO Investors
Set out below are details of each of our Pre-IPO Investors as of the Latest Practicable
Date. To the best knowledge of our Directors, save as disclosed below, each of our Pre-IPO
Investors and their respective ultimate beneficial owner (where applicable) is an Independent
Third Party.
Puhua Xiaxing (
݋ࢀ)
Puhua Xiaxing is a limited partnership established in the PRC, and is principally engaged
in the equity investments with assets under management of approximately RMB200 million as
of December 31, 2023. The general partner of Puhua Xiaxing is Hangzhou Puyang Investment
Management Co., Ltd. (ʮ̡), which is held by Mr. Wu Yihui ( юɓฯ),
our non-executive Director as to 70%, and Ningbo Fushiyangqu Business Management
Partnership (Limited Partnership)* (΃՟Άุ၍ଣΥྫΆุ(Υྫ)) as to 30%. To
the best knowledge and information of the Company, all these above mentioned entities and
individuals are Independent Third Parties.
Puhua Xiaxing has 14 limited partners, among which (i) Hangzhou Puhua Shuoyang
Equity Investment Partnership (Limited Partnership) (ᛆҳ༟ΥྫΆุ(Υ
ྫ)) holds approximately 26.33% partnership interests therein, (ii) Zhongtian Holding Group
Co., Ltd. (ʮ̡) holds approximately 24.22% partnership interests therein,
and (iii) each of the other 12 limited partners holds less than 20% partnership interests therein.
To the best knowledge and information of the Company, all these above mentioned entities and
individuals are Independent Third Parties.
Haibang Entities
Haibang Taida (
ऎԞ㹻༺): Haibang Taida is a limited partnership established in the
PRC, and is principally engaged in the equity investments with assets under management of
approximately RMB155 million as of December 31, 2023. The general partner of Haibang
Taida is Hangzhou Haibang Fenghua Investment Management Co., Ltd.* (ψऎԞ㋘ശҳ༟
ʮ̡)( “ Haibang Fenghua ”). Haibang Taida has 23 limited partners, each holding
less than 20% partnership interests therein. Haibang Fenghua is controlled by Zhejiang
Fenghua Investment Management Co., Ltd.* (ʮ̡) as to 75%, a
company ultimately controlled as to 82% by Mr. Xie Li ( ᑽɢ), (a) directly through his 46%
interests, and (b) indirectly as to 36% through Hangzhou Fenghe Investment Partnership
(Limited Partnership)ψ㋘ձҳ༟ΥྫΆุ(Υྫ), a limited partnership where he is the
general partner, holding 66.67% partnership interests therein. To the best knowledge and
information of the Company, all these above mentioned entities and individuals are
Independent Third Parties.
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Haibang Boyuan ( ऎԞ௹๕): Haibang Boyuan is a limited partnership established in the
PRC, and is principally engaged in the equity investments with assets under management of
approximately RMB630 million as of December 31, 2023. The general partner of Haibang
Boyuan is Haibang Fenghua. Save for Haibang Fenghua being a general partner, Haibang
Boyuan has five limited partners, among which Hangzhou Haibang Xinrun V enture Capital
Partnership (Limited Partnership) (ψऎԞ㒥ᆗ௴ุҳ༟ΥྫΆุ(Υྫ)) (“ Haibang
Xinrun ”) holds approximately 49.05% partnership interests therein and each of the other four
limited partners holds less than 20% partnership interests therein. The general partner of
Haibang Xinrun is Haibang Fenghua. Save for Quzhou Qujiang District State Capital
Investment Group Co., Ltd.* (ʮ̡) as a limited partner,
holding approximately 32% of its partnership interests, none of the other 30 limited partners
(including Dr. Xu) holds more than 5% partnership interests therein.
Haibang Fenghua is controlled by Zhejiang Fenghua Investment Management Co., Ltd.*
(ʮ̡) as to 75%, a company ultimately controlled as to 82% by Mr. Xie
Li ( ᑽɢ), (a) directly through his 46% interests, and (b) indirectly as to 36% through
Hangzhou Fenghe Investment Partnership (Limited Partnership) (ψ㋘ձҳ༟ΥྫΆุ(ࠢ
Υྫ)), a limited partnership where he is the general partner, holding 66.67% partnership
interests therein. To the best knowledge and information of the Company, save as disclosed, all
these above mentioned entities and individuals are Independent Third Parties.
Hangzhou Heda Xinyiyao (
ψձ༺อᔼᖹ)
Hangzhou Heda Xinyiyao is a limited partnership established in the PRC, and is
principally engaged in the equity investments with assets under management of approximately
RMB300 million as of December 31, 2023. Hangzhou Heda Xinyiyao is owned as to (i) 0.1%
by Hangzhou Heda Investment Management Co., Ltd. (ʮ̡)
(“Hangzhou Heda Investment Management ”), as its general partner, (ii) 80% by Hangyin
Wealth Management Co., Ltd. (ப΂ʮ̡), as its limited partner, which is a
wholly-owned subsidiary of the Bank of Hangzhou Co., Ltd., a company listed on the Shanghai
Stock Exchange (stock code: 600926.SS), and (iii) 19.9% by Hangzhou Heda Industry Fund
Investment Co., Ltd. (ʮ̡), as its limited partner. Hangzhou Heda
Investment Management is controlled by Hangzhou Heda Financial Services Group Co., Ltd.
(ʮ̡). Both of Hangzhou Heda Financial Services Group Co., Ltd.
(ʮ̡) and Hangzhou Heda Industry Fund Investment Co., Ltd. (؄
ʮ̡) are wholly owned by Hangzhou Qiantang New Area Industrial
Development Group Co., Ltd.* (ʮ̡), a company ultimately
controlled by Hangzhou Qiantang New Area Management Committee* (ψ፺෨อਜ၍ଣ։
ึ) as to 90% of its equity interests. To the best knowledge and information of the Company,
all these above mentioned entities and individuals are Independent Third Parties.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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Shenzhen Minhe Investment ( ଉέ͏ձҳ༟)
Shenzhen Minhe Investment is a limited liability company established in the PRC in
2011, with registered capital of RMB20 million, and is principally engaged in the equity
investments. Shenzhen Minhe Investment is wholly owned by Mr. Zhang Qiangming ( ੵ੶ჼ),
who is a former Director, voluntarily resigned in May 2024, without any dispute of
disagreement with the Board.
Nanjing Outao (
ԯᆄௗ)
Nanjing Outao is a limited liability company established in the PRC in 2011, with
registered capital of RMB7 million, and is principally engaged in the development of computer
software and information services. It has made investments in companies operating in the
healthcare or pharmaceutical industries. Nanjing Outao is held by Mr. Huang Tongge ( රҕ—)
as to 68.93%, an Independent Third Party, and by five other individual shareholders, each of
whom holds less than 20% shareholding therein and is an Independent Third Party.
Hainan Jingsheng Yiqi (
౻ସɓಂ)
Hainan Jingsheng Yiqi is a limited partnership established in the PRC, and is principally
engaged in the equity investments with assets under management of approximately RMB400
million as of December 31, 2023. The general partner of Hainan Jingsheng Yiqi is Hainan
Jingsheng Private Equity Fund Management Partnership (Limited Partnership) (౻ସӷ෍
၍ଣΥྫΆุ(Υྫ)) (“ Jingsheng PE ”). Hainan Jingsheng Yiqi has nine limited
partners, among which (i) Mr. Zhou Zhuohe ( մՙձ) holds approximately 23.05% partnership
interests therein, (ii) Shanghai Junshi Biosciences Co., Ltd. (ࠢ
ʮ̡) holds approximately 23.05% partnership interests therein, and (iii) each of the seven
other limited partners holds less than 20% partnership interests therein. Jingsheng PE is
controlled by Mr. Sun Qiming (׼To the best knowledge and information of the
Company, all these above mentioned entities and individuals are Independent Third Parties.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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CAPITALIZATION
Our Company has filed with CSRC for H-share full circulation to convert certain Unlisted
Shares into H Shares upon the Listing. The conversion of Unlisted Shares into H Shares will
involve an aggregate of 68,201,112 Unlisted Shares, representing approximately 46.38% of
total issued share capital of the Company as of the Latest Practicable Date. The table below is
a summary of the capitalization of our Company as of the Latest Practicable Date immediately
prior to and upon completion of the Global Offering and the conversion of Unlisted Shares into
H Shares:
Shareholders
As of the Latest
Practicable Date
Immediately upon Completion of the
Global Offering
Number
of Unlisted
Shares held
Ownership
percentage
(approximation)
Number
of Unlisted
Shares held
Number
of H Shares
held
Ownership
percentage of
total issued
Shares
(approximation)
Controlling Shareholders
Qikang International 59,567,875 47.65% 47,654,300 11,913,575 42.01%
Hangzhou Haiding 15,410,125 12.33% 15,410,125 – 10.87%
Ms. Li 10,273,375 8.22% 5,136,687 5,136,688 7.24%
Hangzhou Xiyong 5,136,750 4.11% – 5,136,750 3.62%
Hangzhou Y uanxi 5,136,750 4.11% – 5,136,750 3.62%
Pre-IPO Investors
Puhua Xiaxing 9,131,875 7.31% – 9,131,875 6.44%
Haibang Taida 7,209,375 5.77% – 7,209,375 5.08%
Hangzhou Heda
Xinyiyao 5,371,750 4.30% – 5,371,750 3.79%
Shenzhen Minhe
Investment 2,739,625 2.19% – 2,739,625 1.93%
Haibang Boyuan 2,283,000 1.83% – 2,283,000 1.61%
Nanjing Outao 1,369,750 1.10% – 1,369,750 0.97%
Hainan Jingsheng Yiqi 1,369,750 1.10% – 1,369,750 0.97%
Investors taking part in
the Global Offering – – – 16,800,000 11.85%
Total 125,000,000 100.00% 68,201,112 73,598,888 100.00%
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PUBLIC FLOAT
Following the conversion of the Unlisted Shares into H Shares and upon completion of
the Global Offering:
(a) a total of 104,656,750 Shares held by our core connected persons will not be counted
towards the public float, representing 73.81% of our share capital in aggregate upon
the completion of Global Offering, including (i) Qikang International (a close
associate of Dr. Xu, our executive Director), (ii) Ms. Li (our executive Director),
(iii) Hangzhou Haiding, Hangzhou Xiyong and Hangzhou Y uanxi (each being a
close associate of Ms. Li, our executive Director), and (iv) Puhua Xiaxing (a close
associate of Mr. Wu Yihui, our non-executive Director);
(b) a total of 20,343,250 Unlisted Shares held by the remaining existing Shareholders
will be converted into H Shares and listed on the Stock Exchange, and therefore will
be counted as part of the public float, representing 14.35% of our share capital in
aggregate upon the completion of Global Offering. None of such remaining existing
Shareholders is accustomed to take instructions from any of our core connected
persons in relation to the acquisition, disposal, voting or other disposition of their
Shares and none of their acquisition of the Shares were financed directly or
indirectly by our core connected person; and
(c) a total of 16,800,000 H Shares issued pursuant to the Global Offering will be
counted as part of the public float, representing 11.85% of our share capital upon the
completion of Global Offering in aggregate.
Based on the above, it is expected that immediately following completion of the Global
Offering, a total of 37,143,250 Shares, representing 26.19% of our total share capital upon the
completion of the Global Offering will be counted as part of the public float. As a result, over
25% of our Company’s total issued Shares will be held by the public upon completion of the
Global Offering as required under Rule 8.08(1)(a) of the Listing Rules.
Immediately following the completion of the Global Offering, a total of 125,000,000
Shares held by the existing Shareholders, representing 88.15% of our total share capital upon
the completion of the Global Offering, will be subject to a lock-up period of 12 months
following the Listing Date. For details, see “—Pre-IPO Investments—Principal Terms of the
Pre-IPO Investments” above. In addition, based on the low-end of the Offer Price range of
HK$28.40, a total of 2,763,800 H Shares to be subscribed by the cornerstone investors,
particulars of which are set out in “Cornerstone Investors,” will be subject to disposal
restrictions during the period of six months from and including the Listing Date. Accordingly,
based on the low-end of the Offer Price range of HK$28.40, upon the completion of the Global
Offering, it is expected that at least 14,036,200 Shares, representing approximately 9.90% of
our total share capital upon the completion of the Global Offering, will not be subject to any
disposal restrictions (whether under contract, the Listing Rules, applicable laws or otherwise)
at the time of the Listing.
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CORPORATE STRUCTURE IMMEDIATELY BEFORE COMPLETION OF THE
GLOBAL OFFERING
The chart below sets out the shareholding structure of our Group immediately before
completion of the Global Offering:
Healthy Angel Ms. Li
Qikang
International
Hangzhou
Haiding(1)
Hangzhou
Xiyong(2)
The Company
(PRC)
Hangzhou
Yuanxi(2)
Haibang
Entities(3)
100%
Dr. Xu
100%
ACAPBIO Limited
(Hong Kong)
Gaodi Investment
(PRC)
CPC Scientific, Inc.
(US)
Incalinia Inc.
(US)
100% 100%
100% 100%
Yuanxi Pharmaceutical
(PRC)
Chinese Peptide
(PRC)
100% 100%
47.65% 8.22% 12.33%
99% GP GP
4.11% 4.11% 7.60%
Other Pre-IPO
Investors(4)
8.67%
Puhua
Xiaxing
7.31%
Notes:
(1) Hangzhou Haiding was held as to 99% by Ms. Li, and 1% by her spouse, Mr. Li Congyan (֧a
supervisor of Chinese Peptide.
(2) Hangzhou Xiyong and Hangzhou Y uanxi are our Employee Incentive Platforms. Ms. Li is responsible for the
management of Hangzhou Xiyong and Hangzhou Y uanxi and exercising the voting rights attaching to the
Shares held by Hangzhou Xiyong and Hangzhou Y uanxi, in accordance with the partnership agreements
entered into among the general and limited partners of Hangzhou Xiyong and Hangzhou Y uanxi, respectively.
For details, see “—Pre-IPO Employee Incentive Scheme” in this section.
(3) Haibang Entities include Haibang Taida and Haibang Boyuan. For more information, see “—Information about
our Pre-IPO Investors” in this section.
(4) Other Pre-IPO Investors include Hangzhou Heda Xinyiyao (ψձ༺อᔼᖹ), Shenzhen Minhe Investment ( ଉ
έ͏ձҳ༟), Hainan Jingsheng Yiqi (౻ସɓಂ) and Nanjing Outao (ԯᆄௗ). For more information, see
“—Information about our Pre-IPO Investors” in this section.
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CORPORATE STRUCTURE IMMEDIATELY FOLLOWING COMPLETION OF THE
GLOBAL OFFERING
The chart below sets out the shareholding structure of our Group immediately following
completion of the Global Offering:
Healthy Angel Ms. Li
Qikang
International
Hangzhou
Haiding(1)
Hangzhou
Xiyong(2)
The Company
(PRC)
Hangzhou
Yuanxi(2)
Haibang
Entities(3)
Puhua
Xiaxing
100%
Dr. Xu
100%
ACAPBIO Limited
(Hong Kong)
Gaodi Investment
(PRC)
CPC Scientific, Inc.
(US)
Incalinia Inc.
(US)
100% 100%
100% 100%
Yuanxi Pharmaceutical
(PRC)
Chinese Peptide
(PRC)
100% 100%
42.01% 7.24% 10.87%
99% GP GP
3.62% 3.62% 6.69% 6.44%
Other Pre-IPO
Investors(4)
Other Public
Shareholders(5)
7.65% 11.85%
Notes:
Notes (1) to (4): See the details contained in the preceding pages.
Note (5): These shares will count towards the public float upon Listing. See “—Public Float” in this section.
Remark
Other than a total of 68,201,112 Unlisted Shares, representing approximately 48.10% of our total issued Shares
upon the Listing held by Qikang International, Hangzhou Haiding and Ms. Li which will not be converted into H
Shares, a total of 56,798,888 Unlisted Shares held by existing Shareholders will be converted into H Shares under
the “full circulation” application, upon completion of the Listing.
HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
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OVERVIEW
We are the third largest peptide-focused CRDMO worldwide in terms of sales revenue
with a market share of 1.5% in 2023, according to Frost & Sullivan. We are also one of the most
comprehensive peptide-focused CRDMO globally, offering full-cycle services ranging from
early-stage discovery, preclinical research and clinical development to commercial-stage
production. The top two players in the global peptide-focused CRDMO market accounted for
23.8% of the market share and the remainder of the market is fragmented and each of the top
three to six players (including our Company) only accounted for around 1% of the market share
in 2023.
We mainly provide (i) CRO services, namely peptide NCE discovery synthesis; and (ii)
CDMO services, namely peptide CMC development and commercial manufacturing. Our
services primarily focus on providing customers with APIs rather than drug products. We have
established stable customer relationships and service footprint in over 50 countries, including
major markets such as China, the United States, Japan, Europe, South Korea and Australia. We
provide our customers with peptide drug development, production, and CMC filing support
services that meet regulatory requirements in major markets worldwide.
The following chart sets forth details of our end-to-end services across the peptide drug
lifecycle.
Peptide CRDMO
Research Discovery Preclinical Phase I Phase II Phase III Commercial
CRO CDMO
Discovery Synthesis CMC Development Commercial Manufacturing
• Synthesize peptide NCE
for drug discovery research
• Non-GMP production
with numerous purity
standards
• Synthesize molecules from
simple to complex structures
and challenging molecules
• Develop and scale up(1) API manufacturing processes
to ensure stability and control
• Develop analytical methods and quality standards to ensure
API quality
• Prepare CMC dossier to support global regulatory filing
END-TO-END SERVICES ACROSS THE PEPTIDE DRUG LIFECYCLE
• Offer generic drug development
• Offer GMP manufacturing of API for
NCE
•
• Offer GMP manufacturing of API for
generic drugs
Provide on-going stability studies
after commercialization
• Validate the manufacturing processes with parameters to confirm
that the processes can be performed and reproduced
Notes:
(1) Scale up refers to the process of transforming a lab-scale product into a commercially viable product by
developing a reliable manufacturing technique. This technique is designed to accommodate various output
volumes, which are typically larger than lab-scale.
(2) Our services primarily focus on providing customers with APIs rather than drug products. We do not produce
drug products that are directly used in clinical trials or commercially.
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Market Opportunities
The global TIDES drug market is expected to experience significant growth over the next
few years, primarily driven by the distinct advantages of TIDES drugs. Compared with
chemical drugs, peptide drugs generally exhibit better tolerance, greater specificity and
enhanced bioactivity. Relative to biologics, peptide drugs often have improved stability and
lower R&D costs, while demonstrating comparable side effect profile, half-life, tolerance,
specificity and bioactivity. The following chart shows comparative analysis of chemical drugs,
biologics and peptide drugs.
Comparative Analysis of Chemical Drugs, Biologics and Peptide Drugs
Stability Side
Effects Half-life Tolerance Immuno
-genicity Specificity Bioactivity R&D Costs
Chemical
Drugs
Peptides
Drugs
Biologics
Influence Level: MidHigh Low
Source: Frost & Sullivan analysis, Literature research
The significant growth opportunities of the global peptide drug market is also driven by
unmet demand for chronic disease therapies, increasing number of approvals for peptide
therapies, development of new formulations, production technology and capacity, as well as
favorable policies worldwide. The global peptide drug market grew from US$60.7 billion in
2018 to US$89.5 billion in 2023 as measured by sales revenue, representing a CAGR of 8.1%,
and is expected to further grow to US$261.2 billion in 2032, representing a CAGR of 12.6%.
One particular type of blockbuster peptide drug, namely GLP-1 drug products, has
changed the landscape for the treatment of metabolic diseases, and is expected to be a key
driver for the growth of the global peptide drug market. The global GLP-1 drug market grew
from US$9.3 billion in 2018 to US$38.9 billion in 2023 as measured by sales revenue,
representing a CAGR of 33.2%, and is expected to further grow to US$129.9 billion in 2032,
representing a CAGR of 14.3%.
The market opportunities in the global peptide drug market is expected to drive the
growth of the global peptide CRDMO market. Production of peptide drugs is complicated and
involves highly technical processes. The rapid historical and forecasted growth in the global
peptide drug market has led to the accumulation of significant demand for expertise, know-how
and human resources on peptide synthesis, development, and cGMP-compliant production
which we have accumulated over our two decades of operations and many pharmaceutical and
biotech companies do not have. These companies therefore need to engage third-party service
providers for such synthesis, development and production services. According to Frost &
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Sullivan, the percentage of pharmaceutical and biotech companies that outsourced clinical
development and production to third-party service providers reached approximately 70% in the
global peptide drug market in 2023, higher than approximately 30%-40% for biologics. This
reliance on third-party service providers has led to the rapid growth of the global peptide
CRDMO market, which increased from US$1.6 billion in 2018 to US$3.1 billion in 2023 as
measured by sales revenue, representing a CAGR of 14.8%, and is expected to further grow to
US$18.8 billion in 2032, representing a CAGR of 22.0%.
Many such third-party service providers lack the ability to perform full-cycle CRDMO
services for peptide drug products. Pharmaceutical and biotech companies therefore often have
to engage multiple service providers. Our integrated and comprehensive CRDMO service
capabilities, on the other hand, provide customers with full-cycle solutions covering the entire
peptide drug development cycle from discovery and preclinical research to clinical
development and commercial-stage production, saving them the hassle and costs of having to
engage multiple service providers along different development stages.
Besides peptide drugs, the global oligonucleotide drug market also experienced and is
expected to further experience significant growth. According to Frost & Sullivan, 18
oligonucleotide drugs had obtained regulatory approvals globally between January 1, 2015 and
the Latest Practicable Date. The global oligonucleotide drug market grew from US$2.0 billion
in 2018 to US$4.5 billion in 2023 as measured by sales revenue, representing a CAGR of
16.9%, and is expected to further grow to US$45.9 billion in 2032, representing a CAGR of
29.6%.
The global oligonucleotide CDMO market is also expected to experience significant
growth, driven by increasing demand for oligonucleotide drugs, complexity of oligonucleotide
manufacturing, technology advancements in oligonucleotide synthesis, the outsourcing
strategies of oligonucleotide pharmaceutical and biotech companies and the expected growth
in the global oligonucleotide drug market. The global oligonucleotide CDMO market by sales
revenue grew from US$0.5 billion in 2018 to US$2.3 billion in 2023, representing a CAGR of
33.8%, and is expected to further grow to US$18.4 billion in 2032, representing a CAGR of
26.0%.
Our Pipeline
We have built an extensive project pipeline. As of December 31, 2022 and 2023, we had
168 and 198 ongoing NCE CDMO projects, and 87 and 119 ongoing generic drug CDMO
projects, respectively. As of December 31, 2024, our project pipeline included 1,217 ongoing
CRO projects, and 332 ongoing CDMO projects (including 319 CDMO projects at CMC
development stage and 13 commercial stage projects). The 332 ongoing CDMO projects
included 204 NCE projects (including 103 preclinical stage projects, 70 Phase I trial projects,
21 Phase II trial projects, seven Phase III trial projects, and three commercial stage projects)
and 128 generic drug projects (including 118 development stage projects and 10 commercial
stage projects). In particular, we had nine NCE GLP-1 molecule development projects as of the
Latest Practicable Date.
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Our Production Capabilities
We have established production technology and large-scale production capabilities for
peptide drugs. We believe our expertise in peptide drug design, modification, synthesis and
production control exceeds those of our competitors. Our highly efficient operational system
centers around innovation and efficiency. Through carefully crafted production protocols and
optimized supply chain management, we have achieved advantages in terms of production
efficiency, cost, and product quality of peptide APIs. We have extensive peptide API
production capacity equipped with a comprehensive digitized system of project research and
innovation. Our cGMP-compliant production facility in Hangzhou has a total gross floor area
of over 15,000 square meters, with an annual peptide API production capacity of 500kg and
per-batch peptide production capacity of 20kg, capable of handling multiple peptide 100kg
level peptide orders.
OUR COMPETITIVE STRENGTHS
Peptide CRDMO, Providing Full-cycle Services with Quality, Efficiency and Cost
Advantages
We are the third largest peptide-focused CRDMO worldwide in terms of sales revenue in
2023, according to Frost & Sullivan. We are also one of the most comprehensive peptide-
focused CRDMO globally, offering full-cycle services ranging from early-stage discovery,
preclinical research and clinical development to commercial-stage production. We believe such
full-cycle service capabilities provide us strong competitive advantages and market position as
we are able to offer customers full-cycle solutions so that they do not need to engage multiple
outsourcing service providers, avoiding overly complex and inefficient communications and
logistics coordination, testing and quality control issues, potential delays and supply chain
disruptions. Our full-cycle service capabilities also ensure seamless collaboration among
different teams from discovery and preclinical research all the way to cGMP clinical
production and commercial-stage large-scale production, substantially reducing the
inefficiency and lack of accountability that may arise during the inter-company transfer
handover process at different stages.
We mainly provide (i) CRO services, namely peptide NCE discovery synthesis; and (ii)
CDMO services, namely peptide CMC development and commercial manufacturing. Our
services primarily focus on providing customers with APIs rather than drug products. As of the
Latest Practicable Date, we have established stable customer relationships and service footprint
in over 50 countries, including major markets such as China, the United States, Japan, Europe,
South Korea and Australia. We provide our customers with peptide drug development,
production, and CMC filing support services that meet regulatory requirements in major
markets worldwide. Our quality control system throughout the peptide drug production process
has undergone and consistently passed inspections and supervisions by customers and various
regulatory authorities worldwide, which serves as a testimony to our rigorous quality control
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measures over production equipment, techniques and products. Our decades of experience and
collaborations with global customers have helped us establish our brand and reputation in the
global market as well as profound relationships with a large number of global pharmaceutical
and biotech companies.
Our market position is also attributable to our project management capabilities, which
enable us to provide full-cycle service with high quality, efficiency and low cost.
 Quality . Over our two decades of business operations and accumulated experience,
we have amassed over hundreds of thousands of synthesis and purification records
of peptide molecules, covering nearly all aspects of peptide synthesis and
modification, including the latest global advancements in peptide chemical synthesis
and modification techniques. Our expertise in the techniques and know-how of
peptide drug design, modification and synthesis safeguards the high quality of our
products and services. At the drug synthesis stage, we enjoy an average success rate
of synthesizing new molecules of over 99.95%. We had passed every quality
inspections by customers over the past five years. We passed GMP inspections from
various regulatory authorities and quality organizations between our inception and
the Latest Practicable Date, including five FDA on-site GMP inspections, and three
on-site and remote GMP inspections from other overseas regulatory authorities
including MFDS, EMA and TGA; over the past five years, we had also passed nine
on-site GMP or registration inspection from the NMPA. We had also obtained the
ISO9001 and ISO13485 certifications. During the Track Record Period and up to the
Latest Practicable Date, we have not experienced any product recall due to quality
issues.
 Efficiency. Our services across the entire peptide drug development cycle are highly
efficient. We share our master production plan across all departments involved in
production, ensuring smooth and seamless process transfers. At the clinical
development and large-scale production stage, we have put in place various
measures to ensure timely product deliveries to customers. We maintain frequent
communications with customers and set key milestones and delivery schedules
which are subject to periodic assessments and adjustments. We also closely follow
up with customers to collect their feedback on each batch of delivery. Our average
delivery time of products at the clinical development stage ranges from four to 12
weeks, depending on the complexity and requirements of each project, and our
average delivery time for products under large-scale production ranges from eight to
12 weeks, depending on the sequence of peptide.
 Cost advantage. Our highly efficient operational system enables us to reduce costs.
We primarily work with suppliers based in China to lower freight costs, and leverage
our market presence to maintain a strong bargaining power when sourcing raw
materials. Our facility is also equipped with advanced peptide synthesis capabilities
that enable us to optimize performance and achieve cost-effective production.
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Well Positioned to Capture Opportunities in the Sizable and Fast-growing Global TIDES
Drug Market, Particularly the GLP-1 Drug Market
As a CRDMO focusing on peptide, we are well positioned to capture the huge
opportunities in the sizable global TIDES drug market with rapid growth potential, leveraging
our competitive advantages including, advanced TIDES drug synthesis techniques, cGMP and
large-scale production capabilities, efficiency in operations and cost, large talent pool, decades
of expertise and experience, outstanding reputation, robust intellectual property portfolio and
new drug development capabilities.
Peptide Drug Market
Compared to small molecule drugs and antibodies, peptide drugs demonstrate some
unique benefits: it has higher activity and stronger selectivity than small molecule drugs, and
better stability and lower immunogenicity than antibodies, according to Frost & Sullivan.
Compared to biologics, peptide drugs have clearly defined structures, CMC and impurity levels
which are governed by regulations in a number of markets. Peptide drugs are applied in the
treatment of a wide range of indications, including urinary system, respiratory system,
digestive system, endocrine system, central nervous system, cardiovascular diseases,
musculoskeletal system diseases, and viral and bacterial infections. Driven by these
advantages, the peptide drug market has reached a development inflection point. According to
Frost & Sullivan, the number of non-insulin peptide drugs that had obtained regulatory
approvals globally reached 76 between January 1, 2015 and the Latest Practicable Date. The
global peptide drug market grew from US$60.7 billion in 2018 to US$89.5 billion in 2023 as
measured by sales revenue, representing a CAGR of 8.1%, and is expected to further grow to
US$261.2 billion in 2032, representing a CAGR of 12.6%, according to Frost & Sullivan.
GLP-1 Drug Market
One particular type of peptide drug product, namely GLP-1, has become a major driver
for the rapid growth of the global peptide drug market. We have established business
relationships and contracts with a number of pharmaceutical and biotech companies in the field
of GLP-1 drug development and manufacturing. We had nine NCE GLP-1 molecule
development projects with seven customers in developing oral and/or injectable GLP-1
molecule products as of the Latest Practicable Date.
GLP-1 drug products account for a market share of 43.5% in 2023 within the global
peptide drug market in terms of sales revenue, which is expected to further grow to 49.7% in
2032, according to Frost & Sullivan. Several GLP-1 drugs, such as semaglutide, tirzepatide and
dulaglutide, have experienced significant growth in sales volume since they were approved. In
addition to growth in market size and demand, the global GLP-1 industry has also witnessed
the rise of new peptide formulation technologies. Oral GLP-1 drugs are expected to experience
significant growth in market size and market share, and represent the most active field of the
near future peptide drug development. Oral formulations typically require higher amounts of
APIs compared to injectable formulations, and enjoy the advantages of ease of administration
and high patient acceptance and compliance, which in turn lead to higher demand for APIs.
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We believe the expansion and penetration of GLP-1 drug products is also expected to lead
to economies of scale and lower overall costs of production, such as prices of amino acids,
which in turn leads to wider adoption of GLP-1 drugs, forming a virtuous cycle.
Market Opportunities for us as a Peptide-focused CRDMO
The production of peptide drugs is complicated and involves highly technical processes.
The rapid historical and forecasted growth in the global peptide drug market has led to the
accumulation of significant demand for expertise, know-how and human resources on peptide
synthesis, development, and cGMP-compliant production which we have accumulated over our
two decades of operations and many pharmaceutical and biotech companies do not have. These
companies therefore need to engage third-party service providers for such synthesis,
development and production services. According to Frost & Sullivan, the percentage of
pharmaceutical and biotech companies that outsourced clinical development and production to
third-party service providers reached approximately 70% in the global peptide drug market in
2023, higher than 30%-40% for biologics. This reliance on third-party service providers has led
to the rapid growth of the global peptide CRDMO market, which increased from US$1.6 billion
in 2018 to US$3.1 billion in 2023 as measured by sales revenue, representing a CAGR of
14.8%, and is expected to further grow to US$18.8 billion in 2032, representing a CAGR of
22.0%, according to Frost & Sullivan.
Many such third-party service providers lack the ability to perform full-cycle CRDMO
services for peptide drug products. Pharmaceutical and biotech companies therefore often have
to engage multiple service providers. Our integrated and comprehensive CRDMO service
capabilities, on the other hand, provide customers with full-cycle solutions covering the entire
peptide drug development cycle from discovery and preclinical research to clinical
development and commercial-stage production, saving them the hassle and costs of having to
engage multiple service providers along different development stages.
Oligonucleotide and Other Products in the TIDES Drug Market
Oligonucleotide drugs share many similarities with peptide drugs in terms of drug
synthesis techniques, pharmacology and drug development. Key types of oligonucleotide drugs
include ASO, siRNA, shRNA, dsRNA, piRNA, PMO, and CpG oligonucleotides and aptamer,
among others.
According to Frost & Sullivan, 18 oligonucleotide drugs had obtained regulatory
approvals globally between January 1, 2015 and the Latest Practicable Date. The global
oligonucleotide drug market grew significantly from approximately US$2.0 billion in 2018 to
approximately US$4.5 billion in 2023 as measured by sales revenue, representing a CAGR of
16.9%, and is expected to further grow to US$45.9 billion in 2032, representing a CAGR of
29.6%.
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Sustainable Growth Driven by a Diverse and Loyal Customer Base and a Stable and
Extensive Project Pipeline, Both in NCE and Generic Drugs
With over two decades of operations and accumulated expertise in the peptide CRDMO
industry, we have built a diverse and loyal customer base as well as stable and extensive project
pipeline of both NCE and generic drugs to continuously support our business growth.
Our customer base includes early-stage biotech companies, commercial-stage multi-
national pharmaceutical and biotech companies, generic drug manufacturers, and top tier
research institutions. As of the Latest Practicable Date, we had served over 1,000 customers
worldwide. In particular, we have been serving as a stable business partner for 20
internationally renowned research institutions. As of the Latest Practicable Date, we had
established stable customer relationships and service footprint in over 50 countries. We offer
these customers full-cycle solutions to help them navigate the diversified regulations on
peptide synthesis, development and production, and assist them with regulatory submissions
and approvals in major markets where our customers operate or intend to commence sales,
including major markets such as China, the United States, Japan, Europe, South Korea and
Australia.
During the Track Record Period, we had 664, 711 and 707 customers in 2022, 2023 and
2024, respectively. Our customers also demonstrate high loyalty and stickiness. The average
length of our relationships with our five largest customers in each year during the Track Record
Period is approximately 10 years; many customers choose to retain us for multiple stages as
their peptide products progress toward commercialization and large-scale production. We
achieved CDMO customer retention rate of 95.4% and 95.4% in 2022 and 2023, respectively.
Our CDMO customer retention rate during the Track Record Period is calculated as the number
of customers in a given year that remained as our customers until December 31, 2024, divided
by the number of all customers in the given year. This is largely due to our deep understanding
of our customers’ unique requirements and our initiatives to help customers reduce cost and
improve product competitiveness. We closely monitor the progress and key performance
indicators of each of our customers’ projects to ensure we timely allocate sufficient human
resources and equipment to incubate projects with the potential to advance into
commercialization and large-scale production. Our dedication to customized and high-quality
CRDMO services has led to frequent repurchases by existing customers who decide to engage
us in their new development projects.
For example, we have been a CRDMO service provider to 3D Matrix Japan, Ltd. since
2006. We collaborated with 3D Matrix Japan, Ltd. to address product purification challenges
of its hemostatic gel product, which enabled it to advance its product through clinical
development, receive regulatory approvals in Europe and Japan, and subsequently received
regulatory approvals in the United States. Such product enjoys several advantages in safety,
convenience, and ease of indication expansion, and has significant market potential. Using our
Impurity Screening
TM platform, we helped another customer MYR Pharmaceuticals (later
acquired by Gilead Sciences, Inc.), identify and eliminate impurities concealed in the main
peak of bulevirtide (the API of Hepcludex), an issue which had previously stalled their product
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development processes. This significantly improved customer’s product quality, enhanced
stability, and increased product yields. The Hepcludex product was conditionally approved in
the European Medicines Agency territories in 2020, then received positive opinion
recommending it for full marketing authorization from the committee for medicinal products
for human use in Europe in May 2023. We are currently collaborating with Gilead Sciences,
Inc. (after its acquisition of MYR pharmaceuticals) in obtaining other regulatory approvals for
the bulevirtide product.
We have built an extensive project pipeline. As of December 31, 2024, our project
pipeline included 1,217 ongoing CRO projects and 332 ongoing CDMO projects. We have
strategically focused on the pipeline buildup in the field of GLP-1. As of the Latest Practicable
Date, we had nine NCE GLP-1 molecule development projects with seven customers in
developing oral and/or injectable GLP-1 molecule products.
Peptide Production Technology and Large-Scale Production Capabilities, Creating High
Entry Barriers
The large-scale production of peptide products faces a variety of unique challenges
compared to small molecules or antibodies, such as synthesis complexity, control of impurities,
and difficulty of isolation. Our production enjoys a wide ranges of advantages to address these
challenges through globally production technologies, tight control of impurity levels, rapid
production speed, extensive overall and per-batch production capacity, advanced production
equipment, and effective cost control. These advantages have created a high entry barrier for
our services.
We have established production technology and large-scale production capabilities for
peptide APIs. Our expertise in peptide drug design, modification, synthesis and production
control exceeds those of our competitors. Over the past two decades, we had accumulated
hundreds of thousands of records on peptide molecule synthesis and purification, covering
nearly all fields of peptide synthesis and the latest peptide chemical synthesis and modification
technologies. Our team is highly adept in several advanced synthesis methods for complex and
long peptide chains, such as solid-phase synthesis, liquid-phase synthesis, hybrid solid-liquid-
phase synthesis, and fragment condensation synthesis. We have also mastered the technologies
of super-long peptide chain synthesis, cyclopeptide synthesis, difficult sequence peptide
synthesis, diversified peptide modification and multiple disulfide bond peptides. Our advanced
purification and separation technologies and experiences, such as our Impurity Screening
TM
platform, help us in the large-scale peptide production, especially those with complex
sequences and modifications, as well as in promptly delivering high-quality peptide to our
customers.
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Our highly efficient operational system centers around innovation and efficiency.
Through carefully crafted production protocols and optimized supply chain management, we
have achieved advantages in terms of production efficiency, cost, and product quality.
 Production protocols. Our production protocols are constantly refined with the
involvement and input of personnel along the production process, which we believe
contribute to efficient cross-department communications and transparent monitoring
of the production workflow, and therefore improve accuracy rate and work
efficiency.
 Supply chain management . We make detailed and concrete procurement plans during
the annual budgeting process based on our sales target and production plans for the
next year. This provides more clarity on our procurement needs and enables us to
mitigate risks of supply shortages. Such detailed procurement plans also help us
obtain favorable pricing through bulk purchases to reduce our production costs.
We have extensive peptide API production capacity equipped with a comprehensive
digitized system of project research and innovation. Our cGMP-compliant production facility
in Hangzhou has a total gross floor area of over 15,000 square meters, with an annual API
production capacity of 500kg and per-batch production capacity of 20kg, capable of handling
multiple 100kg level peptide orders. We also have two production facilities under construction
in the United States and Hangzhou, with a total gross floor area of approximately 4,000 and
26,700 square meters, respectively, which we believe will significant increase our overall
production capacity. Our production facilities are equipped with advanced production
equipment supplied by top-tier equipment suppliers such as Jianbang, Hanbang, Cytiva,
Agilent, Waters and Thermo Fisher.
Leveraging our production advantages, including advanced technologies, rapid
production speed, extensive capacity, and advanced equipment, we have established first-
mover advantage and entry barriers in GLP-1 CRDMO services, and have established a rich
project pipeline, including a wide range of injectable and/or oral GLP-1 projects from
preclinical toxicity research to clinical development and commercial production.
Experienced Management Team and an Efficient and Pragmatic Execution Team
Our core leadership team members have profound academic background and diverse
professional experience in the peptide industry. Collectively, they have accumulated vast
industry resources and connections, as well as management and entrepreneurial experiences
which are necessary to lead our Company to future growth and success. Dr. Xu Qi is our
chairwoman of the Board, executive Director and Chief Executive Officer. Dr. Xu joined
Chinese Peptide in June 2003 and has served as our Chief Executive Officer since June 2020.
She obtained a master’s degree and a doctorate degree from Bethune Medical University
(currently known as School of Basic Medicine of Jilin University). Prior to joining Chinese
Peptide, Dr. Xu served as the director of new drug R&D at Changchun GeneScience
Pharmaceuticals Co., Ltd. from 1999 to 2001. Dr. Li Xiang is an executive Director and has
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been a Director since January 2022. Dr. Li founded Chinese Peptide in August 2001, and has
been its chairman since its establishment. Dr. Li co-founded Zhejiang Handing Pharmaceutical
Co., Ltd. in April 2021. He also worked as the Chief Operating Officer of American Peptide
Company, which he co-founded, from June 1989 to April 2004. He has accumulated rich
experience in managing and operating multinational enterprises, and has built extensive
industry connections. With over 30 years of experience in research, production, strategy and
management in the peptide industry, Dr. Li has made significant contribution to our growth and
enjoys wide industry recognition. Our executive Director and Chief Business Officer, Ms.
Cheng Tao, has extensive professional experience in the global CRDMO industry. Ms. Cheng
joined us in 2012, and has been leading the global expansion of our business operations. Prior
to joining our Company, Ms. Cheng served as a senior vice president at Asymchem
Laboratories Inc. Leveraging the accumulated industry experience and insights of our senior
leadership team, we have achieved significant growth in business scale and coverage.
In addition, our success is also largely attributable to our experienced business teams
consisting of talent with solid background and extensive industry experience. We have also
assembled a talented team in the United States, such as our Chief Technology Officer, Mr. Tong
Xiaohe, Chief Solution Officer Dr. Liu Baosheng, VP of Business Operations Mr. Godkin
David, among others. Our business development team in the United States has an average of
over ten years of industry experience. Leveraging the latest industry analysis and insight
prepared by our marketing team, as well as their local resources and deep understanding of
customer needs, our business development team in the United States are well versed in
preparing service proposals that highlight our service capabilities and how such capabilities
can cater to the customers’ distinct needs.
To ensure a sustainable pipeline of talent with rich industry experience and management
and execution skills, we actively recruit qualified candidates worldwide and offer
comprehensive training programs and promotion opportunities to current employees. We also
hold and participate in various TIDES industry conferences to improve our ability to get
acquainted with and attract top industry talent. As of the Latest Practicable Date, our R&D
team had 62 employees, nearly 38.7% of whom held a master’s degree or above; our
manufacturing department had 243 employees, 74% of whom held a bachelor’s degree or above
mainly in chemical engineering or medicine.
We believe our experienced core leadership team, business teams and employee talent
pool serve as the cornerstone of our ability to maintain our competitive advantages and achieve
sustainable long-term growth.
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OUR STRATEGIES
Solidify Our Position in the Global Peptide-focused CRDMO Industry, and Enhance the
Stability and Reliability of Our Global Peptide-focused CRDMO Service Capacity
To further solidify our position in the global peptide-focused CRDMO field, we intend to
enhance the stability and reliability of our service capacity worldwide by establishing new
production lines and facilities in more countries. Specifically, we intend to focus on the
following regions for our growth in production capacity:
 United States . We plan to complete the renovation of our Rocklin Site in the first
half of 2025, which we expect will increase our annual production capacity by
approximately 100-300kg. The Rocklin Site will focus on GMP-compliant
production of peptide APIs intended for the North America market, which we
believe will ensure stability of our supplies to the local customers.
 China . We plan to further enhance the utilization of our existing production facility
in Qiantang, Hangzhou. We are constructing our new Hangzhou Biopharma Town
Site, which will be dedicated to research, formulation development, and pilot
production of peptide and oligonucleotide APIs. In addition to our current facility in
Qiantang, Hangzhou and new facility in Hangzhou Biopharma Town Site, we plan
to construct or acquire new production facilities in China in the next two or three
years, which we expect will increase our annual production capacity by
approximately 1,000kg to 2,000kg. This expansion is in response to existing and
potentially growing customer demand for GLP-1 products, which are approaching
advanced stages of clinical and commercial production.
We have adopted a “going with the compound” strategy where we match production
capacity with orders at hand and the development trends of the industry. Many of our current
projects are expected to enter into commercial production stage over the next three to five
years, driven by (i) the expected commercialization of several of our pipeline projects; (ii)
growth in market demand for peptide drug products (particularly GLP-1 products); and (iii) the
expected prevalence of generic drugs such as semaglutide (with the expiration dates of patents
related thereto falling in 2032, 2026, 2031, and 2031 in United States, China, Japan, and
Europe, respectively) and tirzepatide (with the expiration dates of patents related thereto
falling in 2036, 2040, and 2037 in United States, Japan, and Europe, respectively) after the
relevant patents expire. We believe our global production expansion plans will position us well
to capture the above trends and opportunities.
We also intend to expand our services along the TIDES industry value chain. We plan to
further build facilities and develop technologies for the formulation development capabilities.
We also initiated and intend to further expand our research projects on green chemistry in
preparation for energy conservation and emission reduction as we enhance our production
capacity going forward, which we believe fulfills our ESG responsibilities.
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Strengthen our R&D Capabilities and Further Advance Our Technologies to Maintain
Our Competitive Advantages
We plan to focus our R&D efforts on developing the following areas of technologies:
 Peptide drug CMC and manufacturing platform. We intend to conduct further CMC
research on new TIDES related drugs, including GLP-1, PDC, RDC and POC drugs.
Specifically, we intend to develop and streamline analytical and rapid manufacturing
technologies on oral GLP-1RA drugs for indications such as diabetes and obesity in
response to large expected market demand.
 Semi-recombinant technology . Driven by an increase in demand for GLP-1 drugs
and increasing needs for cost control, we intend to enhance our R&D on
semi-recombinant technology combining chemical and biological synthesis in order
to reduce cost.
 Special and complex API development and production . Peptide compounds are
becoming increasingly complex. The side chain complex modification (use of
unusual amino acids and cyclic structures) brings additional challenges to efficient
production. We intend to enhance our research into the production techniques of
special and complex amino acid APIs and related quality standards, as well as
further establish and enlarge capabilities for large-scale API development to satisfy
the expected increase in demand and reduce supply chain and delivery risks.
 Automated production . We plan to continuously enhance the automated production
process. Enhanced automation during the production process is expected to reduce
quality risk, increase production efficiency, and improve our competitiveness.
Further Build Our Global Sales Network to Expand Our Customer Base
We plan to establish sales and after-sales service presence in more regions to enrich our
operations overseas and expand our customer base. We intend to adopt a dual-level sales team
structure, assigning regional customer relationship managers alongside business development
personnel who are responsible for developing new customers and nurturing customer
relationships to better align our sales activities with corporate strategies and goals while
improving our service quality.
Currently, our customers are primarily based in North America and China. We plan to
enhance our customer penetration in more regions, focusing on European and Asian countries
besides China. We intend to maintain our long-term relationships with existing customers and
follow up on the development of their pipeline drugs in order to obtain more projects from
them. We will stay ahead of our customers’ evolving needs by continuing to offer and expand
our CRDMO services in the field of GLP-1 drugs, considering its huge growth potential. We
also intend to closely monitor the development trends of PDC, RDC, POC and other peptide
drug products to stay on top of the competition and explore new market opportunities.
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Strategically Grow Our Oligonucleotide CDMO Business and Diversify Our Service
Portfolio
Oligonucleotide drugs have become one of the top development priorities in the global
pharmaceutical industry. Oligonucleotide drug products share many similarities with peptide
drug products in terms of drug synthesis techniques, pharmacology and drug development.
Leveraging our deep and long-standing experience in the global peptide industry, we are
well-positioned to ride the industry tailwind of oligonucleotide drugs. Our established
production capacity, production technologies, rigorous quality control system and global
compliance quality system will enable us to provide high quality CDMO services in the
oligonucleotide field with cost advantages and high efficiency. We believe our existing diverse
customer base of over 1,000 customers as of the Latest Practicable Date have provided us solid
customer foundation to grow our oligonucleotide business. We plan to enhance our integrated
oligonucleotide service platform to cover preclinical research, design, synthesis, clinical
development and commercial-stage production.
Continue to Attract, Retain and Develop Talent
Our leadership and management team and our dedicated talent base in science,
technology, business development and business operations are crucial to our ability to develop
new service capabilities, maintain and improve service quality, and retain existing and attract
new customers. We intend to continue to recruit, retain and develop qualified employees to
carry out our development strategies and capture the growth opportunities in the global TIDES
industry. We plan to continue to implement, refine, and expand our employee professional
development programs to ensure our employees stay ahead of latest developments in
technology, customer demands, and regulatory requirements in the TIDES industry. In addition,
we intend to more efficiently allocate human resources to different types of projects to make
sure our employees can work on their fields of expertise and interest, and on projects that boost
their own credentials. We believe such measures will effectively help attract and retain top
talent, who we believe will significantly contribute to our sustainable growth within the
industry.
OUR BUSINESS MODEL
We are the third largest peptide-focused CRDMO worldwide in terms of sales revenue in
2023, according to Frost & Sullivan. We are also one of the most comprehensive peptide-
focused CRDMO globally, offering full-cycle services ranging from early-stage discovery,
preclinical research and clinical development to commercial-stage production. We have built
an extensive project pipeline. Our services primarily focus on providing customers with APIs
rather than drug products. In particular, we mainly provide (i) CRO services, namely peptide
NCE discovery synthesis; and (ii) CDMO services, namely peptide CMC development and
commercial manufacturing. Our customers conduct further steps, such as formulations, to mix
the APIs with excipients to create the final dosage forms of drug products, such as tablets,
capsules, or injections. During this process, our customers determine the appropriate dosage
form, route of administration, and formulation to ensure the drug’s stability, controlled release,
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and effectiveness, and then use the final drug products for their clinical trials or commercial
sales. We have established stable customer relationships and service footprint in over 50
countries, including major markets such as China, the United States, Japan, Europe, South
Korea, and Australia. We provide our customers with peptide drug development, production,
and CMC filing support services that meet regulatory requirements in major markets
worldwide.
Major projects refer to projects with revenue contribution over RMB5.0 million for each
year. We had six, nine and ten major projects in 2022, 2023 and 2024, respectively. The total
revenue contribution of the major projects is RMB138.5 million, RMB175.8 million and
RMB246.6 million in 2022, 2023 and 2024, respectively, accounting for 39.5%, 52.2%, and
55.8% of the total revenue during the same year, respectively.
We had a total of 1,492, 1,449 and 1,549 ongoing projects as of December 31, 2022, 2023
and 2024, respectively. The following table sets forth the beginning and ending balance of our
project numbers and changes in the number of projects for the years indicated.
For the Y ear Ended December 31,
2022 2023 2024
Number of ongoing projects at the
beginning of the period
Peptide
– CRO 2,090 1,237 1,129
– CDMO 207 255 317
Oligonucleotide
– CRO – – 3
Number of new projects secured
during the period
Peptide
– CRO 8,788 8,611 8,998
– CDMO 69 79 27
Oligonucleotide
– CRO – 6 32
Number of projects closed during
the period
(1)
Peptide
– CRO 9,641 8,719 8,935
– CDMO 21 17 12
Oligonucleotide
– CRO – 3 10
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For the Y ear Ended December 31,
2022 2023 2024
Number of ongoing projects at the
end of the period
Peptide
– CRO 1,237 1,129 1,192
– CDMO 255 317 332
Oligonucleotide
– CRO – 3 25
Notes:
(1) For CRO projects, a project is considered closed once the products have been delivered and payment has
been received. For CDMO projects, a project is considered closed once the project is completed or
discontinued.
Our CRO orders typically represent the earliest stages of research and development
activities by universities, research institutions, and commercial enterprises. Early-stage
research projects are by nature highly exploratory, and as a result, some of these engagements
may be intended as one-time engagements at the outset driven by specific research objectives,
and many of these projects do not progress to later stages. These projects also inherently carry
a high risk of failure at such early stage. Certain other CRO projects may foster ongoing
collaboration if the synthesized peptide becomes a potential clinical candidate. During the
Track Record Period, we provided services for four projects from four customers, covering
stages from CRO to CDMO during the CMC development stage. We also worked on five
projects from four customers, progressing from CDMO at CMC development stage to
commercial manufacturing stage.
For NCE CDMO projects at CMC development stage, the duration is typically 1-2 years,
1-4 years, 1-3 years, and 3-4 years for preclinical stage projects, Phase I trial projects, Phase
II trial projects, and Phase III trial projects, respectively. The total contract value ranges from
US$50.0 thousand (approximately RMB0.4 million) to US$1.6 million (approximately
RMB11.3 million), US$0.5 million (approximately RMB3.5 million) to US$4.0 million
(approximately RMB28.2 million), US$1.0 million (approximately RMB7.1 million) to
US$15.0 million (approximately RMB105.8 million), and US$5.0 million (approximately
RMB35.3 million) to US$35.0 million (approximately RMB246.8 million) for preclinical stage
projects, Phase I trial projects, Phase II trial projects, and Phase III trial projects, respectively.
All of our commercial-stage CDMO projects are still ongoing, and total contract value
and duration are expected to continue to change going forward. The customers for whom we
undertook these projects generally have in place master agreements without definitive overall
or minimum purchase amounts. Actual purchase amounts are determined through specific
purchase orders separately placed in the course of the projects. While these master agreements
typically have a validity period, the master agreements would also typically provide for a
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contract renewal mechanism for parties to extend the validity period in the original master
agreements. Therefore, the provisions in the master agreements signed at the beginning of these
commercial stage CDMO projects do not provide definitive contract value or duration of these
projects.
For generic drug projects, from development stage to market approval, the project
duration is typically 3-7 years and the total contract value ranges from approximately US$0.2
million (approximately RMB1.4 million) to US$3.0 million (approximately RMB21.2 million).
As of April 30, 2025, the amount of backlogs (representing confirmed purchase orders
with specified amount that had not been fulfilled or delivered) was RMB349.0 million,
consisting of RMB34.3 million and RMB314.7 million from CRO and CDMO services,
respectively.
Our Fee Models
Our service fee arrangement can be primarily divided into two types: (i) fee-for-service
model and (ii) full-time-equivalent model.
FFS Model
During the Track Record Period, we generated fee income substantially on an FFS basis
for the services provided. We generally receive payments in accordance with a pre-agreed
payment schedule specified in the contract or work order. The payment schedule sets out the
fees for services we provide at relevant discovery, development or manufacturing steps that fall
under the scope of work in the contract or work order. We determine the fee level based on the
scope of the services, the estimated costs and expenses, and the estimated amount of time to
deliver our services, among others. Our service contracts and work orders under the FFS model
typically include a detailed schedule that sets forth specifications of and anticipated time
required for completing each step as well as the corresponding payment. Revenue is recognized
at a point in time when we transfer control of the distinct services or products to our customer
upon (i) receipt for domestic customers; and (ii) delivery to designated carriers or locations for
overseas customers in accordance with applicable delivery terms in the FFS contracts.
In pricing our contracts, we evaluate factors such as market positioning, prices of
comparable services offered by our competitors, the success of the project, degree of saturation
of the market, market trends, complexity of the services required, costs of our services,
timeliness, and market trends. During the Track Record Period, under the FFS model, the
typical range of duration of peptide CRO and CDMO projects is approximately 1-4 weeks and
1-4 years, respectively. Based on the nature and specific considerations pertaining to a
particular project, the total service fees we charged for different projects varied broadly during
the Track Record Period: under the FFS model, for our CRO projects, the fee for each project
that we charged typically ranged from approximately RMB1.4 thousand to RMB14.1 thousand;
for our CDMO projects at CMC development stage, the fee for each project that we charged
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ranged from approximately RMB0.4 million to RMB246.8 million. Our CDMO projects at
commercial manufacturing stage are typically larger in sizes compared to CRO and CDMO
projects at CMC development stage because they involve provision of services at a larger scale
and for a longer time period.
FTE Model
We also generate income under the FTE model. During the Track Record Period, the FTE
model applied for the CRO service only. Under the FTE model, we allocate employees to our
customer’s projects at a fixed rate per employee per period of time. During this period of time,
the designated employees are dedicated to such customer’s project exclusively. Customers
simultaneously receive and consume benefits as services are performed. FTE billing is based
on the number of scientists and research technicians and the amount of time spent on a given
project, among other considerations. The term of our FTE contracts may range from several
months to multiple years and are subject to renewal. Therefore, the performance obligation of
FTE services is satisfied over time. During the Track Record Period, under the FTE model, the
fee for each CRO project that we charged ranged from approximately RMB3.5 thousand to
RMB35.3 thousand. For FTE model, revenue will be recognized over the service period. The
typical deliverables under FTE model is work hours of designated employees spent on projects
designated by a customer. Revenue is recognized over the service period of the designated
employees. If such projects are suspended, revenue is recognized based on their current stage
as determined through communications with customers.
The table below sets forth a breakdown of our revenue by fee model for the years
indicated:
Y ear Ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
FFS 331,576 94.5 326,803 97.1 425,322 96.2
FTE 17,981 5.1 9,550 2.8 16,551 3.7
Others 1,283
(1) 0.4 421 (2) 0.1 353 (2) 0.1
Total 350,840 100.0 336,774 100.0 442,226 100.0
Notes:
(1) Others in 2022 relate to (i) lease income; and (ii) revenue from sales of raw material. In March 2021,
we disposed of the entire equity interests of Prometheus Bio to Hangzhou Haiding. Despite this disposal,
one contract remained effective in 2022, under which we sold raw material to Prometheus Bio in 2022,
generating revenue. For further details of our disposal, please refer to the section headed “History,
Development and Corporate Structure.”
(2) Others in 2023 and 2024 relate to lease income.
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For details on our revenue recognition mechanism, please see the paragraph headed
“Financial Information—Material Accounting Policies, Judgments and Estimates”.
Payment Term
Under the FFS model, a contract or work order typically comprises a number of tasks,
each including several discovery, development and/or manufacturing steps. We bill our
customers by task and typically give our customers a credit term within 30-60 days. We
typically require our customers to make prepayments for the initiation of a task, a portion of
the corresponding payment upon the commencement of each task and the remaining payment
after we complete such task and meet the requirement of our customers. Under an FFS contract
or work order, we are typically required to deliver a CoA, in some cases technical laboratory
report. Upon the delivery of CoA or other deliverables requested by our customers as set forth
under the contracts, the relevant discovery, development or manufacturing step is deemed to be
completed and revenue is recognized.
Under the FTE model, we typically require the customer to make monthly payments for
services rendered with a credit term of 30 working days. We typically provide a base rate by
combining human resource cost, depreciation of equipment, cost of raw material and other
expenses. After accounting for our profit margin, we give our customers a quote of monthly or
yearly rate and, if accepted, enter into an agreement or a work order with them. We bill our
customers based on the actual time and number of employees we allocate to their relevant
projects. Under an FTE contract or work order, we are typically required to deliver a CoA
and/or other deliverables to the customer upon completion of each discovery milestone.
OUR SERVICES
Peptide CRDMO Services
During the Track Record Period, we derived 99.6%, 99.9% and 99.9% of our revenue
from peptide CRDMO services in 2022, 2023 and 2024. For details, please see “—Our Fee
Models.” Peptides, comprising 2-99 natural amino acids in living organisms, are organic
compounds with a molecular weight of less than 10,000 Da. Peptides represent a distinct class
of pharmaceutical compounds, molecularly poised between small molecules and proteins, yet
biochemically and therapeutically distinct from both. As intrinsic signaling molecules for many
physiological functions, peptides present an opportunity for therapeutic intervention that
closely mimics natural pathways and play a central role in numerous physiological processes
in the human body, including hormones, neurotransmitters, or in inflammatory responses.
Peptides have been investigated across the therapeutic spectrum, reflecting the potential utility
across a wide range of indications, particularly for chronic disorders such as metabolic,
oncology and inflammatory musculoskeletal diseases.
One particular type of peptide drug product, namely GLP-1, has become a major driver
for the rapid growth of the global peptide drug market. GLP-1 drug products accounted for a
market share of 43.5% in 2023 within the global peptide drug market in terms of sales revenue,
which is expected to further grow to 49.7% in 2032, according to Frost & Sullivan. Several
GLP-1 drugs, such as semaglutide, tirzepatide and dulaglutide, have experienced significant
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growth in sales volume since they were approved. In addition to growth in market size and
demand, the global GLP-1 industry has also witnessed the rise of new peptide formulation
technologies. Oral GLP-1 drugs are expected to experience significant growth in market size
and market share, and represent the most active field of future peptide drug development. Oral
formulations typically require higher amounts of APIs compared to injectable formulations,
and enjoy the advantages of ease of administration and high patient acceptance and
compliance, which in turn lead to higher demand for APIs.
We believe the expansion and penetration of GLP-1 drug is also expected to lead to
economies of scale and lower overall costs of production, such as prices of amino acids, which
in turn leads to wider adoption of GLP-1 drugs, forming a virtuous cycle. We have established
business relationships with a number of biotech companies and multinational pharmaceutical
companies in the field of GLP-1 drug development and manufacturing.
In addition, competition in the CRDMO market for GLP-1 products may intensify as the
growing GLP-1 market attracts more market entrants. We believe we enjoy the following
competitive advantages to compete in the GLP-1 CRDMO market. We have an established
experience in peptide API manufacturing, which enables us to deliver a wide range of
high-quality peptide API products. Our efficient production processes and stringent cost
control capabilities enable us to offer competitive pricing for customers. We strategically
locate our facilities in the United States and China to better capture growth opportunities
worldwide.
As of the Latest Practicable Date, we had successfully filed FDA drug master files for
semaglutide under development. We are also preparing for tirzepatide DMF, and expect to
make the submission in the first half of 2025. Additionally, we had nine NCE GLP-1 molecule
projects under development spanning from preclinical to clinical stage as of the Latest
Practicable Date.
Our project pipeline also includes a variety of peptide projects related to generic products
targeting indications such as diabetes, gastrointestinal tract diseases, and oncology. Besides
semaglutide, we had submitted DMF or obtained regulatory approvals for several other major
generic drug products, such as leuprorelin acetate, semaglutide and triptorelin acetate. In order
to satisfy more diverse customer needs, we also have other major generic products under
development, including tirzepatide, difelikefalin, triptorelin pamoate, and teduglutide, all of
which have patent protections.
The research, development, and manufacturing of peptides pose a unique set of challenges
that span various stages of the pharmaceutical pipeline. One significant challenge lies in the
inherent complexity of peptide structures, often characterized by intricate sequences and
specific folding patterns critical to their biological activity. Achieving optimal synthesis
efficiency while maintaining high purity levels represents a constant challenge, particularly
with longer or modified peptide sequences. Additionally, scalability can be an issue, as
translating laboratory-scale synthesis to large-scale production demands meticulous
optimization to ensure reproducibility. Balancing cost-effectiveness with the need for
sophisticated analytical techniques for quality control further compounds the challenges.
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Addressing these hurdles requires interdisciplinary collaboration, innovative technologies, and
a deep understanding of peptide chemistry to navigate the intricacies associated with bringing
peptide-based therapeutics from research concepts to successful commercial manufacturing.
We are a full-service peptide-focused CRDMO with vertically-integrated capabilities in
the development and manufacturing of peptide drugs. Given the complex and highly technical
nature of peptides which make the development and manufacturing of peptides a time
consuming and capital-intensive process, our tailored services are ideally suited for peptide
pharmaceutical and biotech companies seeking outsourcing solutions for their development
and manufacturing needs.
CRO Services
Discovery Synthesis
We possess extensive technologies in the field of peptide synthesis and modification,
demonstrating proficiency in various techniques. Our adeptness extends to employ diverse
protection strategies to obtain chemoselectivity in a subsequent chemical reaction, including
Fmoc, t-Boc, and Cbz.
In the realm of drug discovery, researchers face the daunting task of screening through
tens of thousands of molecules to pinpoint one or two promising preclinical candidates. A
paramount concern at this stage is the swift and cost-effective execution of drug screening. Our
focus lies in designing and synthesizing innovative peptides and related organic compounds
tailored to our clients’ specifications. In these types of engagements, clients typically provide
explicit details regarding the desired molecular structures or sequences of the products, along
with specific quality requirements for early-stage research. We conduct thorough feasibility
assessments based on the molecular sequences provided by our clients, meticulously outlining
the synthesis strategy for each product. Our team then orchestrates the synthesis process and
mobilizes our technical experts to prepare the products. Quality testing is rigorously conducted
in accordance with our clients’ specifications, ensuring that each product meets their standards
before final delivery is completed.
The following chart illustrates the operational flow from engagement to delivery for CRO
services:
• Customer provides
molecular sequence/
structure
• Customer provides
quality requirements
• Communicate to
identify customer
needs
• Feasibility study
evaluation
• Clarify the product
synthesis scheme
• Research grade
batches production
• Service contents
requested by other
customers
• Complete product
quality testing
according to the
quality agreement
• Provide materials
such as COA for
inspection
• Supply based upon
purchase order or
supply agreement
Enquiry&Evaluation ProcessEstablishment &
Product Synthesis Specifications OligonucleotideAPI)Supply
Discovery Synthesis
Final Products(e.g.Peptide and
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Over the past two decades, we had accumulated deep experience consisting of thousands
of records on peptide molecule synthesis and purification, covering nearly all fields of peptide
synthesis and the latest peptide chemical synthesis and modification technologies. Our team is
highly adept in several advanced synthesis methods for complex and long peptide chains, such
as solid-phase synthesis, liquid-phase synthesis, hybrid solid-liquid-phase synthesis, and
fragment condensation synthesis. We have also mastered the technologies of super-long peptide
chain synthesis, cyclopeptide synthesis, difficult sequence peptide synthesis, diversified
peptide modification and multiple disulfide bridge peptides. Our advanced purification and
separation technologies and experiences, such as our Impurity Screening
TM platform, help us
in the large-scale production of peptide products, especially those with complex sequences and
modifications, as well as in promptly delivering high-quality peptide products to our
customers. For details of our R&D technology, see “—Research and Development—R&D
Technology Platform” section below.
CDMO Services
Our peptide CDMO services encompass comprehensive support for non-GMP preclinical
manufacturing, Phase I, II and III clinical development, generic drug development and
commercial manufacturing. The regulatory approval and pre-commercialization development
pathway for generic drugs is typically different from the process of NCEs. Specifically, the
development process of NCEs typically includes preclinical studies, IND application, Phase I,
Phase II and Phase III trials and NDA submission. In contrast, many generic drugs can apply
for regulatory approval, such as ANDA, directly after the completion of analysis of reference
listed drug, process development, process validation, stability studies manufacturing, and
bioequivalence studies, without the need for additional clinical trials which are necessary for
NCEs. The following table sets forth detailed service scope of our CDMO service.
CDMO
Preclinical
Clinical Phases
Commercial
I
 II
 III
API Manufacturing
Process Development and
Validation
Analytical Development
Stability Studies
Regulatory Documents
Non-GMP Batch
Process Development
 Pilot Scale
Up
Process
Validation
Method Development
 Method Validation
Phase I CMC
Documentation
n
Phase II CMC
Documentation
C
n
Phase III CMC
Documentation
C
n
 DMF
Stability Studies
 Stability Studies
 On-going
Stability Studies
GMP Batch GMP Batch for
Commercialization
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The following charts illustrate the operational flow from engagement to delivery for
CDMO services.
Communication
and evaluation Signing of contracts Development and
production
Testing and release
for orders
• Product sequences/
structures provided by
clients
• Communication with
clients on requirements
for the project (cycle of
the project and quality
standards for the
product)
• Feasibility studies and
assessment
• Confirmation of
working plans for the
project (scope of
services, price, and
schedule)
• Quotation and
confirmation
• Signing of contracts
between us and clients
• Prepayments by clients
• Client to place working
orders to relevant
departments: R&D,
production, and quality
control
• Purchase, testing and
release of raw materials
required for production
Process development and
determination of process
parameters for synthesis,
cleavage, purification, and
lyophilization of products
Development and
determination of
analysis methods including
high performance liquid
chromatography,
mass spectrometry,
Karl Fischer titration,
and elemental analysis
Establishment and
determination of quality
standards, including
appearance inspection
standard, molecular
weight inspection
standard, and API purity
standard
• Quality control
department to conduct
testing for various
measurement relating
to quality standards
• Quality assurance
department to review
documents relating
to the production and
testing results
Service Processes for CDMO Projects
Collection ofpayment and shipping
• Collection of payment
in accordance with
terms of the contract
• Provide clients with
products (e.g. peptide
API) under working
orders or contracts
• Conduct API production
in accordance with
working orders
• Implementation of
requirements and services
as specified in the contract
(such as stability studies
and impurity research)
 CMC documentation for
IND/NDA/ANDA
submission
API Manufacturing
Equipped with cGMP facilities built according to international standards, we are capable
of developing large-scale API manufacturing processes that are cost-effective, environmentally
friendly and sustainable for long-term supply. We are able to seamlessly transfer API
manufacturing processes from laboratory into production and rapidly scale up the processes, to
support drug candidate selections and toxicology studies and clinical studies and meet
aggressive timelines required by our customers.
Our API manufacturing capabilities include:
 Design and development of new and existing synthetic routes, fit-for-purpose
optimization and scale-up of manufacturing from preclinical to NDA filings;
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 Lyophilization, precipitation and spray-dry of drug substance for process
development;
 Development of synthetic routes and scalable processes for complex peptide drug
substances;
 Definition and study of critical process parameters to support validation of
manufacturing processes for the cGMP or non-cGMP production of drug substances;
and
 Design and development of cost-effective, safe and environmentally friendly
synthetic routes for the commercial production of drug substances to kilograms
scales.
The following chart sets forth the peptide production flow and process.
Synthesis
Solid phase synthesis: according to the product sequence required by the customer,
each amino acid is dissolved, and then condensed onto the solid phase carrier in
sequence by use of a condensation agent.
Liquid phase synthesis: according to the product sequence required by the
customer, the amino acids are dissolved, and then a condensation agent is added to
connect them in sequence to produce a polypeptide chain, until a complete
polypeptide chain is produced.
Cutting
Purification
Freeze-drying
Packaging
Release Testing
Using certain reagents to separate the synthesized peptide from the solid phase
carrier, and remove the protective groups on the amino acids to form a crude peptide.
Using a high performance liquid chromatography or other technical means to purify
crude peptides to meet customer requirements.
Using a freeze dryer to extract the purified peptide from the solution to form
peptide powder.
Packing the freeze-dried peptide powder into the inner packaging material according
to the customer's needs, and then packaged externally.
Most of the peptide powder produced are tested according to the quality standards
approved by customers and released after passing the test.
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Process Development and V alidation
Our process development service focuses on the development of full-scale industrial
manufacturing processes for preclinical, clinical and commercial production, ensuring that
production can be achieved in a cost-effective and accelerated manner. Leveraging our team’s
significant technical and practical experience, we have developed highly specialized
technology to address the challenges inherent in efficiently manufacturing the complex peptide
product candidates. Our peptide synthesis and purification techniques develop robust processes
suitable for clinical development and process validation and commercial manufacturing. In the
production of peptides, different stages of the same batch, particularly synthesis and
purification, are typically carried out on separate production lines. Our process development
services are integrated with our analytics development and cGMP manufacturing of peptide
drug substances. Many of our manufacturing projects involve compounds that we developed
the scale-up methodology used in the process chemistry.
Throughout the process development, we deliver a scalable platform technology to
provide optimal peptide product quality and yield. We begin preliminary manufacturing
process design of peptide drug substances based on the peptide sequence and commercial
projection/indication from the customers, followed by comprehensive process development
and characterization using high-throughput technology and small-scale models. Process
confirmation is executed by gradually scaling up our production from gram in preclinical
studies, and then finally scaled up to tens to hundred kilograms for use in clinical trials and,
eventually, commercial production. At each manufacturing scale, we develop and conduct
measures to ensure that it is safe, efficacious, and consistent from one manufacturing batch to
another.
We rapidly develop phase-appropriate process from laboratory scale to large scale, which
can be transferred to production lines seamlessly. Our production team establishes appropriate
production equipment train based on the developed process and manufactures products in
compliance with cGMP practices to support clinical trials and assist our customers in
accelerating the drug development timetable.
Process validation ensures that we can consistently and reliably produce final products at
predetermined standards. In process validation, we follow the established process, use
materials procured from reliable vendors and manufacture through specifically designed
production equipment to produce drug substances with the desired quality. To generate
sufficient data for NDA filing, we produce at least three continuous batches of products
following the established process and analysis method. We measure and validate each stage of
the manufacturing process and monitor each product’s chemical, physical, and microbiological
characteristics, or critical quality characteristics, as well as various other process control
parameters, to ensure that the final product outputs remain within our customers’ quality
standards as well as other business objectives.
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Each process that we develop for our customers is transferred with an end-to-end process
assessment plan that evaluates and integrates development work, process conformance and
continuing verification. By performing an integrated assessment that goes beyond simply
inspecting conformance, demonstration lots or the final products, we can ensure that the
products and its process will remain consistent throughout the entire product lifecycle. We have
accumulated extensive knowledge to provide our customers an efficient and successful
regulatory filing, process validation, and ultimately commercial manufacture process.
Analytical Development
We use advanced equipment to develop sophisticated methods for analyzing and
characterizing peptides to meet the high regulatory requirements from global regulatory
agencies, such as the FDA, the EMA, the TGA and the NMPA. Our analytical team provides
comprehensive analytical testing support for process development and the manufacture of
peptide drug substances, such as peptide drug substances release testing, and stability test. Our
analytical team adheres to regulatory guidance on supply chain assurance for quality control.
The research process for APIs encompasses several key stages aimed at ensuring the
quality, safety, and efficacy of the final product. It begins with studying the quality of starting
materials and intermediates, followed by confirming the structural integrity through various
analytical techniques such as amino acid sequencing and peptide mapping. Subsequently,
comprehensive analyses are conducted to assess the quality of the API, including identifying
characteristics, analyzing impurities, and developing analytical methods. Standards for API
quality are then established, specifying limits for impurities and outlining strategies for
controlling genotoxic substances. Reference standards are created for comparison and
validation purposes, and research extends to evaluating packaging materials and containers.
Furthermore, studies delve into understanding factors that may influence API quality. Lastly,
long-term stability testing is performed to ensure product integrity over time, adhering to
internationally recognized guidelines such as those climatic conditions for stability studies
outlined in the ICH Q1 series. Overall, this rigorous research process forms the foundation for
developing safe and effective pharmaceutical products.
Stability Studies
Stability is a key attribute for drug molecules. We provide many types of stability study
services under room temperature, 2-8 degree, freeze temperature and also accelerated
conditions to support all phases of drug development. We can efficiently manage stability
studies and have the infrastructure to carry out these studies in full compliance with the cGMP
regulations. Our facilities include temperature and humidity controlled stability chambers that
maintain humidity and temperature with a backup system and redundancies for each critical
system to ensure uninterrupted maintenance of stability conditions throughout the study.
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We offer a full range of ICH stability conditions and provide total stability management.
We develop and validate stability-indicating methods for our customers, provide stability study
protocol, and produce stability report to support our customers’ needs for IND, NDA and
ANDA filings. We prepare and approve protocols to perform stability study under both
accelerated condition and long-term condition. Upon completion of analytical testing at each
time point, the results will be summarized in a stability report.
Upon the commercialization of drug candidates, ensuring the ongoing stability of API is
paramount to their efficacy and safety. We also specialize in providing comprehensive
on-going stability studies to support post-commercialization efforts. Through meticulous
monitoring and analysis, we assess the long-term stability and shelf-life of drug substance
under various environmental conditions. Leveraging our facilities and advanced analytical
techniques, we conduct stability testing to evaluate the physical, chemical, and microbiological
characteristics of the products over time. Our goal is to provide valuable insights into product
stability trends, enabling our clients to make informed decisions regarding product
formulation, packaging, and storage conditions. By maintaining product quality and
compliance with regulatory requirements, we help to ensure the continued success and integrity
of pharmaceutical products in the market.
Regulatory Documents
We have extensive expertise and experience with regulatory filings in the United States,
the European Union, China and other jurisdictions. We are proficient in the interpretation and
application of worldwide drug approval regulations. We pay close attention to changes between
clinical trials and NDA filings, as well as data integrity and manufacturing compliance during
NDA filings. As our business expands, we are proud to report a significant contribution to our
clients’ success in obtaining IND and NDA approvals.
CMC dossier preparation for IND application and NDA approval is a critical component
in the journey of bringing pharmaceutical products to market worldwide. As part of our
services, we are able to generate the complete CMC data package required for our customers’
regulatory filings as an extension of our ongoing process development services. Our regulatory
teams work closely with our customers to ensure alignment of regulatory filing strategies. In
addition, we employ our knowledge of scientific, business, and legal matters to ensure that
projects meet the expectations of the relevant regulatory bodies. Our strong communication,
cross-functional coordination, and experienced project management provide our customers
high-quality and integrated services that lead to regulatory compliance and approval.
Emerging Services: Oligonucleotide CDMO Services
With key technologies breakthroughs in delivery technology, oligonucleotide is becoming
a fast-growing drug modality. According to Frost & Sullivan, the global market of
oligonucleotide drugs, a novel type of chemical drug with significant growth potential, reached
US$4.5 billion in 2023, will continue to grow steadily in the coming years, and is expected to
reach US$45.9 billion by 2032.
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Leveraging our deep industry insights, established R&D and manufacturing capabilities,
we began to assemble a team and prepare production lines for oligonucleotide CDMO projects,
and promoted our oligonucleotide CDMO business to potential customers in 2021, which had
not generated revenue as of the Latest Practicable Date. Much like peptides, oligonucleotide
therapy demands expertise in solid-phase synthesis and protecting group chemistry. Our
downstream processing includes purification via chromatography, ultrafiltration/permeation,
precipitation, and lyophilization, following the same fundamental principles as peptide API
production.
We have capabilities in producing various types of oligonucleotides, including but not
limited to ASO, with various modification, such O-methoxyethyl, LNA and O-ethyl, siRNAs
with various modification, such as O-methylation, F, vinyl-phosphate and conjugates, PMO,
PNAs, miRNAs, aptamers, CpGs and decoys. Our expertise extends to various conjugation
techniques for oligonucleotides, including but not limited to POC, peptide-PMO conjugate,
CPP , CPP-PNA conjugate, Oligo-GalNAc, and Oligo-O-C16. As of the Latest Practicable Date,
we had completed 42 oligonucleotide CRO projects.
The following chart illustrates the details of our emerging oligonucleotide CDMO
services:
Oligonucleotide CDMO
Full Range of Chemistry, Manufacturing, and Control Development Services
• Synthesis of target oligo product (both NCEs or generic drugs), from simple to complex and challenging molecules
• API & advanced intermediate production (both non-GMP and GMP)
• Process development, pilot scale-up(1), process validation
• Analytical method development, quality standard establishment, stability study
• CMC dossier preparation to support global regulatory filing
Preclinical Phase I Phase II Phase III
CDMO
CMC Service for NCEs and Generic Drugs
Notes:
(1) Pilot scale-up refers to the process of transforming a lab-scale product into a commercially viable product by
developing a reliable manufacturing technique. This technique is designed to accommodate various output
volumes, which are typically larger than lab-scale.
(2) Our services primarily focus on providing customers with APIs rather than drug products. We do not produce
drug products that are directly used in clinical trials or commercially.
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Our Formulation Capabilities
Our formulation capabilities are a crucial component of our CDMO services. Drawing
from extensive expertise, our formulation team excels in formulation development, quality
research, pilot-scale process transfer, analytical method development, stability studies, and
document preparation for regulatory submissions. We offer comprehensive formulation
services to support our customers, in particular:
 we provide expertise in formulation process development, tailoring processes to
meet specific requirements and ensure optimal product outcomes.
 we assist in selecting, qualifying, and managing the most suitable CDMO for
formulation needs, overseeing the entire process from identification to ongoing
collaboration, including facilitating the transfer of formulation processes and
ensuring adherence to quality standards through signed quality agreements.
In addition to our current initiatives, we are embarking on research and development
efforts focused on oral solid formulations. This expansion reflects our commitment to
innovation and meeting the evolving needs of our customers and the market. By venturing into
oral solid formulations, we aim to broaden our product portfolio and offer enhanced solutions
that address diverse therapeutic requirements. We are upgrading our laboratory infrastructure
and leveraging our team’s proficiency in capsule and tablet research, positioning us to embark
on oral solid formulation projects tailored to emerging needs and market demand.
Formulation study and process development encompass the selection of dosage forms,
formulation study selection, and formulation process development. We select dosage forms by
carefully reviewing the specific clinical usage needs. Formulation study selections involves
selecting excipients based on the properties of the APIs and the characteristics of the dosage
form, aiming to enhance the stability of peptide drugs and prevent adverse interactions between
excipients and APIs. During process development, it is essential to fully understand the factors
which could cause instability in peptide drugs. In formulating the production process, efforts
should be made to avoid long-term or short-term instability of peptide drugs, such as the use
of pH regulators and pH shift, adsorption of containers and filters, and sterility assurance
levels.
Like APIs, we conduct comprehensive study on the quality of formulations using
advanced facilities and equipment to meet the requirements of global regulatory guidance. We
licensed in formulation technology from 3D Matrix Japan, Ltd. in China and further partnered
with 3D Matrix Japan, Ltd. on the formulation of PuraStat, an advanced absorbable hemostat
product for the Chinese market, showcasing our innovative capabilities in hemostatic agents.
Additionally, we collaborated with REIG JOFRE, a Spanish pharmaceutical company listed on
the Spanish Stock Exchange market, on the development and commercial exploitation of a
peptide, a specialized generic pharmaceutical injectable. These partnerships highlight our
expertise in formulation and commitment to advancing high-quality pharmaceutical solutions,
underscoring our ability to meet diverse medical needs.
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FACILITIES
Our Current Facilities
Our operations in China are conducted through our Qiantang Site, covering a vast cGMP
campus with approximately 26,000 square meters. Within Qiantang Site, we have constructed
a cGMP facility with GFA of over 15,000 square meters. Our production facilities adhere
rigorously to cGMP as mandated by major regulatory authorities globally, including the
NMPA, the FDA, the EMA, the TGA and MFDS. We have successfully passed FDA inspections
five times as of the Latest Practicable Date. Furthermore, our facility holds ISO9001 and
ISO13485 certifications for quality management systems.
As of the Latest Practicable Date, our Qiantang Site housed 19 peptide synthesis
production lines ranging from 20L to 1,000L, alongside 16 purification production lines. Our
Qiantang Site has an annual peptide API production capacity of 500kg and per-batch
production capacity of 20kg with utilization rate of 68.2% (average usage of total 19 synthesis
line and 16 purification lines) in 2023, capable of handling multiple 100kg level purchase
orders. The Qiantang Site also has the capacity to manufacture 1-17kg of oligonucleotides per
year.
Below are photographs of our Qiantang Site:
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The following table sets forth a summary of certain key information about our Qiantang
Site, as of the Latest Practicable Date. For more property information about this sites, see
“—Properties.”
Site
Site Area
(sq.m.)
Owned/
Leased Primary Use Capacity Utilization Rate (1)
Qiantang District,
Hangzhou
25,927
(parcel of
land),
20,275.4
(facility
GFA)
owned Peptide CRO and CDMO
services
Oligonucleotide CDMO
services
Peptide:
 19 peptide synthesis
production lines
ranging from 20L to
1,000L, alongside 16
purification
production lines
 annual API
production capacity
of 500kg and per-
batch production
capacity of 20kg
(3)
Oligonucleotide:
 1-17kg/year
 68.9% (2022)
 68.2% (2023)
 83.5% (2024)
(2)
(1) The utilization rate for a particular year is calculated by averaging the monthly utilization rates. The monthly
utilization rate is calculated by dividing the actual days in that month that our facilities are in operation to carry
out manufacturing projects for customers (including the days for actual manufacturing, the necessary clean-up
steps, equipment maintenance and validation, audits, production line sharing and suitability assessments, and
non-production days such as public holidays during which no new production arrangements are initiated)
divided by the total number of calendar days in the respective month.
(2) The utilization rate increased in 2024 because the projects we took on in 2024 were more complex and required
additional time to carry out manufacturing compared to those in 2022 and 2023.
(3) Our Qiantang Site has 16 purification lines. Each production line can complete between six to 12 production
batches annually. The largest production line has a maximum production capacity of 20kg per batch (calculated
using Semaglutide as an example). Actual production capacity per-batch may be slightly different for certain
products with higher process yields due to differences in molecule structure, chemistry reaction and process
and production technique. In total, the 16 purification production lines can provide an annual API production
capacity of 500kg.
(4) We allocate production lines to each new order by considering factors including the clinical stage of the
product, batch requirements, process characteristics, and toxicological assessment of share-line suitability
study, and then determine which production line will be used. The costs arising from the above processes are
typically included in customers’ fee payment under their service agreements. For commercial stage CDMO
projects, once a project has been allocated a production line per the above process, the customer would not
switch to other production lines during the entire lifecycle of the project.
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The current utilization rates for our key production lines have reached a very high level.
We define key production lines as (i) synthesis production lines with reactors at high
capacities; and (ii) purification lines with large diameters. According to the above criteria, we
have 14 key production lines as of the Latest Practicable Date, including six synthesis lines and
eight purification lines, accounting for nearly 90% of our total synthesis and purification
capacities. The average monthly utilization rates for these 14 key lines reached 73%, 73.3%
and 89.6% in 2022, 2023 and 2024, respectively. The monthly utilization rate is calculated as
the actual days in that month that our facilities are in operation to carry out manufacturing
projects for customers (including the days for actual manufacturing, the necessary clean-up
steps, equipment maintenance and validation, audits, production line sharing and suitability
assessments, and non-production days including public holidays that had no production
arrangement) divided by the total number of calendar days in the same month. The monthly
utilization rate for certain manufacturing lines could reach as high as 93.3%. Such high
utilization rates of our key production lines are primarily due to increases in customers’
demand for our API products as we strengthen and develop relationships with existing and new
customers, which we believe is attributable to our full-cycle service capability with quality,
efficiency and cost advantages, extensive peptide portfolio, and established production
capability.
Our international operations are based in Rocklin, California, the United States. We boast
a robust business development and administrative support team stationed in the United States,
engaging directly with clients. This approach empowers us to swiftly and flexibly address
customer needs and have face to face meetings, tailoring solutions to their specifications.
Backed by seasoned professionals with extensive industry knowledge and a rich pool of
customer resources, our business development team affords us a distinct competitive edge.
Additionally, our Rocklin Site can mitigate potential risks of BIOSECURE Act passed on
September 9, 2024 by the United States House of Representatives in the United States as well
as potential additional 20% tariff on imports from China. For details, please see “Risk
Factors—Risks Relating to Doing Business in Jurisdictions Where We Operate—Changes in
geopolitical relationships, international trade policies and other tensions may impact our
business operations.”
Our Facility Expansion Plans
United States Expansion Plan
We intend to expand our capacity and capabilities across our business in the United States
and China to meet customers’ increasing demand and capture the rapid growth of the peptide
CRDMO market. In 2022, we acquired the California production facility of Rocklin Site, which
occupies approximately 12,000 square meters of land, boasting a building area of
approximately 4,000 square meters. Our Rocklin Site is currently under construction, and upon
completion, is expected to provide GMP-compliant production, analytical development, quality
control release and stability testing services for peptide APIs, accommodating production
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single batch capacities ranging from grams to kilograms. We plan to complete the construction
of Rocklin Site (including installation of equipment) in the second half of 2025, which we
expect will increase our annual production capacity by approximately 100-300kg.
We believe the establishment of a production base in the United States enhances our
ability to deliver more convenient and efficient services to our clients. The establishment of our
new API manufacturing facility in Rocklin represents a strategic milestone aimed at providing
stable international supply chain solutions to our valued customers. This expansion allows us
to foster even closer technical communication with our clientele, enabling us to better
understand and address their specific needs and challenges. By strategically locating our
facility, we enhance our agility and responsiveness, ensuring seamless collaboration and
delivering superior value to our customers worldwide.
Below are photographs of our Rocklin Site which was under renovation as of the Latest
Practicable Date:
China Expansion Plan
In China, we are constructing our new facility of Hangzhou Biopharma Town Site, which
will be dedicated to research, formulation development, and pilot production of peptide and
oligonucleotide. Spanning an area of approximately 10,000 square meters, with a building
space of approximately 26,700 square meters, the finalized Hangzhou Biopharma Town Site
will embody a pharmaceutical research and production facility, featuring a ten-story main
building and a three-story podium. As of the Latest Practicable Date, the primary structural
construction of Hangzhou Biopharma Town Site has been completed, with interior renovation
to commence in the second half of 2025. We expect Hangzhou Biopharma Town Site to
commence operation in the second half of 2025.
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Below is a photograph of our new Hangzhou Biopharma Town Site which was under
construction as of the Latest Practicable Date:
To address the growing demand in the global peptide CDMO market and improve
production efficiency, we further plan to expand our facilities within the existing Qiantang
Site. The Qiantang Site spans approximately 26,000 square meters and includes a GMP facility
covering over 15,000 square meters. The expansion will utilize approximately 6,500 square
meters within the current site for the installation of new facilities and equipment. We
commenced the expansion of Qiantang Site in October 2024 and expect to complete the
expansion by the end of 2025, achieving an additional annual productivity of 500kg. Upon
completion, the Qiantang Site will have a total annual production capacity of up to 1,000kg.
This project aims to optimize the use of existing resources, enhance facility efficiency, and
strengthen our production capabilities.
Moreover, in addition to Qiantang Site and Hangzhou Biopharma Town Site, within the
next two to three years, we intend to either construct or acquire new production facilities in
China. This strategic move is projected to bolster our annual production capacity by
approximately 1,000kg to 2,000kg. This expansion plan is in response to growing existing and
potential customer demand for GLP-1 products, which are approaching advanced stages of
clinical and commercial production.
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The following table sets forth a summary of certain key information about our facility
expansion plans as of the Latest Practicable Date.
Site
Site Area
(sq.m.)
Owned/
Leased
Expected
Primary Use Expected Capacity
Expected
Operation Date
Rocklin Site 11,736
(parcel of
land), 3,832
(facility)
Owned Peptide APIs
Production
100-300kg/year 2026
Hangzhou
Biopharma
Town Site
10,000
(parcel of
land), 26,700
(facility)
Owned  R&D and
administration
 Formulation
development
 Peptide and
oligonucleotide
pilot production
N/A (R&D focused) Second half of 2025
Qiantang Site 26,000
(parcel of
land), 15,000
(facility)
Owned Peptide APIs
Production
1,000kg/year The end of 2025
We estimate the total capital expenditures for our expansion plans of Qiantang Site,
Rocklin Site, Hangzhou Biopharma Town Site and a new production facility in the PRC to be
HK$234.4 million, HK$273.5 million, HK$78.1 million, and HK$626.6 million, respectively.
As of the Latest Practicable Date, the total capital expenditure of Hangzhou Biopharma Town
Site is expected to be fully funded with the net proceeds from the Global Offering of HK$77.8
million, and the capital expenditure of Qiantang Site, Rocklin Site, and a new production
facility in the PRC is expected to be funded through a combination of (i) the net proceeds from
the Global Offering of HK$77.8 million, HK$155.6 million, and HK$264.4 million,
respectively, and (ii) additional funds generated from our CRDMO service cash flows. The
aforementioned estimation of the net proceeds from the Global Offering assumes an Offer Price
of HK$29.50 per H Share (being the mid-point of the indicative range of the Offer Price of
HK$28.40 to HK$30.60 per H Share), and upon deduction of the estimated underwriting
commissions and other fees and expenses payable by us in connection with the Global
Offering. For further details, please see the section headed “Future Plans and Use of Proceeds”
in this Prospectus. We believe our expansion plans will not affect our cost structure and future
profitability in any material aspects; while we expect depreciation cost to increase after the
expansions, we also expect increases in revenue as we could take on more projects and generate
more revenue with the expanded capacity.
In addition, all existing and new facilities are or are designed to be capable of
manufacturing GLP-1, provided that the toxicological assessment of share-line suitability
studies permits the manufacture of GLP-1 with existing products.
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RESEARCH AND DEVELOPMENT
Our R&D Team
We boast an expert team dedicated to peptide research and production with rich
professional knowledge and project experience. We are capable of meeting the production
needs of peptides ranging from simple to complex and challenging molecules. Our team is
proficient in various peptide synthesis methods, and excel in synthesizing complex sequences,
difficult sequences, and super-long peptide spanning two to 200 amino acids.
As of the Latest Practicable Date, our R&D department included 62 employees, nearly
38.7% of whom hold a master’s or doctoral degree. We have consolidated all research and
development activities into CITRI (CPC Innovative & Technology Research Institute). Our
centralization initiative is designed to bolster synergy, streamline resource allocation, and
cultivate innovation, facilitating swift execution of new projects and offering integrated
solutions throughout our organization. This concerted effort ensures a cohesive approach
towards accomplishing our objectives. The structure of our R&D team comprises several
specialized units, each led by an experienced leader and supported by a dedicated team. These
units are excel in various domains: process development, emphasizing the creation of efficient
synthesis processes; analytical capabilities, focusing on separation technologies and the
development of analytical methods; and specific technological areas such as multiple-cyclic
peptides, peptide conjugation techniques, GLP-1 technologies, green chemistry, formulation
studies, and spray dry technologies, among others. The workflow of our R&D activities include
several stages such as project initiation, small-scale research, pilot-scale research,
collaboration with process validation, and regulatory submission.
We incurred research and development expenses of RMB21.0 million, RMB23.1 million,
and RMB28.7 million in 2022, 2023 and 2024, respectively.
R&D Technology Platform
For years, we have served as a trusted partner in the realm of peptides CRDMO,
collaborating with a variety of multinational corporations, biotech companies, and esteemed
research institutions worldwide. We have attained this status through continual innovation in
synthetic peptide technologies, a commitment that has been pivotal to our success. By
bolstering our efforts in R&D, we reinforce our capacity to innovate, ensuring that we remain
at the forefront of the field and continue to deliver advanced solutions to meet the evolving
needs of our customers and the industry as a whole. We have established several research
centers including the “Zhejiang Province International Science and Technology Cooperation
Base”, “Zhejiang Province Enterprise Research Institute”, “Zhejiang Province High-Tech
Development Center”, “Zhejiang Province Postdoctoral Research Workstation” and “National
Post-doctoral Research Center”, through which we collaborate with universities, institutions,
international companies and local companies to facilitate our R&D technology.
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We have mastered key technologies essential for super-long peptide chain synthesis
enabling the synthesis of peptides up to 200 amino acids in length through both stepwise
synthesis and various ligation methods. Additionally, our expertise extends to diverse cyclic
peptide cyclization techniques, encompassing disulfide bonds with bridges, head-to-tail
cyclization, side chain to side chain cyclization, staple cyclization, and multiple cycle
cyclization. Furthermore, our capabilities include a wide array of peptide modifications such
as N-methylation, peptoid, peptide aldehyde, peptide alcohol, side chain modifications,
incorporation of unusual amino acids, and synthesis of small molecular structures. We also
specialize in selective disulfide bond analysis, ensuring precise characterization of peptide
structures and functionalities. By employing innovative purification and separation
technologies, our process development and scale-up capabilities ensure stable commercial
production processes suitable for large-scale production of complex sequences and peptide
modifications. We can promptly provide high-quality peptide products to our customers.
Our proprietary technological platforms include:
OmniPeptSynth™
In the realm of peptide synthesis, we boast extensive technical expertise. Leveraging our
proprietary OmniPeptSynth™ platform, we excel in efficiently and precisely synthesizing a
wide range of peptides, from complex to challenging sequences, and even super-long peptides.
Continually innovating, we employ a blend of protection strategies (including Fmoc, t-Boc,
and Cbz) and advanced synthesis techniques (including mixed solvents, microwave-assisted
synthesis, high-salt systems, polyethylene glycol-polystyrene resin, and more) to overcome
hurdles such as coupling super-long peptides, synthesizing cyclic peptides, and tackling
challenging sequences.
In comparison to the industry standard of 30 minutes for individual amino acid coupling
in peptide synthesis, as reported by Frost & Sullivan, our advanced solid-phase peptide
synthesis device reduces peptide synthesis cycles and enhances production efficiency,
achieving a connection time for individual amino acids of typically just 5-10 minutes. This
injects fresh vigor into our clients’ projects. Over the past two decades, our OmniPeptSynth™
platform has amassed a repository of records detailing the synthesis and purification of
hundreds of thousands of peptide molecules. Encompassing majority facets of peptide
synthesis, this trove of data and expertise cements our industry-leading position. These
invaluable resources not only provide robust support for expediting client projects but also
underpin our solid standing in the industry.
PeptiConjuX™ and PeptiNuclide LinkTech™
Our PeptiConjuX™ and PeptiNuclide LinkTech™ platforms provide customized
synthesis, conjugation, development and production of conjugate peptide API products.
Specifically, we provide RDC peptides and linker to customers who perform the final RDC
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conjugations. We also provide the POC and PDC peptides as well as the conjugated POC and
PDC products to customers. As of December 31, 2024, we had successfully synthesized
approximately 3,200 molecules through our PeptiConjuX™ and PeptiNuclide LinkTech™
platforms.
Peptide modification technology plays a pivotal role in altering the structure of peptide
chains and side-chain groups, effectively enhancing their physicochemical properties. This
includes improvements in water solubility, stability, biological activity, and prolonged efficacy
in vivo. Our PeptiConjuX™ platform integrates advanced peptide modification techniques,
such as proprietary on-resin cyclization, N-methylation, phosphorylation, glycosylation, and
diverse forms of PEGylation. Notably, we excel in modifying MAPs, cyclic peptides (e.g.,
single-cycle peptides comprising amide bonds, single thioether bonds, and linked disulfide
bridge peptides, stapled peptides, bicyclic peptides, and tricyclic peptides).
Within this platform, we have developed a refined set of labeling processes encompassing
conjugation, fluorescence, biotinylation, acylation, among others. Our product development
spans various research domains, including immunology, oncology, genetics, among others.
Presently, we have more than 40 labeling offerings, providing customers with a diverse range
of choices. Moreover, our PeptiConjuX™ platform offers tailored development services for a
variety of peptide drug conjugates, such as peptide-radionuclide conjugates, peptide-toxin
conjugates, peptide-oligo conjugates, and peptide-antibody conjugates, empowering customers
with innovative molecular solutions.
The PeptiNuclide LinkTech™ platform stands as our premier in-house solution for
peptide-nuclear drug conjugation. As of the Latest Practicable Date, our PeptiNuclide
LinkTech™ platform had successfully synthesized approximately 4,007 peptide precursor
molecules incorporating chelating agents like DOTA, NOTA, DOTAGA, NOTAGA, DTPA,
hydrazinonicotinic acid, and crown chelating agents. With an extensive repository of data and
hands-on experience, we offer customers high-quality and efficient solutions.
At the heart of the PeptiNuclide LinkTech™ platform lies our precision in synthesizing
peptides and nuclear drugs, coupled with our conjugation techniques. Moreover, we possess
specialized expertise in controlling impurities in peptide precursor molecules for nuclear drug
conjugation and selecting packaging materials and containers suitable for this type of product.
Through our PeptiNuclide LinkTech™ platform, clients can access products meeting stringent
quality requirements, directly applicable to clinical settings, and catering to diverse
pharmaceutical needs, including drug delivery, targeted therapy, and imaging diagnosis.
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GreenSynth Innovations™
GreenSynth Innovations™ stands as a cornerstone of our advantage in the realm of green
chemistry. This platform is dedicated to reshaping production processes, minimizing the use
and generation of harmful substances and driving down production costs, all in line with our
commitment to sustainability. Under the banner of GreenSynth Innovations™, we have
embarked on a series of initiatives:
 We have optimized our synthesis solvent usage procedures, slashing solvent
consumption and refining the addition of dimethylformamide. These refinements
have not only boosted synthesis efficiency and curbed side reactions but have also
significantly slashed reagent usage and waste discharge.
 We have implemented dimethylformamide reduction technology, strategically
reducing its usage in peptide synthesis to streamline costs. This practice has been
seamlessly integrated into our GMP manufacturing, providing our customers with
dual benefits: economic savings and environmental stewardship. By optimizing our
processes and minimizing dimethylformamide usage, we not only enhance cost-
effectiveness but also contribute to a more eco-friendly manufacturing approach.
This commitment to sustainability underscores our dedication to delivering high-
quality products while minimizing our environmental impact, aligning with our
values of innovation, efficiency, and responsible business practices.
 Further enhancements include streamlining cutting processes, simplifying ether
precipitation steps, and reducing the usage of trifluoroacetic acid and ether, thus
lowering costs and waste discharge. Moreover, by adopting direct base
neutralization techniques, we achieve cost efficiencies by minimizing the need for
additional chemicals and complex processes, thus reducing procurement, handling,
and disposal expenses. This approach also lowers waste generation and disposal
costs, while requiring less energy compared to alternative methods, contributing to
overall energy efficiency and operational cost reduction. Furthermore, by
streamlining the neutralization process, we mitigate environmental impacts,
including pollution and resource depletion, aligning with our commitment to
sustainability and responsible environmental stewardship.
 The introduction of GreenPepisolate™ peptide green separation technology marks a
pivotal advancement in our production processes, showcasing a remarkable increase
in peptide yields by more than 70%. This innovation not only elevates product
quality and process stability but also stands as a sustainable alternative to traditional
freeze-drying methods. By embracing GreenPepisolate™, we not only reduce
reliance on costly equipment and minimize energy consumption but also underscore
our commitment to environmentally conscious practices. This dual benefit of
enhanced efficiency and sustainability drives forward our mission for excellence
while minimizing our ecological footprint.
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These initiatives underscore our commitment to innovation and environmental
stewardship in the field of green chemistry. As we forge ahead, our ongoing acetonitrile
replacement project promises to further reduce the use of harmful solvents and drive cost
efficiencies. GreenSynth Innovations™ is expected to continue to drive our business forward,
laying a robust foundation for sustainable growth in the future.
Impurity Screening™
Due to the intricate nature of peptide and oligonucleotide synthesis processes, it is
common to encounter related impurities like misjoins and deletions after multiple chemical
reactions. These impurities create mixtures comprising both the desired product and
structurally similar ones. Effectively monitoring impurities and efficiently purifying the target
product to enhance yields and diminish impurities pose challenging hurdles in the industry.
Drawing from our extensive experience in peptide drug research, we have established a
comprehensive and effective impurity research platform, namely Impurity Screening™. This
platform boasts mature and unique processes for analyzing and preparing peptide impurities,
alongside dedicated technical support.
In impurity preparation, our skilled technical team excels in the targeted synthesis of
various peptide-related impurities, including those arising from the process itself or
degradation. Leveraging efficient coupling technologies, we swiftly synthesize a wide array of
impurities, significantly expediting the peptide drug development process. Our impurity
research spans analysis, structural identification, and targeted synthesis, offering holistic
support for peptide drug development.
In impurity analysis and identification, we utilize equipment such as high-throughput
screening analysis technology based on the high-performance liquid chromatography
instrument Agilent 1260, enabling simultaneous, rapid screening of potential impurities across
multiple channels and systems. Additionally, our Agilent 1260-6530A Q-TOF LC/MS System
accelerates the structural identification of various impurities. Through process optimization,
impurities are effectively detected, identified and removed, ensuring product purity and
stability, thereby maximizing drug efficacy in clinical settings.
Regarding peptides, the identification and control of multi-ring peptide impurities
resulting from disulfide bonds have long posed challenges in the industry. Currently, most
products of this type in the industry are produced using natural cyclization methods, often
yielding low cyclization rates and generating a slew of impurities due to disulfide bond
mismatches. This necessitates complex purification processes. Through our targeted synthesis
technology, we ensure correct pairing to alleviate purification pressures, significantly
improving overall product yields. Meanwhile, our Company has conducted extensive research
and development in the structural confirmation and impurity analysis of peptide drug
substances containing multiple disulfide bridge peptides. Over years of production and
research, we have developed a novel method based on chemical cleavage and mass
spectrometry, the DisulfideDetect™ technology, addressing the industry-wide challenge of
confirming the structures of peptides containing multiple disulfide bridge peptides.
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In addition to the above, we have the following technologies that distinguish us from our
peers:
GreenPepisolate™
GreenPepisolate™ stands as a separation solution designed specifically for peptides.
Serving as a cost-effective alternative to freeze-drying methods, it not only reduces equipment
expenses but also minimizes energy consumption, aligning seamlessly with national carbon
neutrality initiatives. By overcoming common challenges in peptide separation processes, such
as product oiliness, gel formation, and filtration complexities, GreenPepisolate™ ensures
high-efficiency peptide separation while maintaining superior product purity and yield.
GreenPepisolate™ includes (i) high-throughput separation system screening technology. By
simultaneously screening over 20 solvents, we swiftly identify the optimal solvents for product
separation, reducing screening time from weeks to days. This innovative approach not only
enhances separation efficiency but also effectively reduces the randomness of system
screening, leading to further cost reductions; and (ii) separation of peptide raw materials and
short peptides. In addressing the separation of peptide raw materials and short peptides, we
employ direct separation methods alongside comprehensive process control. The direct
separation method, with its integrated solvent usage, bypasses the intricate purification steps
typically associated with traditional synthesis processes. This results in a substantial reduction
in solvent consumption and operation cycles while concurrently lowering process mass
intensity to the environmentally-friendly level.
In our focus on peptide products, we prioritize a thorough control of every aspect of the
separation process. Through precise data collection and experimental oversight, we guarantee
both product quality and process stability. Utilizing GreenPepisolate™ technology, we have
successfully achieved efficient and environmentally friendly peptide separation, significantly
improving both product quality and process stability. With separation yields ranging from 70%
to 100%, our peptide production receives dependable technical support, establishing a robust
foundation for future advancements.
DisulfideDetect™
DisulfideDetect™ is an advanced technology for analyzing the localization of disulfide
bonds. These bonds are crucial chemical links intricately tied to the structure and function of
peptides and proteins. When peptides contain multiple cysteine residues, various pairing
configurations of disulfide bonds can occur. Therefore, accurately and swiftly pinpointing
these bonds within peptides is vital for studying the relationship between peptide structure and
function. We have dedicated extensive research and development efforts to the structural
confirmation and impurity analysis of peptide drug substances containing multiple disulfide
bridge peptides. We have pioneered a novel method, DisulfideDetect™, based on chemical
cleavage and mass spectrometry, to tackle the challenge of confirming the structures of
peptides with multiple disulfide bridge peptides. Utilizing this analytical technique, we have
successfully achieved precise localization of multiple disulfide bridge peptides in peptide
chains such as Linaclotide.
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Our R&D Process
We consistently monitor the latest research and development trends and market dynamics,
along with the sales expectations of relevant products. We initiate research and development
projects at opportune moments, following comprehensive market research and technical
assessments to ensure project feasibility and market potential. The project initiation process
typically encompasses assessments of market demand, technical feasibility, risk and financial
viability.
For a visual representation of the R&D process, please refer to the diagram below:
R&D Project TeamProject Review Committee
Project Initiation
001
Project
Implementation
003
Project Closing
Preparation
005
 Project
Closing
Project Initiation
Review
002
Stage
Reviews
004
Project Closing
Review
006
Project
Initiation
Rejected
Review Passed?
Project initiation materials need revision
Not Approved
Approved
No
Yes
Currently, our primary research and development focuses include novel peptide
therapeutics (including GLP-1 analogs), development and production technology
enhancements for high-volume generic drugs, green synthesis, continuous purification, and
drying technologies, among others. We prioritize areas such as metabolism (diabetes and
weight management), oncology, immunomodulation, gastrointestinal pancreatic diseases, and
other niche or high-volume markets.
PROJECT MANAGEMENT
We believe that we have an established reputation among our customers for high quality
and productivity, rapid turnaround and comprehensive customer support. We generally assume
full project management responsibility for our projects. We strictly adhere to our internal
quality and project management processes. We believe our processes, methodologies and
knowledge management systems reduce the overall cost for our customers and enhance the
quality and speed of delivery.
We have developed a project management methodology to ensure timely, consistent and
accurate delivery of quality services. We take the following measures to achieve effective
project management:
 Project Planning and Control: We meticulously devise comprehensive project plans
outlining milestones and critical tasks. Through consistent monitoring and
adjustments, we ensure adherence to timelines for timely project delivery.
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 Resource Allocation and Optimization: We distribute project resources,
encompassing manpower, equipment, and funds, to maximize productivity and
resource efficiency.
 Risk Management: Our approach involves thorough identification and assessment of
project risks. We implement corresponding measures to effectively manage and
control these risks, thereby minimizing the likelihood of project delays and quality
issues.
 Team Collaboration: We foster an environment of efficient team collaboration,
promoting seamless communication and cooperation among cross-departmental and
cross-functional teams. This ensures smooth project progression and alignment of
efforts towards shared objectives.
 Continuous Improvement: Through regular project reviews and summaries, we
gather feedback and insights. These are utilized to continuously enhance our project
management processes and methodologies, striving for ongoing improvement in the
quality and efficiency of project delivery.
Upon receiving a new project from a customer, our project management team will set the
schedule of the project and liaise with other departments, including the relevant business units,
to determine the staffing of the project team. A project manager and an account manager are
usually appointed to oversee the entire project. Project manager assigned on a project team are
typically divided into several groups based on the type of services to be provided. Each group
is assigned a group leader who is responsible for supervising the services carried out by such
group and reporting back to the project manager. Our project management team also works
closely with the account manager to monitor the progress of the project and liaises with the
customer. To ensure our service quality, each technical report will be reviewed by the head of
the relevant business units before being submitted to the customer.
To facilitate project management, our project team communicates with our customers
through emails, reports and regular conference calls. Our project management involves strict
adherence to our strategic imperative to protect our customers’ intellectual property and other
confidential information. See “—Intellectual Property” for more information. In addition, we
conduct frequent customer satisfaction surveys with customers, which enable us to measure
key performance indicators to improve our planning, execution, evaluation, and support. We
focus internally on operational improvement and innovation to achieve lower direct costs,
better use of assets, faster discovery and development time, increased accuracy, greater
customization or precision of data, more added value, and simplified processes. Dedicated to
improving responsiveness to our customers’ needs and inquiries, our customer support team
focuses on sales support and relationship management with our customers.
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Our project management team is dedicated to handle customer queries and complaints,
and provide comprehensive training to our customer service personnel to ensure consistent and
high-quality service. Upon receiving feedbacks from a customer, our project manager will
immediately follow up until the issue is resolved. We received 13 customer complaints during
the Track Record Period and up to the Latest Practicable Date, including damaged packaging,
incorrect product label or product solution with impurities. We resolved all complaints in a
timely manner and we believe that such customer complaints did not have a material adverse
impact on our customer relationships or business operations. During the Track Record Period
and up to the Latest Practicable Date, we did not have any material customer complaints.
QUALITY MANAGEMENT
We believe that an effective quality management system for procuring raw materials,
R&D and manufacturing is critical to ensuring the quality of our services and maintaining our
reputation and success. We seek to ensure that our services consistently meet high industry
standards and requirements. We have established a quality assurance and quality control
department, which is responsible for supervising the implementation of the quality standards.
Based on the research and development and specific manufacturing processes of drug
substances, we have established comprehensive quality control measures for our operations,
covering procurement of raw and auxiliary materials, research and development and process
development, and manufacturing of intermediates, drug substances.
As of the Latest Practicable Date, our quality assurance and quality control department
consisted of a total of 100 staff members, primarily holding undergraduate degrees, with
pharmacy, chemistry, biology, pharmaceutical-related majors being the main field of study. All
relevant personnel have obtained professional qualifications for their respective positions. The
average work experience of the staff members in our quality assurance and quality control
department is five years.
We have implemented a comprehensive training management protocol to ensure
systematic and professional development opportunities for our employees on a regular basis.
Training is structured at various organizational levels, including company-wide, departmental,
and position-specific training. It is further categorized based on position requirements,
encompassing job qualification training and on-the-job instruction. Additionally, training
sessions are conducted both internally and externally. We employ a variety of methods for
training delivery, including presentations, self-paced learning modules, hands-on
demonstrations, supervised practice, group discussions, and video-based instruction.
Each year, a detailed training plan is crafted to address regulatory updates and operational
needs for different levels. This plan covers a wide array of topics including regulatory
compliance, updates from pharmacopoeias, current GMP for all employees and microbiological
knowledge, job-specific skills, and environmental health and safety. Upon implementation,
training sessions are assessed, documented, and monitored to ensure effectiveness. Following
completion, evaluations are conducted to gauge the impact of the training and inform future
development initiatives.
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In addition, we have implemented relevant internal control policies, measures and
procedures for all of our business departments regarding each of the drug discovery,
development and manufacturing stages, educating the relevant employees about such policies,
measures and procedures, addressing their questions, submitting suggested revisions to such
policies, measures and procedures to the internal control department and regularly monitoring
the implementation of such policies, measures and procedures. Furthermore, We provide our
employees with regular training on these measures and procedures as part of our employee
training program. We also regularly monitor the implementation of these measures and
procedures through our internal audit department at each stage of the drug development
process.
Raw Material and Equipment
We have established stringent procedures for qualifying suppliers and conducting supplier
audits. These procedures extend to material receipt, inspection, and storage management. The
purchase department oversees material procurement, while the material department manages
material receipt, inspection, and storage. Our quality control department handles material
sampling, testing, and release, while quality assurance department conducts supplier audits and
approvals.
Raw materials are categorized into critical, major and general categories based on their
impact on production processes and product quality. For peptide CRDMO services, all
protected amino acids or structure modifying compounds and separation media are considered
critical raw materials, such as Fmoc-L-Ala-OH, Boc-Pro-OH, (R)-DOTA-GA(tBu)4, and rink
amide linker. The major raw materials are important to complete the production, such as
coupling reagent 2-(1H-benzotriazole-1-yl)-1,1,3,3-tetramethyluronium hexafluorophosphate,
1-hydroxy-7-azabenzotriazole, and 2-(5-norbornene-2-yl)-1,1,3,3-tetramethyluronium
tetrafluoroborate. The general materials are common chemical materials such as solvents that
are less critical to the overall production processes, including DMF, alcohol, and Acetonitrile.
Supplier audits, either through on-site visits or questionnaire surveys, are conducted
periodically according to materiality classification. Raw materials must be sourced exclusively
from approved suppliers, with annual evaluations of material suppliers conducted regularly.
There were not major raw materials quality issues during the Track Record Period and up to
the Latest Practicable Date.
Each raw material is assigned a unique company-issued identification code, and all
production materials have established quality specifications (with a specification code) aligned
with product manufacturing processes. Incoming materials are accompanied by supplier testing
reports and undergo testing based on quality specifications. Only materials meeting
requirements are released for production, while rejected materials are not used in production.
Separate warehouses are maintained for raw materials, organic solvents, packaging materials
and final products. Warehouses are segmented into quarantine, released and rejected areas
based on material status. Raw material inventory is checked monthly by the material
department. We employ meticulous procurement planning during annual budgeting, aligning
with sales targets and production forecasts. This proactive approach minimizes the risk of
supply shortages and enables us to leverage bulk purchasing for cost savings.
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Save as contact equipment for manufacturing products, our strategy emphasizes the
shared use of key production equipment across various projects to optimize resource allocation.
Additionally, each production team implement tailored plans to maximize equipment
utilization at the department level, aligning with our overarching strategy. Equipment and
spares are procured exclusively from reputable suppliers. Installation qualification, operational
qualification, and performance qualification of equipment and instruments related to GMP
production and testing activities are conducted, ensuring compliance with acceptable criteria
prior to use. Routine cleaning, maintenance, preventive maintenance, calibration, and
qualification of equipment and instruments are carried out according to established procedures
to ensure operational integrity. Regular communication with technical support staff of
equipment suppliers facilitates maintenance and upgrades as needed.
R&D and Process Development Procedures
We have implemented comprehensive standard operating procedures to ensure the quality
of our services and compliance with applicable domestic and international regulations. Our
R&D department is responsible for formulating experimental plans for process development
and quality research, collecting and analyzing research data, evaluating experimental results,
and establishing specifications for raw materials and final products. Additionally, our R&D
team systematically investigates process routes, screens parameters, and analyzes potential
impurities to optimize processes. Structural confirmation and impurity studies are conducted to
support process and quality assessments. Our R&D team also oversees technology transfer and
provides support for regulatory submissions. We maintain a dynamic approach to production
protocols, fostering collaboration and feedback from all our personnel involved. This promotes
streamlined communication across departments, enhancing accuracy and efficiency in our
workflow.
Manufacturing
We have developed standard operating procedures for in-process control in the
manufacturing process. We have compliance and internal control quality assurance department
to review the integrity of each batch of products manufactured, in order to ensure that
cGMP-compliant quality standards are maintained during the manufacturing process. Our
quality control staff take samples from each batch of products and laboratory technicians carry
out quality testing on each batch of final products and issue testing reports based on the results.
Samples that fail to pass the inspection are disposed of in accordance with the requirements of
our operating procedures for non-conforming products. In addition, the on-site quality
assurance staffs are also responsible for the monitoring and supervision of clean environment
of workshops to ensure the cleanliness requirements of our facilities and the quality
supervision of manufacturing process, and ensure the data are attributable, legible,
contemporaneous, original and accurate.
Our quality control system throughout the peptide manufacturing process has undergone
and consistently passed constant inspections and supervisions by customers and various
regulatory authorities worldwide over the past two decades, which serves as a testimony to our
rigorous quality control measures over production equipment, techniques and products.
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SALES AND MARKETING
Our Team
Operating globally, our sales center boasts dedicated sales and marketing teams in both
China and the United States. In Asia, our sales team is segmented into three sub-teams which
focus on sales to China north regions, China south regions, and Asia-Pacific regions,
respectively. Similarly, our sales in the United States is structured with teams covering the east
coast and west coast of the United States, and a dedicated team concentrating on sales within
the Western Hemisphere, including Europe and the Americas outside the United States. Led by
our senior vice president of business development, and senior vice president of strategic
portfolio, our business development team in the United States has an average of over ten years
of industry experience. Leveraging the latest industry analysis and insight prepared by our
marketing team, as well as their local resources and deep understanding of customer needs, our
business development team in the United States is well versed in preparing service proposals
that highlight our service capabilities and how such capabilities can cater to the customers’
unique needs.
In tandem with our sales efforts, our sales and marketing team plays a pivotal role in
crafting strategic campaigns and initiatives to bolster brand visibility and market penetration.
Comprised of seasoned marketers with expertise in various facets of the industry, our
marketing team ensures alignment of messaging and promotional activities with overarching
business objectives. Leveraging comprehensive market research and customer insights, our
marketing professionals devise targeted strategies to effectively position our products and
services, drive demand generation, and nurture customer relationships. Moreover, our
marketing team excels in customer and drug pipeline mapping and allocation, meticulously
assigning leads to the corresponding sales teams to optimize conversion rates and enhance
customer engagement.
Our sales and marketing management positions are helmed by seasoned industry
professionals who not only spearhead key project acquisitions and strategic marketing
initiatives but also mentor and train new talent. Regular internal training sessions cover a
spectrum of topics including industry insights, market trends, and innovative marketing
strategies, supplemented by team-building activities to foster a cohesive and high-performing
team environment. We foster a culture of continuous learning and self-improvement,
encouraging employees to engage in professional development opportunities to further enhance
their skills and expertise in both sales and marketing domains.
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Our Strategy
As part of our strategic expansion plan, we are committed to establishing a stronger
global presence for sales and after-sales service, enriching our operations and broadening our
customer base. Central to this initiative is our reliance on our dedicated in-house business
development team, tasked with both cultivating new customer relationships and nurturing
existing ones.
To ensure optimal coordination between sales activities and overarching corporate
strategies, we are implementing a dual-level sales team structure. This approach involves
assigning regional customer relationship managers alongside our business development
personnel.
While our current customer base is predominantly situated in North America and China,
we are expanding our reach into European and Asian markets, complementing our existing
presence in China. Emphasizing the importance of long-term partnerships, we are committed
to nurturing relationships with existing customers and closely monitoring the progress of their
pipeline drugs. This proactive approach allows us to secure additional projects and foster
mutual growth.
Recognizing the immense growth potential in the field of GLP-1 drugs, we are dedicated
to expanding and refining our CRDMO services in this sector. By staying attuned to evolving
customer needs and market dynamics, we aim to maintain our competitive edge and capture
new opportunities. Moreover, we are closely monitoring the development trends of various
TIDES, including PDC, RDC, POC, and others. This proactive approach enables us to
anticipate market shifts, stay ahead of competitors, and explore emerging market opportunities.
Through these strategic initiatives, we are poised to strengthen our global footprint, deepen
customer relationships, and capitalize on emerging market trends, positioning ourselves for
sustained growth and success in the dynamic pharmaceutical landscape.
We determine our pricing strategies based on a variety of factors, such as our market share
and growth strategy, market demand for our services, and pricing dynamics introduced by
competitors.
We market our services directly to pharmaceutical and biotech companies through
industry conferences with their representatives and senior management. We also utilize
multiple digital marketing and promotional channels, including social media, advertisements,
press releases, webinars and email updates, to promote our technologies, platforms and
services. During the Track Record Period, we incurred selling and marketing expenses of
RMB22.2 million, RMB28.1 million, and RMB42.5 million in 2022, 2023 and 2024,
respectively.
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EMPLOYEES
As of the Latest Practicable Date, we had a total of 522 employees, of whom 493 were
in China and 29 were in the United States. As of the Latest Practicable Date, we had 69
employees who have obtained a master’s degree or above, with 15 holding a Ph.D. or
equivalent degree. As of the Latest Practicable Date, the gender distribution of our employees
were approximately 54.2% male and 45.8% female. The table below sets forth a breakdown of
our employees by function as of the Latest Practicable Date.
Functions
Number of
employees by
function Percentage
Research and development 62 12%
Manufacturing 243 47%
Quality assurance and quality control 100 19%
Business development, sales and marketing 44 8%
Management Operations 73 14%
Total 522 100%
We believe that our success depends in part on our ability to attract, recruit and retain
quality employees. We enter into individual employment contracts and confidentiality
agreements with our employees. The employment contracts cover matters such as wages,
benefits and grounds for termination. The remuneration package of our employees generally
includes salary and bonus. In general, we determine the remuneration package based on the
qualifications, position and performance of our employees. In addition, we have adopted share
incentive scheme to provide an additional means to attract, motivate, retain and reward our
employees.
We provide our employees with opportunities to work on advanced projects to develop
their knowledge and skills. We have an effective training system, including orientation and
continuous on-the-job training, to accelerate the learning progress and improve the knowledge
and skill levels of our workforce. The orientation process for newly joined employees covers
subjects such as corporate culture and policies, work ethics, introduction to the development
process, quality management, as well as occupational safety. Our periodic on-the-job training
covers streamlined technical know-how of our integrated services, environmental, health and
safety management systems and mandatory training required by applicable laws and
regulations. We also aim to further enhance a collaborative work environment that encourages
our employees to develop their career with us.
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In support of our growth, we pay close attention to our capabilities and adjust our
workforce to ensure that our workforce can meet the demand for our services. During the Track
Record Period, we have primarily adopted a direct recruitment policy to seek talent from recent
graduates of top universities through on-campus recruiting events in China and recruit lateral
employees with the suitable background in China and abroad. We proactively recruit recent
Ph.D. graduates and provide them with additional post-degree training opportunities. Our
commitment is underscored by our accreditation to award the National Post-Doctoral Training
Certificate, enabling us to deliver specialized training in peptide-related fields to emerging
Ph.D. talent.
We believe that we maintain a good working relationship with our employees. We had not
experienced any material labor disputes or any material difficulties in recruiting employees for
our operations during the Track Record Period and up to the Latest Practicable Date.
CUSTOMERS
We have a diversified customer base, with customers located in North America, Asia,
Europe and other countries. In addition to large pharmaceutical and biotech companies, we
provide comprehensive and customized services responding to the needs of a growing group
of diverse biotech start-ups and virtual pharmaceutical and biotech companies. We are devoted
to enhancing the breadth of our services and providing customized services to target customers
with unique needs and demands. As of the Latest Practicable Date, we had served over 1,000
customers worldwide.
Our customers also demonstrate high loyalty and stickiness. The average length of our
relationships with our five largest customers in each year during the Track Record Period is
approximately 10 years; many customers choose to retain us for multiple stages as their peptide
products progress toward commercialization and large-scale production as proved by the high
average CDMO customer retention rate of over 90% during the Track Record Period.
Five Largest Customers in Each Y ear During the Track Record Period
The total revenue generated from our five largest customers in each year during the Track
Record Period amounted to RMB157.3 million, RMB162.6 million and RMB222.3 million in
2022, 2023 and 2024, respectively. None of our five largest customers in each year during the
Track Record Period is our supplier. In 2022, 2023 and 2024, revenue generated from our five
largest customers in each year during the Track Record Period accounted for 44.8%, 48.3% and
50.3% of our revenue in the same year, respectively, and revenue generated from our largest
customer in each year during the Track Record Period accounted for 15.4%, 20.9% and 26.8%
of our revenue in the same year, respectively. None of our Directors, their respective close
associates, or Shareholders who, to the knowledge of our Directors, own 5% or more of our
issued share capital had any interest in any of our five largest customers in each year during
the Track Record Period. None of our five largest customers in each year during the Track
Record Period was also our supplier.
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The following tables set forth certain information about our five largest customers in each
year during the Track Record Period in terms of revenue (in descending order) generated in
2022, 2023 and 2024, respectively:
For the year ended December 31, 2024
Customers Background
Number of
Projects
During
the Y ear
Y ears of
Business
Relationship
Credit
Term and
Payment
Services
Purchased Revenue
Revenue
Contribution
(RMB in
million)
Customer A A clinical-stage biopharmaceutical
company in the United States,
focusing on the development of
novel therapies for metabolic and
endocrine disorders with market
capitalization as of the Latest
Practicable Date of RMB41,466.2
million.
8 Since 2019 30 days,
bank transfer
CRO+
CDMO
118.6 26.8%
3D Matrix Japan, Ltd. A regenerative medicine company
in Japan, focusing on
commercializing self-assembling
peptide technology with
registered capital of RMB382.5
million.
4 Since 2006 30 days, bank
transfer
CDMO 30.3 6.9%
Beijing Biote
Pharmaceutical Co. Ltd.
(ʮ
̡)
A pharmaceutical company in
China, specialized in microsphere
drug research, manufacture and
marketing with registered capital
of RMB60.0 million.
3 Since 2005 Upon
prepayment,
bank transfer
CDMO 27.6 6.2%
Gilead Sciences, Inc. A global biopharmaceutical
company in the United States,
committed to discovering,
developing and delivering
innovative therapeutics for people
with life-threatening diseases
with revenue in 2023 of
RMB191,079.6 million.
1 Since 2021 Upon
prepayment,
bank transfer
CDMO 24.7 5.6%
LGM Pharma A CDMO in the United States
providing API sourcing and drug
CDMO solutions to the
pharmaceutical, biotechnology,
and compounding pharmacy
industries.
1 Since 2023 Upon
prepayment,
bank transfer
CDMO 21.1 4.8%
Total 222.3 50.3%
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For the year ended December 31, 2023
Customers Background
Number of
Projects
During
the Y ear
Y ears of
Business
Relationship
Credit
Term and
Payment
Method
Services
Purchased Revenue
Revenue
Contribution
(RMB in
million)
3D Matrix Japan, Ltd. A regenerative medicine company
in Japan, focusing on
commercializing self-assembling
peptide technology with
registered capital of RMB382.5
million.
4 Since 2006 30 days,
bank transfer
CDMO 70.4 20.9%
Gilead Sciences, Inc. A global biopharmaceutical
company in the United States,
committed to discovering,
developing and delivering
innovative therapeutics for people
with life-threatening diseases
with revenue in 2023 of
RMB191,079.6 million.
1 Since 2021 Upon
prepayment,
bank transfer
CDMO 39.9 11.9%
Beijing Biote
Pharmaceutical
Co. Ltd. (तᖹ
ʮ̡)
A pharmaceutical company in
China, specialized in microsphere
drug research, manufacture and
marketing with registered capital
of RMB60.0 million.
5 Since 2005 Upon
prepayment,
bank transfer
CDMO 19.5 5.8%
Customer A A clinical-stage biopharmaceutical
company in the United States,
focusing on the development of
novel therapies for metabolic and
endocrine disorders with market
capitalization as of the Latest
Practicable Date of RMB41,466.2
million.
13 Since 2019 Upon
prepayment,
bank transfer
CDMO 18.3 5.4%
Customer B A biopharmaceutical company in
China, focusing on growth
hormone production businesses
with registered capital of
RMB73.0 million.
3 Since 2002 Upon
prepayment,
bank transfer
CDMO 14.5 4.3%
Total 162.6 48.3%
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For the year ended December 31, 2022
Customers Background
Number of
Projects
During
the Y ear
Y ears of
Business
Relationship
Credit
Term and
Payment
Services
Purchased Revenue
Revenue
Contribution
(RMB in
million)
3D Matrix Japan, Ltd. A regenerative medicine company
in Japan, focusing on
commercializing self-assembling
peptide technology with
registered capital of RMB382.5
million.
4 Since 2006 30 days,
bank transfer
CDMO 54.0 15.4%
Gilead Sciences, Inc. A global biopharmaceutical
company in the United States,
committed to discovering,
developing and delivering
innovative therapeutics for people
with life-threatening diseases
with revenue in 2023 of
RMB191,079.6 million.
1 Since 2021 Upon
prepayment,
bank transfer
CDMO 36.4 10.4%
Beijing Biote
Pharmaceutical
Co. Ltd. (तᖹ
ʮ̡)
A pharmaceutical company in
China, specialized in microsphere
drug research, manufacture and
marketing with registered capital
of RMB60.0 million.
4 Since 2005 Upon
prepayment,
bank transfer
CDMO 30.3 8.6%
Red Queen Therapeutics A clinical-stage biotech company in
the United States, focusing on
R&D of antiviral therapies.
(1)
7 Since 2021 Upon
prepayment,
bank transfer
CRO+
CDMO
19.3 5.5%
Customer A A clinical-stage biopharmaceutical
company in the United States,
focusing on the development of
novel therapies for metabolic and
endocrine disorders with market
capitalization as of the Latest
Practicable Date of RMB41,466.2
million.
13 Since 2019 Upon
prepayment,
bank transfer
CRO+
CDMO
17.3 4.9%
Total 157.3 44.8%
Notes:
(1) Red Queen Therapeutics is a non-public company with no public information regarding size of operation.
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During the Track Record Period and up to the Latest Practicable Date, we had not
encountered any material dispute with our customers or any material breach of our service
contracts or agreements. To the best of our knowledge, as of the Latest Practicable Date, we
were not aware of any information or arrangement that would lead to termination of contractual
relationships between any five largest customers in each year during the Track Record Period.
Key Contractual Terms with Our Customers
We commonly establish CRO and CDMO framework service agreements or project-based
service agreements with our customers for our services. Under these agreements, services for
individual projects are carried out through separate and distinct work orders. Each work order
specifies project specifications, management, schedule, discovery, development and/or
manufacturing steps, rules governing reporting, service fee and payment instructions.
Additionally, the work orders are not necessarily tied to specific development stages, but rather
adapt to the progress of projects and strategically align with our customers’ research and
development requirements. Our project-based service agreements, like the work orders within
framework service agreements, usually have a term ranging from several months to multiple
years. Such project-based service agreements provide essential elements, such as project
specifications, management, schedule, discovery, development and/or manufacturing steps,
payment terms, confidentiality obligations of the parties, ownership of intellectual property
rights, termination clause and other general terms and conditions. Such project-based service
agreements generally terminate upon the completion of the relevant projects.
The table below summarizes the key contractual terms under CRO and CDMO framework
service agreements/work orders and project-based service contracts with our customers.
Key Contractual Terms CRO Agreements CDMO Agreements
Quality Requirements Both parties consider legal requirements, national and industry
standards, and customer’s specific needs to formulate quality
standards and service requirements.
We commit to meticulously adhering to these quality standards to
manufacture and deliver products.
Outsourcing We do not outsource projects to third parties.
Product Liability We are liable for the quality of the products in accordance with the
quality standard requirements.
Our customers are liable for making payments in accordance with
contractual requirements.
If one party breaches its obligations and fails to cure the breach
within 30 days after written notice from the non-breaching party to
cure the breach, the non-breaching has the right to unilaterally
terminate the work order, and the breaching party shall pay
liquidated damages. For details, see “– Liability for Breach.”
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Key Contractual Terms CRO Agreements CDMO Agreements
Inspection  Delivery
 If we entrust a third party to deliver the products, our
customer shall receive the products as soon as possible
on the day that the third party notifies the receipt of the
products. Our customers shall inspect the integrity of
the outer packaging and appearance of the products
upon receipt. In the event of damage to the outer
packaging or damage to the inner products due to
damage to the outer packaging, our customers shall
refuse to accept and raise it with the third party at the
time of receipt.
 If our customers pick up the products, our customers
shall notify us in writing. Our customers shall confirm
the integrity of the outer packaging of the products for
acceptance when receiving the products. In case of
damage to the packaging, or damage to the internal
products due to damage to the packaging, our customers
shall refuse to accept the products and notify us at the
time of receipt.
 If we deliver the products to our customers’ designated
carrier, the risk of loss or damage of the products shall
be transferred to our customers on the date when we
deliver the products to the carrier designated by our
customers. When receiving the products from the
carrier, our customers shall inspect and confirm the
integrity of the outer packaging of the products. In case
of damage to the outer packaging, or damage to the
inner products due to damage to the outer packaging,
our customers shall refuse to accept and present to the
carrier at the time of receipt.
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Key Contractual Terms CRO Agreements CDMO Agreements
 Regardless of the methods of delivery, if our customers
notify the third party and refuse to accept the products,
and then claim compensation after receipt of the
products on the grounds that the packaging is damaged,
or the internal products are damaged due to the damaged
packaging, we shall be exempted from liability. The risk
of loss or damage to the products shall be transferred to
our customers on the date that (i) our domestic
customers receive the products, or (ii) the products are
delivered to designated carriers or locations for our
overseas customers in accordance with applicable
delivery terms in the FFS contracts.
 Quantity inspection: Our customers shall inspect quantity of
products within five working days from the date of receipt.
 Quality inspection: Our service agreements with customers
typically include quality standards and quality inspection
standards and procedures. Our customers shall inspect quality
of products within 30 days from the date of receipt. The
common quality standard requirements typically include
appearance inspection standard, such as the color of the
powder, molecular weight inspection standard, and API
purity standard, such as the content of API, the content of
water and residual solvents as well as microbiological
examination.
 Quality audit: We agree to permit auditors from our
customers to conduct quality audits of products during
regular working hours.
 Indemnity: Our service agreements do not typically include
indemnity clauses, and we shall have no further quality
liabilities after passing customers’ quality checks as provided
in the quality inspection procedures above.
Payment Terms FTE and FFS model. For
details, see “—Our Business
Model—Our Fee
Models—Payment Terms”
section above.
FFS model. For details, see
“—Our Business Model—Our
Fee Models—Payment Terms”
section above.
Duration 1-4 weeks 1-4 years
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Key Contractual Terms CRO Agreements CDMO Agreements
Minimum Procurement
Limit
N/A Our customers commit to us a
minimum procurement limits
within the first three years from
the effective date of the
agreement. If the purchasing
volume for a year does not
reach the minimum purchasing
limit, our customers shall make
up the difference within 60 days
from the settlement date of the
year; otherwise, we have the
right to unilaterally terminate
the agreement by providing a
30-day written notice in
advance and demand our
customers to pay liquidated
damages.
Intellectual Property We guarantee that the products that we deliver to our customers do
not infringe the intellectual property rights and other legal rights of
third parties.
Our customers guarantee that the data or research information that
they share with us does not infringe the intellectual property rights
and other legal rights of third parties. In the event that one party
is pursued by a third party in terms of dispute, litigation,
arbitration, or is investigated or penalized by a governmental
agency because of the existence of infringement of intellectual
property rights, the infringing party shall be responsible for all the
damages, including, but not limited to, the reasonable costs and
attorney’s fees.
Our customers retain ownership of all intellectual property of their
products, including the intellectual property made accessible to us.
Regardless whether the parties apply for patents or not, we
typically fully own all rights relating to any process related,
analytical method related technical inventions, trade secrets, or
improvements conceived during the performance of the agreement
and the work order. Frost & Sullivan is of the view that the
intellectual property ownership arrangement is in line with
industry norm because other CRDMOs in the industry use similar
intellectual property arrangements.
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Key Contractual Terms CRO Agreements CDMO Agreements
Liability for Breach  If we delay the delivery for 30 days and causes damage to our
customers, or if our customers delay the payment for 60 days,
the breaching party shall pay the late liquidated damages,
with a maximum annual amount of 20% of the corresponding
amount of the delayed delivery.
 If our customers terminate the work order without cause, our
customers must settle the payments corresponding to the
products or services that we have already completed and the
raw material costs that we have already incurred. If we
terminate the work order without cause, we must deliver the
completed products or services to our customers. In addition,
the breaching party shall pay liquidated damages of 20% of
the total amount of the work order to the non-breaching party,
and the non-breaching party shall still be entitled to claim
damages, if the liquidated damages are not sufficient to cover
its financial loss.
 If one party breaches its obligations and fails to cure the
breach within 30 days after written notice from the non-
breaching party to cure the breach, the non-breaching has the
right to unilaterally terminate the work order. The breaching
party shall pay liquidated damages of 20% of the total amount
of the work order to the non-breaching party, and the
non-breaching party shall still be entitled to claim damages,
if the liquidated damages are not sufficient to cover its
financial loss.
 (Only applicable for CDMO Agreements) If one party
terminates the agreement without cause, the party shall pay
liquidated damages of 25% of minimum procurement limit.
Validation Term The agreement is valid for a long term. The agreement shall enter
into force on the date when both parties signed and stamped with
seal and shall terminate after the completion of the project and
after all the rights and obligations have been fulfilled, usually no
later than a date agreed by both parties.
During the Track Record Period and up to the Latest Practicable Date, there were no
material breaches of our customer agreements either on our part or the part of our customers,
and there was no termination of any material contract (representing contracts with values of
RMB5.0 million or more), except one contract which the customer had partially performed
before terminating due to changes in its drug development plan. We were not subject to any
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exclusivity clause in our provision of services during the same period. There was no material
dispute between customers and us on the acceptance of deliverables during the Track Record
Period and up to the Latest Practicable Date. During the Track Record Period, there were
seven, 13 and 27 terminated contracts in 2022, 2023 and 2024, with net contract value of
RMB6.9 million, RMB0.4 million, and RMB15.7 million, respectively, and accounted for
1.7%, 0.1% and 2.3% of the sum of contract value for all contracts during the same year,
respectively. Terminated contracts were generally because of changes in our customers’ own
peptide drug development resources, plans and cycles. Out of 27 terminated contracts in 2024,
some were due to the research design being highly complex and relying on cutting-edge
technologies. Since these technologies are still in the early stages of exploration and
development, the complexity of their application hindered project progress, making it difficult
to achieve the desired outcomes and ultimately leading to contract terminations.
SUPPLIERS
Owing to our vast array of services, we procure a wide variety of raw materials and
equipment, which are generally available from various suppliers in China in quantities
adequate to meet our needs. We have maintained stable relationships with many of our key
suppliers. There were no major raw materials quality issues during the Track Record Period and
up to the Latest Practicable Date.
Five Largest Suppliers in Each Y ear During the Track Record Period
In 2022, 2023 and 2024, purchases from our five largest suppliers in each year during the
Track Record Period in aggregate amounted to RMB68.1 million, RMB57.3 million and
RMB50.5 million, representing 43.6%, 40.4% and 32.5% of our total purchases for the same
year, respectively, and purchases from our largest supplier in each year during the Track
Record Period accounted for 17.0%, 13.1% and 10.7% of our total purchases for the same year,
respectively. During the Track Record Period and up to the Latest Practicable Date, we did not
encounter any material dispute with our suppliers or any material breach of our supply
contracts or agreements. To the best of our knowledge, as of the Latest Practicable Date, we
were not aware of any information or arrangement that would lead to termination of our
relationships with any of our five largest suppliers in each year during the Track Record Period.
None of our Directors, their respective associates, or Shareholders who own 5% or more of our
issued share capital had any interest in any of our five largest suppliers in each year during the
Track Record Period. During the Track Record Period, none of our five largest suppliers in
each year during the Track Record Period was also our customer.
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The following table sets forth certain information about our five largest suppliers in each
year during the Track Record Period in terms of purchases (in descending order) in 2022, 2023
and 2024, respectively:
For the year ended December 31, 2024
Suppliers Background
Main
Services/
Products/
Equipment
Procured
Y ears of
Business
Relationship
Credit Term
and Payment
Method
Procurement
Amount
Procurement
Contribution
(RMB in
millions)
Chengdu Pukangweixin
Biotechnology
Co., Ltd. ( ϓே౷ੰਬ
ʮ̡)
A company in China focusing on the
research & development of
polypeptide modifiers with
registered capital of RMB9.2
million.
Raw
Materials
Since 2019 30 Days,
Bank Transfer
16.6 10.7%
Hangzhou Tiandongli
Chemical Co., Ltd.
(Ϟ
ʮ̡)
A company in China focusing on
manufacture and sales of raw
materials, chemical products and
reagents with registered capital of
RMB10.0 million.
Raw
Materials
Since 2018 30 Days,
Bank Transfer
16.3 10.5%
Chengdu ZY
Biochemical
Technology Co., Ltd.
(ҦϞ
ʮ̡)
A company in China focusing on
natural and non-natural protected
amino acid derivatives and short
peptide fragments with registered
capital of RMB10.0 million.
Raw
Materials
Since 2013 30 Days,
Bank Transfer
6.1 3.9%
Jiangsu Hanbon Science
& Technology Co.,
Ltd. (ٰ
ʮ̡)
A company in China providing
professional separation and
purification equipment,
consumables and technical services
for the biopharmaceutical field,
with registered capital of RMB66.0
million.
Equipment Since 2011 30 Days,
Bank Transfer
6.0 3.9%
Shanghai Xietong
(Group) Co., Ltd.
(ɪऎ՘ஷ(ණྠ)ࠢ
ʮ̡)
A company in China engaged in sales
of equipment, medical device, and
raw materials with registered
capital of RMB102.6 million.
Equipment Since 2018 Upon
Prepayment,
Bank Transfer
5.5 3.5%
Total 50.5 32.5%
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For the year ended December 31, 2023
Suppliers Background
Main
Services/
Products/
Equipment
Procured
Y ears of
Business
Relationship
Credit Term
and Payment
Method
Procurement
Amount
Procurement
Contribution
(RMB in
millions)
Supplier A
(1) A company in China engaged in
comprehensive engineering service
with registered capital of
RMB1,000.0 million.
Construction Since 2016 15 days,
bank transfer
18.6 13.1%
Shanghai Changang
Machinery
Technology Co., Ltd.
(ҦϞ
ʮ̡)
A company in China focusing on
professional and technical services
in the fields of mechanics and
automation with registered capital
of RMB10.0 million.
Equipment Since 2018 15 days,
bank transfer
13.4 9.4%
Hangzhou Tiandongli
Chemical Co., Ltd.
(Ϟ
ʮ̡)
A company in China focusing on
manufacture and sales of raw
materials, chemical products and
reagents with registered capital of
RMB10.0 million.
Raw
Materials
Since 2018 30 days,
bank transfer
10.7 7.5%
Supplier B A company in China providing
construction services with
registered capital of RMB101.8
million.
Construction Since 2023 15 days,
bank transfer
9.6 6.8%
MarketOne Builders,
Inc.
A company in the United States
providing construction services.
(2)
Construction Since 2023 15 days,
bank transfer
5.0 3.6%
Total 57.3 40.4%
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For the year ended December 31, 2022
Suppliers Background
Main
Services/
Products/
Equipment
Procured
Y ears of
Business
Relationship
Credit Term
and Payment
Method
Procurement
Amount
Procurement
Contribution
(RMB in
millions)
Supplier A
(1) A company in China engaged in
comprehensive engineering service
with registered capital of
RMB1,000.0 million.
Construction Since 2016 15 days,
bank transfer
26.5 17.0%
Hangzhou Tiandongli
Chemical Co., Ltd.
(Ϟ
ʮ̡)
A company in China focusing on
manufacture and sales of raw
materials, chemical products and
reagents with registered capital of
RMB10.0 million.
Raw
Materials
Since 2018 30 days,
bank transfer
21.0 13.4%
Shanghai Xietong
(Group) Co., Ltd.
(ɪऎ՘ஷ(ණྠ)ࠢ
ʮ̡)
A company in China engaged in sales
of equipment, medical device, and
raw materials with registered
capital of RMB102.6 million.
Equipment Since 2018 Upon
prepayment,
bank transfer
7.9 5.1%
Shanghai Changang
Machinery
Technology Co., Ltd.
(ҦϞ
ʮ̡)
A company in China focusing on
professional and technical services
in the fields of mechanics and
automation with registered capital
of RMB10.0 million.
Equipment Since 2018 15 days,
bank transfer
6.6 4.2%
Chengdu Kelong
Chemical Co., Ltd.
(Ϟ
ʮ̡)
A company in China engaged in
manufacturing of chemical raw
materials and chemical products
with registered capital of RMB80.0
million.
Raw
Materials
Since 2017 30 days,
bank transfer
6.1 3.9%
Total 68.1 43.6%
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Key Contract Terms
We generally maintain long-term (over five years) supply collaboration with our key raw
material suppliers. We sign one-year agreements and renew these agreements annually,
adjusting the purchase price of the raw material based on market conditions. Additionally,
when providing quantity and delivery requirements for each separate purchase order, we also
discuss pricing with the suppliers and make adjustments accordingly to some extent. Given that
we have long-term supply collaboration in place with a majority of our key raw material
suppliers, we believe our supply arrangements enable us to largely manage fluctuations of raw
material prices, if any. During the Track Record Period and up to the Latest Practicable Date,
we did not experience any material fluctuations of raw material prices. Typically there are no
minimum purchase obligations under the long-term supply agreements. We also enter into
one-off supply contracts with some suppliers.
For the purchase of raw materials, the supplier must guarantee that the quality of the
materials conforms to the agreed-upon quality standards in the contracts. Regarding equipment
purchases, the supplier’s products must meet or exceed relevant national and industry standards
and specifications. If equipment is procured, the supplier is typically also responsible for
installing and debugging the equipment and providing trainings to our equipment operators.
Generally, our suppliers are subject to monetary penalties for failing to deliver products on
time.
Procurement
We make detailed and concrete procurement plans during the annual budgeting process
based on our sales target and production plans for the next year. This provides more clarity on
our procurement needs and enables us to mitigate risks of supply shortages. Such detailed
procurement plans also help us obtain favorable pricing through bulk purchases to reduce our
production costs.
We have maintained a list of suppliers approved by our senior management team. For any
given type of raw materials or supplies, we typically have multiple suppliers in order to obtain
competitive prices from suppliers, maintain sourcing stability and avoid over-reliance risk. The
procurement department enters into procurement agreements after negotiating with the
suppliers on commercial terms such as price and quantity.
We select our suppliers based on stringent criteria and applicable laws and regulations to
ensure the quality of our supplies. When selecting suppliers, we consider, among other things,
their product quality, product offerings, pricing, reputation, service quality and delivery
schedule. Our suppliers are required to possess all licenses and permits necessary to conduct
their operations.
We have also established a return and replacement management system and return
defective or expired products to suppliers in accordance with market practice. During the Track
Record Period and up to the Latest Practicable Date, we have not encountered quality problems
or received defective products or experienced any product return that could have a material
adverse effect on our business, financial condition or operations.
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Inventory Management
The inventories amounted to RMB79.3 million, RMB73.0 million and RMB84.8 million
as of December 31, 2022, 2023 and 2024, respectively. Our supplies are delivered by suppliers
in accordance with purchase orders and placed in warehouses that meet storage standards based
on their categories after they are inspected and accepted by us. We carry out overall inventories
management through our internal system, which records the stock level of our inventory and
past purchase records. We comply with the storage requirements and laws and regulations
during the storage period.
We strictly monitor our commodities in inventory, conduct regular physical inventory
counts and establish a monthly-based inventory cycle to meet our demands. We also closely
monitor the shelf life of all products, and once any product expires or reaches the end of its
service life, we safely dispose of the product in accordance with applicable laws and
regulations. We have not experienced any significant inventory write-offs during the Track
Record Period.
INTELLECTUAL PROPERTY
Protection of Our Intellectual Property
Intellectual property rights are important to the success of our business. Our future
commercial success depends, in part, on our ability to obtain and maintain patent and other
intellectual property and proprietary protections for commercially important technologies,
inventions and know-how related to our business, defend and enforce our patents, preserve the
confidentiality of our trade secrets, and operate without infringing, misappropriating or
otherwise violating the valid, enforceable intellectual property rights of third parties.
Our employees are bound by confidentiality obligations under their employment contracts
and are prohibited from disclosing our customers and our intellectual property. During the
Track Record Period and up to the Latest Practicable Date, to our knowledge, none of our
employees breached the confidentiality obligations under their employment contracts. We enter
into agreements with all of our employees under which they disown all intellectual property
they create during their employment and waive all relevant intellectual property rights or
claims. All of our employees have agreed to disclose and assign to us all inventions conceived
by them during their term of employment.
Trade Secrets
We rely upon trade secrets and know-how and continuing technological innovation to
develop and maintain our competitive position. However, trade secrets and know-how can be
difficult to protect. We seek to protect our proprietary information, in part, by executing
confidentiality agreements with our partners, collaborators, employees, and other third parties.
The confidentiality agreements we enter are designed to protect our proprietary information,
and the agreements or clauses requiring assignment of inventions to us are designed to grant
us ownership of technologies that are developed through our relationship with the respective
counterparty.
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Patents, Trademarks and Other Intellectual Property
Patents, patent applications, and other intellectual property rights are important in the
sector in which we operate. We consider on a case-by-case basis filing patent applications with
a view to protecting certain processes, and analytical methods. We may also license or acquire
rights to patents, patent applications, or other intellectual property rights owned by third
parties, academic partners, or commercial companies which are of interest to us. As of the
Latest Practicable Date, we were the owner of 16 patents in China, and we had five pending
patent applications in total in China.
As of the Latest Practicable Date, our owned patents were as follows:
Description
Place of
Registration Issuance Date Expiry Date
Glucagon analogs, methods of
preparation and use thereof
China June 13, 2017 December 21,
2031
A cyclic peptide with a -Pro-Sta-Tyr-
residue fragment used as an
immunosuppressant and its synthesis
methods
China May 4, 2011 April 30, 2028
A cyclic peptide with -Ile-Sta-Pro-
residue fragment used as an
immunosuppressant and its synthesis
methods
China September 8,
2010
April 30, 2028
A cyclic peptide with a -V al-Sta-Leu-
residue fragment used as an
immunosuppressant and its synthesis
methods
China September 8,
2010
April 30, 2028
An analog of adrenocorticotropic
hormone, methods of preparation and
use thereof
China April 20, 2016 March 8, 2031
A peptide for the treatment of diabetes
mellitus, methods of preparation and
use thereof
China May 25, 2016 March 21, 2031
Novel vascular intestinal peptide
analogs, methods of preparation and
use thereof
China August 24,
2016
June 12, 2031
Analogs of thymopeptide alpha 1,
methods of preparation and use
thereof
China April 12, 2017 June 12, 2031
Novel salmon calcitonin analogs,
methods of preparation and use
thereof
China August 24,
2016
August 3, 2031
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Description
Place of
Registration Issuance Date Expiry Date
Long-acting salmon calcitonin analogs,
methods of preparation and use
thereof
China August 24,
2016
August 10,
2031
Analogs of glucagon-like peptide-2
(GLP-2), methods of preparation and
use thereof
China August 24,
2016
August 10,
2031
A fragmentation synthesis method for
the preparation of goserelin
China June 4, 2021 May 30, 2038
A preparation method of glucagon China November 24,
2023
December 26,
2039
A preparation method of plecanatide China November 3,
2023
August 2, 2041
A synthesis method of semaglutide China March 7, 2025 November 8,
2044
A kind of synthetic method of tepote China April 25, 2025 December 27,
2044
The term of a patent depends upon the laws of the country in which it is issued. In most
jurisdictions, a patent term is 20 years from the earliest filing date of a non-provisional patent
application. Under the PRC Patent Law, the term of patent protection starts from the date of
application. Patents related to inventions are effective for 20 years, patents related to designs
are effective for 15 years, and patents related to utility models are effective for 10 years from
the date of application. There are no patent term adjustments or patent term extensions
available in the PRC for issued patents. In the United States, a patent’s term may be lengthened
in some cases by a patent term adjustment, which extends the term of a patent to account for
administrative delays by the United States Patent and Trademark Office in excess of a patent
applicant’s own delays during the prosecution process, or may be shortened if a patent is
terminally disclaimed over a commonly-owned patent having an earlier expiration date.
As of the Latest Practicable Date, we had registered 34 trademarks in China and three
trademarks in Hong Kong. In addition, we are the registered owner of 18 domain names.
Protection of Our Customers’ Intellectual Property
Our reputation and business success also depend on our ability to protect the intellectual
property rights of our customers. Due to the nature of our services, we typically have access
to the drug chemistries, production processes and other intellectual property owned by or
licensed to our customers. We strategically focus on the role of the partner of choice in
discovering, developing and manufacturing peptides and oligonucleotide instead of the role of
a drug maker ourselves and therefore do not have interests that conflict with those of our
customers.
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Protecting the proprietary rights of our customers has been a top priority since our
inception. We have established an intellectual property protection process to properly manage
the document transmission and archiving, preservation of documents related to R&D and
manufacturing, supervision and control of laboratory computers and access to documents in
connection with confidential information.
We put a heavy emphasis on record keeping, as our science notes can be used as original
data in support of regulatory submissions or patent applications. We are now switching from
physical notebooks to electronic notebooks for many of our customers.
Our process preserves the documentation necessary to establish intellectual property
ownership should any disputes arise in the future. This process not only significantly enhances
the protection of key original information, but also increases customers’ confidence and trust
in our company.
In addition, we have established virtual and physical firewalls to protect the customer’s
projects and intellectual property. We believe that our information management system
complies with all regulatory requirements regarding security, including data integrity,
compatibility and audit-trail generation. To the extent that we are able to, each customer project
has dedicated laboratory space equipped with key-card access control systems. Most of our
laboratory computers are not connected to the external internet, so that they cannot be accessed
by unauthorized external parties and have restricted data-transfer capabilities. We believe that
the firewalls restrict potential leaking or intermingling information of different customers and
safeguard their intellectual property.
Despite the measures and efforts, we have taken to protect our own and our customers’
intellectual property, unauthorized parties may attempt to obtain and use information that we
regard as proprietary. Under our contractual arrangements with our customers, we typically
undertake to indemnify our customers for damages resulting from any third-party intellectual
property infringement claims that are solely based on our intellectual property; our customers
typically undertake to indemnify us for damages resulting from any third-party intellectual
property infringement claims other than those that are solely based on our intellectual property.
During the Track Record Period and up to the Latest Practicable Date, we were not subject to,
nor were we party to, any intellectual property rights infringement claims or litigations and
were not aware of any material infringement of our intellectual property rights that had a
material adverse effect on our business. We had complied with all applicable intellectual
property laws and regulations in all material respects during the Track Record Period and up
to the Latest Practicable Date.
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COMPETITION
We face competition primarily from other leading CRDMO and CDMO companies who
are active in peptide manufacturing. Our global market share reached 1.5% in 2023, ranking
third in the global peptide-focused CRDMO services market in 2023, according to Frost &
Sullivan. Peptide CRDMO service providers face competition based on several factors,
including growth of the overall pharmaceutical market, the market demand, quality and breadth
of services, specific scientific and regulatory expertise, advanced technological requirements,
high capital expenditure needs, timeliness of delivery, manufacturing capability and capacities,
capable talent, global supply chain solutions, and ability to build/establish capable GMP
certified facilities.
In terms of barriers to entry, the peptide CRDMO market generally requires high technical
expertise. We are well-positioned to capture opportunities in the sizable and fast-growing
peptide drug market, with our peptide production technology, strong compliance record and
experienced management team. We believe that we can maintain our competitiveness by
leveraging our established position in the global peptide CRDMO market and capitalizing on
the opportunities offered by the fast-growing market.
Please see the section headed “Industry Overview” for details of the global peptide and
oligonucleotide outsourcing services market.
INSURANCE
We maintain property insurance policies covering physical damage to, or loss of, our
facilities and their improvements, equipment, office furniture and inventory; employer’s
liability insurance generally covering death or work injury of employees; product liability and
professional errors and omissions insurance covering product liability claims arising from the
use or operation of our peptide compounds and claims arising from negligence in connection
with our services to customers; public liability insurance covering certain incidents involving
third parties that occur on our premises. We do not maintain key-man life insurance for any
members of our senior management or other key personnel or business disruption insurance.
While we believe that our insurance coverage is adequate and in line with the industry norm
in China and the United States, it may be insufficient to cover all claims for product liability
or damage to our fixed assets. See “Risk Factors—Risks Relating to Our Business and Our
Industry—We have limited insurance coverage, and any claims beyond our insurance coverage
may result in us incurring substantial costs and a diversion of resources.” for more information.
PROPERTIES
We have owned and leased a number of properties in China and the United States. The
following table sets forth a summary of the properties owned or leased by us as of the Latest
Practicable Date. None of our properties were used as the collateral for mortgages. We believe
our current facilities are sufficient to meet our near-term needs, and additional space can be
obtained on commercially reasonable terms to meet our future needs. We will negotiate with
our landlord for the renewal of the lease agreement that will expire within three months and
we do not anticipate undue difficulty in renewing our leases upon their expiration.
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Location Actual Usage Area (sq.m.)
Ownership/
Leased Term/Expiry Date
Qiantang Site Manufacturing 25,927
(the parcel
of land),
20,275.4
(the GFA)
Owned N/A
Baiyang Street,
Qiantang New
District, Hangzhou
Employee
dormitory
50.5
(the parcel
of land),
178.3
(the GFA)
Owned N/A
Hangzhou Biopharma
Town Site
Manufacturing 10,013.0
(the parcel
of land)
Owned N/A
Rocklin Site Manufacturing 11,736
(the parcel
of land),
3,809
(the GFA)
Owned N/A
Xiasha Street,
Qiantang New
District, Hangzhou
Employee
dormitory
89.4 (the GFA) Leased August 31, 2025
(1)
Xiasha Street,
Qiantang New
District, Hangzhou
Employee
dormitory
106.1 (the GFA) Leased September 24, 2025
(1)
Xiasha Street,
Qiantang New
District, Hangzhou
Employee
dormitory
87.9 (the GFA) Leased November 14, 2025
(1)
Milpitas, California Office 216.6 (the GFA) Leased September 30, 2027
Note:
(1) We typically submit our renewal requests two months prior to the respective lease expiration dates and expect
to obtain renewals without any material difficulties.
As of the Latest Practicable Date, none of the properties held by us had a carrying amount
of 15% or more of our consolidated total assets. Therefore, according to Chapter 5 of the
Listing Rules and section 6(2) of the Companies (Exemption of Companies and Prospectuses
from Compliance with Provisions) Notice (Cap. 32L of the Laws of Hong Kong), this
Prospectus is exempted from compliance with the requirements of section 342(1)(b) of the
Companies (Winding Up and Miscellaneous Provisions) Ordinance in relation to paragraph
34(2) of the Third Schedule to the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, which require a valuation report with respect to all our Group’s interests in land or
buildings.
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ESG MATTERS
ESG Governance Structure
We regard ESG as fundamental to our corporate sustainable development. To embed ESG
into our corporate operational management, we actively assess and integrate sustainability into
our daily business operation decision-making processes. We have initially established a
three-tier ESG governance structure as follows:
Parties Responsibilities
Board of Directors The Board of Directors holds ultimate responsibility for our
overall direction, strategy, objectives, performance, and reporting
regarding our sustainable development. Supported by the ESG
Committee, the Board of Directors provides oversight of
sustainability-related matters.
ESG Committee The ESG Committee consists of three members from the Board of
Directors: Ms. Li (executive Director) serves as the Chair of the
ESG Committee, with Dr. Xu (chairwoman, executive Director and
CEO) and Mr. Xia Xinsheng (ː᳅) (independent non-executive
Director) as members. The ESG Committee holds meetings at least
twice a year, providing recommendations to the Board of Directors
on ESG objectives, strategies, risks, material topics, and
significant decisions, and regularly monitoring the implementation
and progress of our ESG work.
We took full consideration of diversity among its members when
setting up the ESG Committee.
ESG Task Force The ESG Task Force is chaired by Ms. Li, who also serves as the
Chair of the ESG Committee. It comprises members from various
departments, including Technical Vice President, the Human
Resources Department, the Quality Assurance Department, the
environment, health and safety (“ EHS”) Department, and the
Board Secretary Office. The Task Force meets at least four times
a year and reports regularly to the ESG Committee. The Task Force
reports to the Committee on Sustainable Development on
identified significant sustainable development risks, opportunities
or trends, and develops management goals, policies, and action
plans to address these risks and opportunities. Meanwhile, the Task
Force is responsible for planning and implementing sustainable
development initiatives, promoting and encouraging cross-
functional collaboration. In addition, it is also responsible for
preparing the annual Environmental, Social and Governance
Report.
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Our ESG task force members have extensive work experience related to our ESG issues.
To ensure that our Board of Directors and all employees understand ESG-related knowledge
and practice ESG principles, the ESG Task Force will be responsible for conducting regular
ESG knowledge training across our Group. Additionally, as deemed necessary by the ESG
committee, we will engage external experts to provide ESG training for the Board of Directors,
the ESG Committee, and the ESG task force. This is aimed at ensuring that our Board of
Directors, the ESG committee, and the ESG task force possess professional and sufficient
knowledge in ESG matters to facilitate us in making ESG-related decisions.
ESG Material Topics
Based on the MSCI ESG Industry Materiality Map for the medical service sector under
the health care industry, the average weights of governance, product safety and quality, labor
management, privacy and data security, carbon emissions, human capital development, access
to health care, as well as toxic emissions and waste are approximately 35.0%, 24.8%, 19.7%,
14.8%, 4.9%, 0.4%, 0.2%, and 0.2%, respectively. Meanwhile, with reference to the healthcare
materiality list in the Environmental, Social and Governance Reporting Guide of the Stock
Exchange, SASB Health Cared Materiality Map and the topics identified by leading
ESG-rating companies in the industry, we have preliminarily determined the following key
ESG matters based on our actual situation:
Material issues Materiality
Potential risks/
opportunities
Some quantitative
indicators
Business ethics and
anti-corruption
V ery important Good business
ethics can
establish a
positive corporate
image
Average hours of
anti-corruption
training per
person
(hours/person)
Product quality &
safety
V ery important Product quality
assurance is
critical to the
enterprise’s
revenue
Percentage of total
products sold or
shipped to be
recycled due to
safety and health
reasons (%)
Data security &
privacy
V ery important Potential litigation
damages resulting
from violations of
confidentiality
principles
Total number of
violations of
regulations and
voluntary
guidelines on
customer privacy
protection (cases)
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Material issues Materiality
Potential risks/
opportunities
Some quantitative
indicators
Greenhouse gas
emission
V ery important Excessive emissions
may result in
fines
Total greenhouse
gas emissions
(tonnes)
Development and
training
V ery important Talent is the
cornerstone of
corporate
development
Employee training
coverage rate (%)
Occupational health
and safety
V ery important Talent is the
cornerstone of
corporate
development
Number of
workdays lost due
to employee
injuries (days)
Risk management Relatively
important
Timely
identification and
response to risks
can reduce losses
Number of
significant risk
events (cases)
R&D and
innovation
Relatively
important
The embodiment of
enterprise
competitiveness
R&D expenditure as
a percentage of
operating income
(%)
Protection of
intellectual
property rights
Relatively
important
The embodiment of
enterprise
competitiveness
Number of
intellectual
properties held
(pieces)
Waste Relatively
important
Excessive emissions
may result in
fines
Hazardous waste
emissions
(tonnes)
Supply chain
management
Relatively
important
A stable supply
chain is the
guarantee of
timely delivery
Number of
Suppliers
(suppliers)
Equal employment Relatively
important
Talent is the
cornerstone of
corporate
development
Percentage of
female employees
(%)
Climate change Relatively
important
Refer to Climate
Change
Loss from climate
change
(RMB10,000)
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Material issues Materiality
Potential risks/
opportunities
Some quantitative
indicators
Customer
relationship
Relatively
important
Customer
satisfaction
supports long-
term business
development
Percentage of
customer
complaints
resolved (%)
Social contribution Moderately
material
The embodiment of
corporate social
responsibility
Amount of
investment in
social welfare
(RMB10,000)
After the listing, the ESG Task Force will continuously review the material topics and
communicate extensively with our stakeholders through diverse channels to gather feedback.
This feedback will be integrated and presented to the ESG Committee, enabling the Board of
Directors to timely assess the materiality of various topics to us and shareholders. Their
feedback will be incorporated into materiality assessments and corporate strategies, as
appropriate, to develop a materiality matrix that better aligns with our actual situation.
Product Responsibility
We believe that innovation and R&D capabilities can solidify our market position and
ensure long-term growth. With our intellectual property rights in synthesis technology, we have
established a library comprising hundreds of thousands of peptides. With an exceptional
technical team in the industry, we have over 30 years of dedicated experience in the field of
peptides.
Furthermore, we are also increasing our investment in green chemistry. Our internal
technical team consistently shares knowledge of green chemistry to enhance our awareness. As
our global business develops and production scales expand, we are conducting green chemical
research to anticipate energy conservation and emission reduction requirements for future
large-scale production and new capacity planning. Meanwhile, this also represents an urgent
requirement for our Group to fulfill its social responsibility.
Health and Safety
We view occupational health and safety as a critical social responsibility. In order to
safeguard the occupational health and safety of our employees, prevent pollution, and help
employees understand the environmental impacts and hazards to their occupational health and
safety in the workplace, as well as to prevent and avoid environmental pollution and
occupational injuries, we have established the General Principles of Environmental
Occupational Health and Safety Management () and a
handbook. We adhere to the principle of “Prevention first, with full employee participation;
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prioritizing safety and health, environmental protection and energy conservation; Ensuring
compliance with regulations and striving for continuous improvement”. Additionally, we have
set a minimum requirement of 4 hours of environmental/occupational health and safety training
per person per year, with a 100% coverage rate. In 2022, we were honored with the title of
“Hangzhou Health Demonstration Unit of 2021”.
Board and Senior Management Diversity
After the listing, we will have four female Directors out of nine Board members.
Currently, the Board composition demonstrates diversity and inclusion. For details, please see
the section headed “Directors, Supervisors and Senior Management”.
Environmental Protection
We have a research base in China. Our operations and facilities are subject to certain
environmental protection laws and regulations in the United States and China, which also
require us to obtain permits from governmental authorities for certain businesses. For details,
please see the section headed “Regulatory Overview” of this Prospectus.
To protect the environment, prevent pollution, and comply with relevant laws and
regulations, we adhere to the principles of “prevention-driven, full staff participation, safety
and health, environmental protection and energy conservation, compliance with laws and
regulations, and continuous improvement”. We have established detailed internal rules
regarding environmental protection, including the Environmental Protection Management
Policy (), Response Plan for Emergency Environmental Incidents,
Environmental Factor Identification, Assessment, and Control Planning Procedure ( ᐑྤΪ
९ᗆйe൙ᄆձછՓഄྌ೻ҏ), Hazardous Waste Emission Control Management Policy
(), Exhaust Gas Emission Management Policy (၍
), Wastewater Emission Management Policy (), Solid Waste
Management Policy (), and Biological Waste Management Policy ( ͛
).
In response to environmental emergencies, we have also developed the response plan for
emergency environmental incidents () to assess the risks we may
face and formulate corresponding emergency plans.
Waste Emission and Management
Our hazardous waste includes waste organic solvents, waste resins, waste packaging
drums (iron/plastic drums), waste activated carbon, waste engine oil, production waste (glass
bottles/plastic bottles/laboratory utensils/gloves/masks/experimental paper), waste palladium-
carbon catalysts, waste medicines, and waste ink cartridges and selenium drums. General solid
waste includes general packaging (wooden frame, cardboard), pure water system waste resins,
waste membranes, domestic waste (plastic paper fruit shells, scrapped office electronic
products (including waste batteries), waste fluorescent tubes), among others.
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We have established a series of strict management procedures and resolutely implement
them to ensure compliance with applicable environmental protection laws and regulations. For
hazardous waste, our EHS Department has developed a hazardous waste management plan and
promptly submitted it for approval as required by the environmental protection department. We
strictly implement procedures for the collection, storage, and disposal of hazardous waste as
outlined in the Hazardous Waste Emission Control Management Policy. Also, the EHS
Department delegates the disposal of hazardous waste to professional qualified units.
Additionally, to effectively reduce the generation of hazardous waste, we have
implemented the following waste minimization measures:
 Enhancing Solvent Utilization Efficiency: By improving process workflows, we
maximize the efficiency of solvent use, thereby reducing overall solvent
consumption. This measure helps to lower production costs and minimizes the
amount of hazardous waste generated from solvent disposal.
 Strengthening Waste Classification Management: We strictly enforce the segregation
of hazardous waste from general industrial waste to ensure that they are not mixed.
Accurate classification prevents unnecessary resource waste and further mitigates
environmental pollution risks caused by misclassification. Furthermore, it enables
the adoption of more precise disposal procedures, improving overall disposal
efficiency.
For general industrial solid waste, mainly waste cardboard and scrap iron sheets, we also
commission professional agencies for recycling.
The quantities of our hazardous and non-hazardous waste in 2022, 2023 and 2024,
respectively, were as follows:
Y ears ended December 31,
Waste 2022 2023 2024
Hazardous waste (tonnes) 2,703.9 2,275.0 3,386.0
Recyclable waste (tonnes) 2.3 2.7 2.9
To reduce and control the generation of exhaust gases, the EHS Department arranges
annual testing of exhaust gas emissions, applies for discharge permits from the environmental
protection department, and pays discharge fees as required. Based on the test results and actual
control needs, we install activated carbon absorption devices to reduce exhaust gas emissions.
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Additionally, we have developed an emergency response rescue plan for accidents to address
situations where we discover atmospheric pollution leading to abnormal air quality. The total
emissions of pollutants from exhaust gases generated by our factories in 2022, 2023 and 2024,
respectively, were as follows:
Y ears ended December 31,
Waste 2022 2023 2024
Industrial exhaust gases (tonnes) 1.5 1.6 0.9
In order to strengthen the pollution prevention and control of our wastewater, improve the
quality of our water environment, and comply with emission standards, we have developed the
Wastewater Emission Management Policy. For hazardous waste liquids generated from
production, we strictly adhere to the procedures for collection, storage, and treatment outlined
in the Hazardous Waste Emission Control Management Policy. For general production
wastewater, on if all emission indicators meet requirements, it is discharged to the sewage
treatment plant. We install an online water quality monitoring system capable of real-time
monitoring of chemical oxygen demand, suspended solids, ammonia nitrogen, and pH in
wastewater. Personnel from the EHS Department conduct daily inspections of online
monitoring stations and commission third-party testing units to sample and test discharge
outlets monthly. Also, we have a series of emergency devices and have formulated the
Emergency Preparedness and Response Control Procedures to address abnormal situations. Our
wastewater discharges in 2022, 2023 and 2024, respectively, were as follows:
Y ears ended December 31,
Waste 2022 2023 2024
Waste water (tonnes) 55,875 43,498 51,135
Resource Consumption and Carbon Emissions
Our primary resource consumption includes gasoline, diesel, electricity purchased from
the grid, heat purchased from municipalities, and water resources. Electricity is the main
source of carbon emissions for our Group among these. Therefore, we are committed to
improving energy efficiency to reduce carbon emissions. In order to strive and contribute to the
reduction of overall greenhouse gas (“ GHG”) emissions, we monitor resource consumption by
integrating the concept of resource conservation into our corporate culture as well as our daily
operations in relation to production and offices. Moreover, we conduct regular assessments,
make continuous improvements, eliminate equipment with high energy consumption and high
pollution, and introduce high-efficiency, energy-saving, and low-pollution equipment such as
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electric motors, fans, and pumps, reducing carbon emissions. We actively optimize processes
to reduce energy and chemical usage, lowering pollutant emissions. The total quantity and
intensity of various resource consumptions in 2022, 2023 and 2024, respectively, were as
follows:
Y ears ended December 31,
Consumption 2022 2023 2024
Water resource consumption (tonnes) 69,844 72,694 70,148
Water resource consumption intensity
(tonne/revenue of RMB10,000) 2.0 2.2 1.6
Gasoline consumption (L) 9,993 12,305 13,405
Gasoline consumption intensity
(L/revenue of RMB10,000) 0.3 0.4 0.3
Diesel consumption (L) 3,854 1,195 1,577
Diesel consumption intensity
(L/revenue of RMB10,000) 0.1 0.04 0.04
Heat consumption (GJ) 15,081 16,859 19,042
Heat consumption intensity (GJ/revenue
of RMB10,000)) 0.4 0.5 0.4
Electricity consumption (MWh) 9,420 10,333 11,484
Electricity consumption intensity
(MWh/revenue of RMB10,000) 0.3 0.3 0.3
Y ears ended December 31,
Carbon dioxide emission 2022 2023 2024
Scope 1 (1) (tCO 2e) 33.7 32.2 35.8
Scope 2 (1) (tCO 2e) 7,031.4 7,747.3 8,644.1
Total GHG emissions (tCO 2e) 7,065.1 7,779.4 8,679.8
Intensity (tCO 2e/revenue of
RMB10,000) 0.2 0.2 0.2
Notes:
(1) The scopes 1 to 2 greenhouse gas emissions classification was determined according to Greenhouse Gas
Protocols.
We have made reference to the ESG performance (including the level of energy
consumption, exhaust gas emissions, and waste management) disclosed in the prospectus and
annual reports of leading companies in the industry, and our ESG performance is comparable
to those industry leaders. Specifically, the total water consumption of the above-mentioned
companies in 2023 ranged from 18,393 tonnes to 210,020 tonnes, total electricity consumption
ranged from 3,500 KWh to 32,418 KWh, and GHG emissions ranged from 2,137 tonnes to
33,569 tonnes.
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We are committed to controlling electricity consumption and GHG emissions. The table
below sets out our emission reduction targets for GHG emissions and electricity consumption
over the next three years compared to the actual figures for 2024.
Consumption 2024
Targets for each of
the next three years
(2025-2027)
GHG emissions intensity (tCO 2e/revenue
of RMB10,000) 0.2 no more than 0.4
Electricity consumption intensity
(MWh/revenue of RMB10,000) 0.3 no more than 0.5
In pursuit of our long-term goals, we aim to achieve carbon neutrality by 2060.
Throughout this period, we remain steadfast in our commitment to consistently reduce the
intensity of carbon dioxide emissions. To attain this target, we have implemented and will
continue to adopt measures that control resource and energy consumption in our daily
operations, thereby effectively lowering carbon emissions. Our investments in upgrading our
facilities to lower energy consumption include replacing conventional lights with energy-
efficient LED lights and installing variable frequency air conditioning systems. In addition to
the aforementioned measures, our energy-saving and environmental protection initiatives
encompass ongoing research and development aimed at reducing solvent usage. We also
prioritize sustainability by utilizing recyclable stainless-steel barrels for certain solvent
storage. Furthermore, when there are new construction, renovation and expansion projects, as
well as new processes, products or equipment, we requires that pollution prevention and
mitigation facilities must be designed, constructed, and operational simultaneously with the
main projects. We believe that these pollution control facilities meet environmental impact
assessment requirements and remain operational without unauthorized dismantling or idle
periods. In our recent construction projects, we prioritize energy efficiency by incorporating
energy-saving devices and materials wherever possible. These include energy-efficient
windows, roofing materials, air conditioning equipment, and lighting systems. Additionally, we
diligently maintain all equipment, promptly addressing aging or abnormal energy consumption.
When necessary, we opt for repairs or replacements, even if it entails increased costs. This
strategic approach not only reduces long-term energy expenses but also helps us avoid potential
penalties for excessive emissions in the future. Furthermore, we explore sustainable
alternatives such as solar photovoltaic power generation and the use of green electricity,
whenever circumstances allow, to contribute to our goal of achieving carbon neutrality.
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We also focus on emissions in Scope 3. We plan to initiate the assessment of our Scope
3 greenhouse gas emissions, and have implemented a series of emission reduction measures for
Scope 3 carbon emissions. We plan to complete the data collection of Scope 3 for 2024 at the
beginning of 2025, which will be used as our data baseline for the future. To reduce emissions
in Scope 3, we have implemented several measures, including but not limited to: (i) posting
water and electricity saving signs in prominent locations within the office to raise employee
awareness about environmental issues; (ii) encouraging duplex printing and electronic
reporting to foster a paperless office environment; (iii) promoting conference calls and online
meetings to minimize unnecessary travel; (iv) encouraging employees to prioritize public
transport and green travel for their commutes and business trips; (v) maximizing the reuse,
recycling, and remanufacturing of materials in our production processes to enhance solid waste
utilization and reduce overall waste; and (vi) evaluating the environmental performance of
suppliers in terms of energy consumption, production methods, and transportation modes, and
encouraging them to optimize their carbon emissions. We will continue to focus on suppliers
and upstream and downstream transport and distribution to reduce carbon emissions from the
corporate value chain. By 2030, we aim to reduce our water intensity by 20% and our
comprehensive utilization of solid waste by 85% in China, both compared to 2023 levels. In
addition, we closely monitor the implementation of these goals and make timely adjustments
and improvements to our strategies as the Company’s development situation evolves.
Climate Change
We recognize the importance of addressing the risks of climate change. To ensure our
long-term resilience to climate risks, we refer to the recommendations of the Task Force on
Climate-related Financial Disclosures to assess and implement various climate change risk
management measures to remain vigilant against addressing climate change-related impacts
and risks in our business operations.
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Climate change-related risk Potential impacts Response measures
Transition
Risks
Policy and legal
risks
Environmental
regulation
 Allocation of carbon
emission allowances
by the government
and pressure on the
cost of carbon
 Costs of energy and
raw materials due to
stricter regulation and
costs of disposal of
pollutants or
hazardous waste
 Fines, business losses,
closure of operations,
and negative impacts
on brand and
reputation
 Enhance compliance
operations
 Take the initiative to
promote energy
conservation and
emission reduction,
and adjust the
structure of energy
use
 Strengthen supply
chain management
Litigation risk  Production or supply
chain disruption,
leading to litigation
risks associated with
inability of companies
to fulfill their
contracts on time
Technology risk Transition costs of
low-carbon
emission
technologies
 The budget related to
the research and
development of green
chemistry technology
 Increased costs due to
equipment upgrades
and procurement of
new equipment
technology
 Increase energy
conservation and
consumption
reduction, and
improve the efficiency
of energy use to
reduce operating costs
in the long term
 Intensify the
introduction of
professional talent and
talent cultivation
efforts
 Take the initiative to
promote green and
low-carbon transition
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Climate change-related risk Potential impacts Response measures
Market risk Changes in
customer
behavior
 Loss of orders and
revenue due to
disclosure of carbon
neutral targets and
data failing to meet
the needs of
downstream customers
 Improve ESG
governance structure
and proactively
respond to ESG-
related issues
 Enhance information
disclosure and
stakeholder
communication
Rising cost of raw
materials
 Reduced quantity and
quality of raw
materials. A decrease
in quantity will
increase the cost of
raw materials, thereby
increasing operating
costs of enterprises
 Strengthen supply
chain management
Reputation risk Increasing
concerns about
negative
feedback from
stakeholders
 As corporate
stakeholders,
including investors
and customers, are
increasingly
concerned about
sustainable
development and
climate change issues,
insufficient corporate
information disclosure
can damage a
company’s reputation
 Improve ESG
governance structure
and proactively
respond to ESG-
related issues
 Enhance information
disclosure and
stakeholder
communication
Physical
risks
Acute risks Increased severity
of extreme
weather events,
such as typhoons
or floods
 Damage to property
and assets, including
buildings,
infrastructure and
others
 Production/supply
chain may be unable
to complete deliveries
in time, disrupting
business
 Property insurance
 Develop emergency
response plans
 Strengthen supply
chain management
Chronic risks Average
temperature rise
 Increased energy
consumption and
operating costs
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CERTIFICATES, PERMITS AND LICENSES
As of the Latest Practicable Date, we had obtained all requisite licenses, approvals and
permits from relevant authorities that are material to our operations in the United States and
the PRC, and such licenses, permits and certifications all remain in full effect. For more details
regarding the laws and regulations to which we are subject, see “Regulatory Overview” in this
Prospectus. There is no material legal impediment in renewing such licenses, permits,
approvals and certificates as they expire in the future as long as we are in compliance with
applicable laws, regulations and rules. During the Track Record Period and up to the Latest
Practicable Date, we had not been penalized by any government authorities for any
non-compliance relating to maintenance and renewal of our material licenses, permits,
approvals and certificates.
The following table sets forth a summary of our material licenses, permits and certificates
that we obtained as of the Latest Practicable Date:
Certificates/Permits/
Licenses
Certificate/ Permit/
License Number Issuing Authority
Effective
Date Expiry Date
License to Discharge
Urban Sewage into the
Drainage Network (۬
ᕄϮ˥રɝર˥၍ၣ஢
̙ᗇ)
Zhe330108 No. 1101
(ए330108 οୋ1101໮)
Qiantang New
District
Management
Committee ( ፺෨
ึ)
July 13, 2021 July 12, 2026
Notification of Approval
of Marketing
Application for
Chemical APIs
(2021YS00035) (ࡡ
ٝ
ࣣ2021YS00035))
(1)
Y20190001147 NMPA (္
ຖ၍ଣ҅)
December 21,
2021
December 20,
2026
Notification of Approval
of Marketing
Application for
Chemical APIs
(2022YS00342) (ࡡ
ٝ
ࣣ2022YS00342))
(2)
Y20200000281 NMPA (္
ຖ၍ଣ҅)
April 8, 2022 April 7, 2027
Certificate of Suitability RO-CEP 2020-111 –
Rev 00
European
Directorate for
the Quality of
Medicines &
Health Care
May 23, 2022 May 22, 2027
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Certificates/Permits/
Licenses
Certificate/ Permit/
License Number Issuing Authority
Effective
Date Expiry Date
Certificate of Work Safety
Standardization ( τΌ͛
ࣣ)
HangAQBQT III
202200619 (؄AQBQT
III 202200619)
Hangzhou
Emergency
Management
Bureau (ψ̹Ꮠ
၍ଣ҅)
March 28,
2025
March 2028
Drug Manufacturing
License (͛ପ஢̙
ᗇ)
Zhe20050090
(ए20050090)
Zhejiang Medical
Products
Administration
(္ຖ
၍ଣ҅)
July 27, 2021 September 2,
2029
Notification of Approval
for Re-registration of
Chemical APIs
(2023R000952) (ࡡ
ࣣٝ
2023R000952))
Y20170001090 Zhejiang Medical
Products
Administration
(္ຖ
၍ଣ҅)
February 22,
2023
February 21,
2028
License of Pollution
Discharge ( રϮ஢̙ᗇ)
913301017308948782001P Hangzhou Ecology
and Environment
Bureau (ψ̹͛
࿒ᐑྤ҅)
August 14,
2023
September 1,
2029
Medical devices Quality
Management Systems
Requirements for
Regulatory Purposes
(ᔼᐕኜ
૛ሯඎ၍ଣ᜗ӻ)
Q8 067952 0007 Rev. 00 TÜV SÜD Product
Service GmbH
August 31,
2023
August 30,
2026
Occupational Health and
Safety Management
System Certificate ( ᔖ
ุ਄ੰτΌ၍ଣ᜗ӻႩ
ࣣ)
00122S33245R3M/3302 China Quality
Certification
Center ( ʕ਷ሯඎ
Ⴉᗇʕː)
September 11,
2023
January 9,
2026
Environmental
Management System
Certificate ( ᐑྤ၍ଣ᜗
ࣣ)
00122E33568R3M/3302 China Quality
Certification
Center ( ʕ਷ሯඎ
Ⴉᗇʕː)
September 12,
2023
January 5,
2026
BUSINESS
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Certificates/Permits/
Licenses
Certificate/ Permit/
License Number Issuing Authority
Effective
Date Expiry Date
Quality Management
System Certificate ( ሯ
ࣣ)
00123Q37290R4M/3302 China Quality
Certification
Center ( ʕ਷ሯඎ
Ⴉᗇʕː)
September 14,
2023
September 16,
2026
Notification of Approval
of Re-registration for
Chemical APIs
(2024R001058) (ࡡ
ࣣٝ
2024R001058))
China Drug
Administration Code
H20090283/
Y20190007496
(οH20090283/
Y20190007496)
Zhejiang Medical
Products
Administration
(္ຖ
၍ଣ҅)
February 7,
2024
February 6,
2029
Written Confirmation for
Active Substances
Exported to EU ( ̈ɹᆄ
׼)
ZJ240144 Zhejiang Medical
Products
Administration
(္ຖ
၍ଣ҅)
September 26,
2024
September 15,
2026
Notes:
(1) This marketing application is for cetrorelix acetate.
(2) This marketing application is for terlipressin acetate.
A W ARDS AND RECOGNITIONS
The table below sets forth a summary of the major awards and recognition we received
during the Track Record Period.
Award/Recognition Award Date Awarding Organization/Authority
High-growth Company in the
Biopharmaceutical Industry of
Zhejiang Province (ي
Άุ)
2024 Department of Economy and
Informatization of Zhejiang
Province (ʷᝂ)
National-level Specialized,
Excellent, Featured and
Innovative “Little Giant”
Company (ॴਖ਼ၚतอʃ
̶ɛΆุ)
2024 Ministry of Industry and Information
Technology (ʷ௅)
Candidate Products for Hangzhou
High-Quality Recommendation
Items (પᑥͦ፽
ۜ)
2024 Hangzhou Economic and Information
Technology Bureau (ψ̹຾᏶ձ
ʷ҅)
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Award/Recognition Award Date Awarding Organization/Authority
National Post-doctoral Research
Center (ʈЪ
१)
2024 Ministry of Human Resources and
Social Security, (ڭ
ღ௅, National Postdoctoral
Management Committee ( Ό਷௹ɻ
၍։ึ)
Candidate Products for Hangzhou
High-Quality Recommendation
Items (પᑥͦ፽
ۜ)
2023 Hangzhou Economic and Information
Technology Bureau (ψ̹຾᏶ձ
ʷ҅)
Zhejiang Province Hidden
Champion Company (ᒯ
ࠏڿ)
2023 Department of Economy and
Informatization of Zhejiang
Province (ʷᝂ)
Specialized, Excellent, Featured
and Innovative Small and
Medium Company of Zhejiang
Province (ਖ਼ၚतอʕʃ
Άุ)
2023 Department of Economy and
Informatization of Zhejiang
Province (ʷᝂ)
Qiantang New District Talent-
Oriented Company (ࠠ
ʑฌʑ΋ආఊЗ)
2021 Qiantang New District Working
Committee, Qiantang New District
Management Committee ( ፺෨อਜ
ึ,ึ)
LEGAL AND COMPLIANCE MATTERS
Legal Proceedings
We may from time to time be involved in contractual disputes or legal proceedings arising
out of the ordinary course of our business. During the Track Record Period and up to the Latest
Practicable Date, we were not subject to any claims, damages or losses which would have a
material adverse effect on our financial position or results of operations as whole. As of the
Latest Practicable Date, no material litigation, arbitration or administrative proceedings had
been threatened against us.
Legal and Regulatory Compliance
We are committed to complying with the laws and regulations applicable to our business.
During the Track Record Period and up to the Latest Practicable Date, we did not have
non-compliance incidents which our Directors believe would, individually or in the aggregate,
have a material operational or financial impact on our Group as a whole.
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Immaterial Non-compliance
Failure to Make Full Contributions to Social Insurance and Housing Provident Funds
According to the Social Insurance Law and the Regulation on the Administration of
Housing Provident Funds and other applicable PRC regulations, any employer operating in
China must open social insurance registration accounts and housing provident fund registration
accounts, and contribute social insurance premium and housing provident fund for its
employees. Any failure to make timely and adequate contribution of social insurance premium
and housing provident fund for its employees may trigger an order of correction from
competent authority requiring the employer to make up the full contribution of such unpaid
social insurance premium and housing provident fund within a specified period of time, and the
competent authority may further impose fines or penalties.
During the Track Record Period, we failed to make full contribution to the social
insurance and housing provident funds for some of our employees as required under the
applicable PRC laws and regulations, involving an immaterial amount which will not bring any
material adverse effect on our operations. As advised by our PRC Legal Adviser, pursuant to
relevant PRC laws and regulations, the under-contribution of social insurance within a
prescribed period may subject us to a daily overdue charge of 0.05% of the delayed payment
amount. If such payment is not made within the stipulated period, the competent authority may
further impose a fine of one to three times of the overdue amount. In 2022, 2023 and 2024, the
amount of shortfall in social insurance was RMB0.2 million, RMB0.1 million and RMB0.1
million, respectively. According to the above provisions, on the premise of failing to make up
the payment by the deadline, we may face a maximum administrative penalty of a fine of
RMB1.2 million. The PRC Legal Advisers are of the opinion that the impact is immaterial due
to the small amount.
Furthermore, pursuant to relevant PRC laws and regulations, if there is a failure to pay
the full amount of housing provident fund as required, the housing provident fund management
center may require payment of the outstanding amount within a prescribed period. If the
payment is not made within such time limit, an application may be made to the PRC courts for
compulsory enforcement. In 2022, 2023 and 2024, the amount of shortfall in housing provident
fund contributions was RMB0.4 million, RMB0.4 million and RMB0.1 million, respectively.
The PRC Legal Advisers are of the opinion that the impact is immaterial due to the small
amount.
We have obtained written confirmation from the competent social insurance and housing
provident fund authorities where we operate confirming that we had not been subject to any
penalties from such authorities during the Track Record Period. We would make timely
payments for the deficient amount and overdue charges as soon as requested by the competent
government authorities. As advised by the PRC Legal Advisers, the government authorities
who issued the written confirmation were competent on the issue of social insurance and
housing provident funds.
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We have enhanced our internal control measures, including (i) designating our human
resources department to review and monitor the reporting and contributions of social insurance
and housing provident fund on a regular basis; (ii) monitoring closely any updates of the laws,
regulations and policies from time to time so as to ensure that we can respond to any changes
with respect to social insurance and housing provident fund requirements; (iii) consulting our
PRC Legal Adviser for advice on relevant PRC laws and regulations; and (iv) adopted the
“Social Insurance and Housing Provident Fund Management Policies” (၍ଣ
) which clearly requires that (a) we make full and timely contribution to social insurance
and housing provident funds for employees in compliance with relevant laws and regulations;
(b) our contribution records be open to supervision by employees and competent authorities;
(c) we periodically report our contribution status to the competent authorities; and (d) we be
subject to requests by employees to raise objections over social insurance and housing
provident funds and rectification measures, if applicable.
Our Directors believe that such non-compliance would not have a material adverse effect
on our business and results of operations, considering that: (i) as advised by our PRC Legal
Adviser (based on the written confirmations issued by the competent government authorities
of our Company and its subsidiaries and public searches conducted), we had not been subject
to any administrative penalties from the social insurance and housing provident fund
authorities during the Track Record Period and up to the Latest Practicable Date; (ii) we were
neither aware of any employee complaints filed against us nor involved in any labor disputes
with our employees with respect to social insurance and housing provident funds during the
Track Record Period and up to the Latest Practicable Date; (iii) as of the Latest Practicable
Date, we had not received any notification from the relevant PRC authorities requiring us to
pay for the shortfalls or any overdue charges with respect to social insurance and housing
provident funds; and (iv) such non-compliance will not have a material adverse effect on our
financial condition or results of operations taken as a whole. As a result, we did not make any
provisions in connection with these non-compliances during the Track Record Period and up
to the Latest Practicable Date. However, we cannot assure you that the competent authority will
not require us to rectify any non-compliance by making contribution of unpaid social insurance
premium and housing provident fund or impose fine or penalty related thereto.
Failure to Obtain the Relevant Permits for the Construction of Temporary Fixture
We have not obtained the relevant permits for the construction of temporary fixture with
an aggregate GFA of approximately 389 sq.m, representing less than 2% of total owned GFA.
Such temporary fixture is used primarily for protecting instruments from the weather, which
are immaterial to our operations. Pursuant to Urban and Rural Planning Law of the PRC, any
temporary fixture constructed without permission are subject to a demolition order from the
local authorities within a prescribed period of time; and if the temporary fixture cannot be
demolished, it will be confiscated, and we may incur a fine up to 10% of the total construction
work cost. As a consequence of the foregoing, our rights to these temporary fixtures may be
BUSINESS
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limited or challenged by relevant governmental authorities. We may be subject to
administrative fines of up to RMB0.06 million given the total temporary fixture cost of
RMB0.6 million or other penalties due to the lack of the relevant regulatory permits,
certificates and approvals.
We have obtained written confirmation from the competent urban-rural planning and
administrative law enforcement authorities confirming that no administrative penalty had been
taken or imposed by the relevant authorities during the Track Record Period with respect to our
operation of properties. As advised by our PRC Legal Advisers, the urban-rural planning and
administrative law enforcement authorities who issued the written confirmation were
competent on this issue. As of the Latest Practicable Date, we were not aware of any actual or
contemplated actions, claims or investigations by any relevant governmental authorities or
third parties against us with respect to the lack of permits for our temporary fixture in use. On
this basis and having considered confirmations from the relevant local governmental
authorities, our Directors believe that the lack of such relevant permits will not, individually
or in the aggregate, materially affect our business and results of operations.
We have enhanced our internal control measures and procedures to manage the associated
risks and prevent the recurrence of such incidents. We have formulated and issued the “Project
Management Policies” (), which clearly requires obtaining the relevant
land use planning permit, construction project planning permit and construction permit prior to
construction commencement, and designates personnel in charge of monitoring and ensuring
compliance throughout our construction projects.
Inaccurately Declaring Product Names and Codes While Exporting Triptorelin Acetate and
Leuprorelin Acetate
China imposes controls on the import and export of products. According to the Customs
Law of the PRC (), where a consignee or consignor of import or
export goods or a Customs clearing enterprise handles Customs declaration procedures, they
shall be subject to registration by Customs in accordance with law. On December 20, 2022,
Qianjiang Customs of China penalized us for inaccurately declaring product names and codes
while exporting triptorelin acetate and leuprorelin acetate, resulting in a fine of RMB370,000.
The penalty has been duly settled. We have obtained a written confirmation issued by the
competent Qianjiang Customs, confirming that it does not impact our customs credit rating and
there are no further violations recorded during the Track Record Period and up to the Latest
Practicable Date. As advised by our PRC Legal Adviser, the penalty is unlikely to have any
material adverse effect on our financial condition or results of operations as a whole or the
Global Offering, because (i) the penalty we received falls within the lower end of the range of
the regulatory penalty scale, and (ii) we have mitigating circumstances given that it is a
one-time incident with no subsequent violation.
We enhance our internal control measures and procedures to manage the associated risks
and prevent the recurrence of such incidents. We have formulated and issued the Procedures for
Management of Sales of Peptide Hormone Stimulants ( ε㹻ዧ९ᗳጳኧኒቖਯ၍ଣ೻ҏ),
BUSINESS
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which requires us to strictly adopt custom commodity codes when making the export filings.
Our quality assurance department is responsible for supervising the entire import and export
process to prevent the incorrect declaration of product names and codes.
RISK MANAGEMENT AND INTERNAL CONTROL
Risk Management
We recognize that risk management is critical to the success of our business operations.
Key operational risks that we face include changes in the overall market conditions and
regulatory environment relating to the global peptide CRDMO service market and
oligonucleotide CDMO service market, our ability to offer quality drug discovery, development
and manufacturing services, our ability to manage anticipated growth and to execute on our
growth strategies and our ability to compete with other CRDMO service providers. Please refer
to the section headed “Risk Factors” in this Prospectus for a discussion of various risks and
uncertainties that we face. We also face various market risks. In particular, we are exposed to
credit, liquidity, interest rate and currency risks that arise in the normal course of our business.
Please see the paragraph headed “Financial Information—Quantitative and Qualitative
Disclosures about Market Risks” in this Prospectus for a discussion of these market risks.
 Our Board is in charge of our overall risk management and is responsible for the
effectiveness of our enterprise risk management. Our Board (i) drives the
establishment of our enterprise risk management system; (ii) determines the overall
objectives of our risk management; (iii) approves the policies related to risk
management; (iv) approves the risk management strategy and the evaluation
criterion of the major risks, major events and important matters; (v) understands the
material risks and management reality; (vi) approves the risk management report
submitted by our senior management; (vii) supervises the development of the risk
management culture of our Company; (viii) decides other major issues related to risk
management.
 Our audit committee and our internal audit department are mainly responsible for
the design of the evaluation system of the enterprise risk management, development
of the evaluation and supervision policies, execution of the evaluation and
supervision activities and issuance of the audit/evaluation report.
 Our legal department is responsible for the execution of our enterprise risk
management, which includes: (i) guiding the development of our Company’s risk
management system; (ii) reviewing the evaluation report in connection with the
rationale of our Company’s risk management policies and its effectiveness; (iii)
guiding the establishment of the risk management mechanism in each department of
our Company and supervise their execution; (iv) periodically reviewing the progress
of our Company’s risk management and report to the our senior management; (v)
coordinating and dealing with other major issues related to the risk management.
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Internal Controls
We have engaged an internal control consultant (the “ Internal Control Consultant ”) to
perform certain agreed-upon procedures in connection with the internal control of our
Company and our major operating subsidiaries and to report factual findings on our Company’s
entity-level controls and internal controls of various processes, including environment
controls, risk assessment, control activities, information and communication, internal
monitoring, sales and receivables management, purchases and payment management, inventory
management, production management, R&D management, human resources and remuneration
management, treasury management, fixed asset and intangible asset management, reporting
and disclosure, tax, insurance, contract management and information system management.
Regarding the Company’s internal control management, the Internal Control Consultant
identified deficiencies, primarily concerning the absence of listing-related systems and the
need to enhance management of process systems. In response, the Company established and
implemented a corresponding internal control management system in May 2024 to regulate its
operations in alignment with its business situation.
We have adopted a series of internal control policies, measures and procedures to
facilitate and ensure effective and efficient operations, reliable financial reporting and
compliance with applicable laws and regulations, among other things. During the Track Record
Period, we have regularly reviewed and enhanced our internal control system. The following
is a summary of the internal control policies, measures and procedures we have implemented
or plan to implement:
 We have set up an internal control department and an internal audit department,
which are responsible for the overall internal control development and assessment
of our Company.
 Our internal control department is responsible for issuing and amending internal
control policies, measures and procedures to ensure that we maintain comprehensive
and effective internal control.
 Our internal audit department organizes periodic inspections relating to the
implementation of and adherence to the internal controls of each business
department. We conduct internal control inspections through on-site visit, random
sampling and other means. Upon completion of on-site visits, our internal audit
department delivers to the head of the relevant business department information and
statistics related to the risks discovered during the visits and any suggested remedial
action. The head of the relevant business department is then required to carry out the
relevant remedies.
 The head of each business department is responsible for implementing relevant
internal control policies, measures and procedures and conducting regular review
regarding the implementation of such policies, measures and procedures.
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 We have adopted various measures and procedures for all of our business operations,
including project management, quality assurance, intellectual property protection,
environmental protection and occupational health and safety.
 Our internal control department has established a whistleblowing mechanism
regarding complaints against our Directors, senior management, employees,
customers and other business partners, and independent and fair investigation is
conducted on any reported complaints. The internal control department has also
established a hotline and specific email for our employees to report their complaints
and inquiries. In addition, the internal control department has established
whistleblowing policies that regulate the reporting channels, case officers,
investigation procedures and results reports related thereto, and that explicitly state
that retaliation against whistleblowers is prohibited.
 We have engaged compliance adviser to provide advice to our Directors and
management team for at least the period commencing from the Listing Date and
ending on the date that our Company publishes its first full financial year results
regarding matters relating to the Listing Rules.
Anti-bribery
We maintain a strict code of conduct and anti-corruption policies among our employees
and partners. We believe we will be less affected by the increasingly stringent measures taken
by the PRC government to correct corruptive practices in the pharmaceutical industry. We
strictly prohibit bribery or other improper payments in our business operations. This
prohibition applies to all business activities, anywhere globally, whether involving government
officials or healthcare professionals. Improper payments prohibited by this policy include
bribes, kickbacks, excessive gifts or entertainment, or any other payment made or offered to
obtain an undue business advantage. We keep accurate books and records that reflect
transactions and asset dispositions in reasonable detail. Requests for false invoices or payment
of unusual, excessive or inadequately described expenses should be rejected and promptly
reported. Misleading, incomplete or false entries in our books and records are never acceptable.
We will also ensure marketing team personnel comply with applicable promotion and
advertising requirements.
Data Privacy Protection
We have established procedures to protect the confidentiality of data. We implement strict
internal policies to govern the collection, handling, storage, retrieval of, and access to client
data and pharmaceutical technology and production data and protect the security and
confidentiality of client data to ensure compliance with all applicable national or international
rules and regulations on data protection and privacy. We usually require our personnel to
collect and safeguard client data in their possession. Our information technology network is
configured with multiple layers of protection to secure our databases and servers. We have also
implemented a variety of protocols and procedures to safeguard our data assets and prevent
BUSINESS
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unauthorized access to our network. To enhance the security management of our information
system, we have instructed our information security personnel to conduct ongoing security
monitoring of computer equipment, promptly address network vulnerabilities, and implement
access control measures for specific hardware and software.
During the Track Record Period and up to the Latest Practicable Date, we did not
experience any breach of confidential client information or any other client information-related
incidents which could cause a material adverse effect on our business, financial condition or
results of operations. We provide customers with APIs rather than drug products. Thus, we do
not, nor do we plan to, perform any clinical trials or otherwise interact with patients, trial
participants or other individuals in China or the United States apart from employees of our
business partners (such as suppliers and customers) with whom we conduct ordinary course of
business. Specifically, we currently do not and do not plan to conduct any clinical trials in our
Rocklin Site. Our customers are pharmaceutical and biotech companies rather than individual
consumers. As such, we do not and will not need to collect any personal information from any
individuals during our ordinary course of business. In addition, we do not, nor do we plan to,
engage in the transmission of personal information and important data to overseas parties; nor
do we allow or intend to allow foreign individuals or organizations to access personal
information stored within China. Based on the above, our operations in the United States are
not in contravention to any data privacy laws. Based solely on the Company’s confirmation that
the Company does not collect, process or store personal data or information in the U.S. or with
respect to any U.S. person, our U.S. Local Counsel, MagStone Law, LLP , is of the view that,
during the Track Record Period and up to the Latest Practicable Date, nothing came to its
attention that the our business has violated any applicable U.S. data and privacy laws which
has resulted in or would be reasonably expected to result in a material adverse effect on our
business and operations. Our PRC data compliance adviser Han Kun Law Offices have
confirmed that, during the Track Record Period and up to the Latest Practicable Date, we had
not been subject to any material penalty in relation to data privacy, had not been involved in
any accident or fatality and had been in compliance with the relevant PRC laws and regulations
in all material aspects.
Sanction Compliance
Our legal and compliance departments lead the sanction compliance function with support
from the finance department and sales and supply chain department and oversight from the
management. Each department is required to follow due diligence procedures to comply with
our sanction compliance policy. We will provide training on United States Economic Sanctions
and on the sanction compliance policy to all employees upon onboarding, as well as periodic
refresher training. In order to better ensure our compliance with the applicable laws and
regulations, we have taken the initiative to adopt the following sanction compliance measures:
 Employees should immediately consult with legal and compliance departments
when dealing with an entity or individual in a high-risk country or when there is a
suspicion that a sanctioned country, entity or individual is involved.
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 In order to ensure compliance with applicable United States Economic Sanctions, to
identify target persons, and to avoid possible United States sanctions risk, we
conduct OFAC screening of all our customers, vendors, and other service providers
and counterparties.
 Employees should consult with the legal and compliance departments to include or
review sanctions language in contracts. Employees should report to legal and
compliance departments if employees become aware that an existing counterparty
has been sanctioned.
 We will not enter into any agreement with, sell or provide any products or services
to, or receive or obtain any products or services from any OFAC’s List of Specially
Designated Nationals and Blocked Persons (SDNs) or any entity 50 percent or more
owned, directly or indirectly, by one or more SDNs.
 All direct and indirect sales to or purchases from parties in target countries or parties
that are identified as possible “hits” to the SDN list or OFAC’s Sectoral Sanctions
Identification List must be pre-approved by CEO.
 United States Person employees of us will not approve or participate, directly or
indirectly, in any transactions or dealings with or that involve sanctions targets.
 The legal department will as appropriate conduct United States Economic Sanctions
risk assessments that include an assessment of the following: (i) customers, supply
chain, intermediaries, and counter-parties; (ii) the products and services it offers,
including how and where such items fit into other financial or commercial products,
services, networks, or systems; and (iii) the geographic locations of the
organization, as well as its customers, supply chain, intermediaries, and
counterparties.
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BOARD OF DIRECTORS
Our Board of Directors consists of nine Directors, comprising five executive Directors,
one non-executive Director and three independent non-executive Directors. Our Directors
serve a term of three years and may be re-elected for successive reappointments. Our Board is
responsible and has general powers for the management and operation of the Company’s
business.
The table below sets forth certain information in respect of the members of the Board:
Name Age
Position for the
current tenure
Time of joining
our Group
Date of
appointment as a
Director Roles and responsibilities
Executive Directors
D r .X uQ i(೘) 57 Chairwoman, Executive
Director, and Chief
Executive Officer
June 2003 June 11, 2020 Responsible for overseeing the
overall business strategy and
operational management
Dr. Li Xiang
(ҽಱ)
Note 1
61 Executive Director August 2001 January 27, 2022 Responsible for overseeing the
R&D activities, strategic
planning and operational
management
Ms. Li Xiangli
(ҽಱ஁)
Note 1
50 Executive Director August 2005 January 27, 2022 Responsible for overall board
affairs and overseeing the
compliance of Group’s R&D
and manufacturing activities
Ms. Cheng Tao 53 Executive Director and
Chief Business Officer
July 2012 May 14, 2024 Responsible for overseeing and
managing commercial
aspects of operations
Ms. Li Lingmei
(ૠ)
49 Executive Director, Joint
Company Secretary
and secretary to the
Board
September 2023 May 14, 2024 Responsible for the corporate
governance, information
disclosure, investor
relationship management
and investment and
financing
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Name Age
Position for the
current tenure
Time of joining
our Group
Date of
appointment as a
Director Roles and responsibilities
Non-executive Director
Mr. Wu Yihui
(юɓฯ)
52 Non-executive Director December 2021 January 27, 2022 Participating in the
formulation of our
Company’s corporate and
business strategies
Independent non-executive Directors
Dr. Y u Cheung Hoi
(ɲ੬ऎ)
70 Independent non-
executive Director
May 2024 May 23, 2024
Note 2 Supervising and providing
independent judgment to the
Board
Dr. Zhu Xun ( ϡԘ) 66 Independent non-
executive Director
May 2024 May 23, 2024
Note 2 Supervising and providing
independent judgment to the
Board
Mr. Xia Xinsheng
(ː᳅)
40 Independent non-
executive Director
May 2024 May 23, 2024
Note 2 Supervising and providing
independent judgment to the
Board
Note 1: Dr. Li Xiang is the brother of Ms. Li.
Note 2: The appointment will become effective upon the Listing.
DIRECTORS
Executive Directors
D r .X uQ i(೘), aged 57, is our chairwoman of the Board, executive Director and the
Chief Executive Officer. Dr. Xu has served as our Chief Executive Officer since June 2020. She
has been our Director since June 2020, and was re-designated as an executive Director in May
2024. Dr. Xu has also been serving as the legal representative, general manager and/or director
at certain of our subsidiaries.
Dr. Xu has over 23 years of experience in the pharmaceutical and biotech industries.
Dr. Xu joined Chinese Peptide in June 2003, and from June 2003 to June 2018, she was the
general manager of Chinese Peptide. Since July 2018, she has been the chief executive officer
of Chinese Peptide. Dr. Xu served as a director from May 2015 to August 2020 and a deputy
general manager from February 2016 to June 2020 at Xinbang. Prior to joining Chinese
Peptide, from July 1999 to May 2001, Dr. Xu worked as a director of new drug R&D at
Changchun GeneScience Pharmaceuticals Co., Ltd. (ப΂ʮ̡). She was a
postdoctoral researcher at Akita University in Japan from May 2001 to May 2002.
Dr. Xu obtained a bachelor’s degree in clinical medicine, a master’s degree in
Pathophysiology and a PhD in Biochemistry and Molecular Biology from Bethune Medical
University (ɽኪ) (currently known as School of Basic Medicine of Jilin University
(ɽኪਿᓾᔼኪ৫)) in the PRC in July 1991, July 1997 and July 2000, respectively.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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Dr. Li Xiang ( ҽಱ), aged 61, is an executive Director and has been a Director since
January 2022. He was re-designated as an executive Director in May 2024. Dr. Li has also been
serving as the director at certain of our subsidiaries.
Dr. Li has over 30 years of experience in the pharmaceutical and biotech industries. Dr. Li
founded Chinese Peptide in August 2001, and has been its chairman since its establishment,
responsible for its strategic management, investment and financing activities. From May 2015
to August 2020, Dr. Li also served as the deputy chairman and a director of Xinbang. Prior to
that, Dr. Li worked as the chief operating officer of American Peptide Company, a company
primarily engaged in peptides manufacturing, from June 1989 to April 2004.
Dr. Li co-founded Zhejiang Handing Pharmaceutical Co., Ltd.* (ʮ̡,
“Zhejiang Handing ”) in April 2021, and has been its chairman since then. Zhejiang Handing
is primarily engaged in the development of innovative drugs. For more information of Zhejiang
Handing and the transactions between Zhejiang Handing and our Group, see the section headed
“Connected Transaction.” Dr. Li has been an independent director at Hangzhou Highlightll
Pharmaceutical Co., Ltd. (ʮ̡) since November 2021. Dr. Li also
co-founded and worked at Lake Capital from March 2017 to April 2021.
Dr. Li obtained a bachelor’s degree in chemistry from Wuhan University (ဏɽኪ)i n
the PRC in July 1983. He then obtained a PhD in Science, majoring in organic chemistry in the
Chinese Institute of Chemistry (ኪ৫) in the PRC in January 1989. Following that, Dr.
Li worked as a postdoctoral research fellow at the Lawrence Berkeley Laboratory in the USA
in February 1989. Dr. Li obtained an MBA degree from IMD business school of Switzerland
and an EMBA degree from the Cheung Kong Graduate School of Business (Ϫਠኪ৫) both
in September 2016 in the PRC.
Ms. Li Xiangli ( ҽಱ஁), aged 50, is our executive Director. Ms. Li has been our Director
since January 2022 and was re-designated as an executive Director in May 2024. Ms. Li has
also been serving as the director and/or supervisor at certain of our subsidiaries.
Ms. Li has extensive experience in management and quality assurance in the
pharmaceutical sector. Ms. Li joined Chinese Peptide in 2005, and has been the director of
Chinese Peptide since 2012. She has been working at the quality assurance department of
Chinese Peptide, and is currently the vice president of Chinese Peptide in area of compliance
management of R&D, production and quality system. Ms. Li has been the chairperson of our
ESG committee, responsible for monitoring the implementation and progress of the Company’s
ESG work. Prior to joining our Group, from July 1997 to September 2005, Ms. Li worked at
Anyang Normal University (ᇍኪ৫), responsible for teaching management.
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Ms. Li graduated from Henan Radio and Television University (ᄿᅧཥൖɽኪ)i nt h e
PRC in June 1995, majoring in mechanical process technology.
Ms. Cheng Tao , aged 53, is our executive Director and Chief Business Officer of our
Group. Ms. Cheng has been appointed as our executive Director since May 2024.
Ms. Cheng joined our Group in July 2012, and has been serving as the Chief Business
Officer of Chinese Peptide since July 2012. She is mainly responsible for the Group’s sales and
marketing, client services and marketing strategy.
Ms. Cheng has extensive experience in the pharmaceutical and biopharmaceutical
industries. Before joining our Group in 2012, she was a senior vice president at Asymchem
Laboratories Inc, a manufacturer of advanced chemical intermediates for the pharmaceutical
and biotech industry. From August 1995 to January 2009, Ms. Cheng served as the chief
representative in China at Charabot SA, a company primarily engaged in manufacturing.
Ms. Cheng obtained a bachelor’s degree in biology from Beijing Normal University ( ̏
ᇍɽኪ) in the PRC in July 1993.
Ms. Li Lingmei (ૠ), aged 49, is our executive Director, joint company secretary and
the secretary to the Board. Ms. Li Lingmei has been appointed as our executive Director since
May 2024. Ms. Li Lingmei joined our Group in September 2023 as the secretary to the Board.
Prior to joining our Group, from February 2023 to September 2023, she was an industry
expert at Firstred Capital ( ોఠҳ༟), which is primarily engaged in buy & build opportunities
with a focus on new economy industries including industrial & technology, healthcare, and
consumer sectors. From September 2018 to November 2022, she worked at ICLEGEND
MICRO group, and was the vice president of sales and marketing of ICLEGEND MICRO
(Nanjing) Co., Ltd. (ʮ̡), which is focused on advancing wireless
technology through innovative products and solutions, from August 2019 to November 2022.
From November 2016 to July 2018, she worked as a sales director at Nexperia (China) Co.,
Ltd, a company known for essential components used in a wide range of electronic designs
globally.
Ms. Li Lingmei graduated from Southeast University (ɽኪ) in the PRC in June 1999,
majoring in computer science. She obtained a finance master’s degree in business
administration from Cheung Kong Graduate School of Business (Ϫਠኪ৫) in the PRC in
September 2013. Additionally, Ms. Li Lingmei obtained an MBA degree from IMD Business
School and an EMBA degree Cheung Kong Graduate School of Business (Ϫਠኪ৫)i nt h e
PRC both in September 2016. She obtained the Fund Practitioner Qualification from the Asset
Management Association of China (ุ՘ึ) in May 2019.
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Non-executive Director
Mr. Wu Yihui ( юɓฯ), aged 52, is our non-executive Director. Mr. Wu was appointed
as a Director in January 2022 and was re-designated as a non-executive Director in May 2024.
Mr. Wu has over 27 years of experience in the banking and investment management
industries. Mr. Wu has served as the executive director and general manager of Hangzhou
Puyang Investment Management Co., Ltd.* (ʮ̡) since October 2016,
and Zhejiang Great Bear Investment Management Co., Ltd. (ʮ̡)
since May 2017. From March 2015 to October 2016, Mr. Wu was the risk control director at
Zhejiang Tianyi Investment Management Co., Ltd.* (ʮ̡). From April
2011 to October 2016, he was the deputy general manager at Zhejiang Puhua Tianqin Equity
Investment Management Co., Ltd. (ʮ̡). From April 2007 to
April 2011, Mr. Wu served as the marketing manager at the Y anzhong branch of the Industrial
and Commercial Bank of China in Hangzhou. From July 1994 to April 2007, he worked at the
Baoshu branch of the Industrial and Commercial Bank of China in Hangzhou, where his last
position was a branch principal. From September 2019 to April 2024, he was an independent
director at Zhejiang Tiansong Medical Equipment Co., Ltd. (ʮ̡).
From July 2018 to August 2022, he was a director at Zhejiang Jindao Technology Co., Ltd. ( ए
ʮ̡) (stock code: 301279.SZ).
Mr. Wu obtained a master’s degree in business administration from Zhejiang University
(एϪɽኪ) in the PRC in December 2007. Since December 2009, Mr. Wu has been accredited
as a Certified Public Accountant in the PRC.
Independent Non-executive Directors
Dr. Yu Cheung Hoi ( ɲ੬ऎ), aged 70, was appointed as an independent non-executive
Director in May 2024 with effect from the Listing Date.
Dr. Y u has served as (i) a director of CR-CP Life Science Fund Management Limited since
May 2021; (ii) a member of the Biotech Advisory Panel of the Stock Exchange since April
2018; (iii) a member of the board of trustees of Gordon Research Conference, a group of
international scientific conferences covering biological, chemical and physical sciences and the
related technologies since July 2014; (iv) a director at Asian Fund for Cancer Research since
November 2012; and (v) a member of the Technology and Innovation Subsector of the Election
Committee of Hong Kong since October 2021.
Dr. Y u served as the chairman of the Hong Kong Council for Testing and Certification
from January 2016 to December 2021. In addition to that, Dr. Y u serves as a professor at the
Neuroscience Research Institute (הat Peking University ( ̏ԯɽኪ)
since December 2001. Dr. Y u founded the Hong Kong Biotechnology Organization (HKBIO)
in September 2009 and the Guangdong – Hong Kong – Macao Greater Bay Area Biotechnology
Alliance in December 2017, and has been serving as the president since Dr. Y u’s appointment.
Dr. Y u also founded Hong Kong DNA Chips Limited, presently Hai Kang Life Corporation
Limited, in May 1999, and has been serving as chairman and CEO since April 2007. Dr. Y u was
appointed as a Justice of the Peace in July 2016.
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Dr. Y u has been an independent non-executive director of Sirnaomics Ltd., a company
listed on the Stock Exchange (stock code: 2257) since December 2021. Dr. Y u has also served
as a director of Keen Vision Acquisition Corporation, a company listed on NASDAQ Global
Market (stock ticker: KV AC), since October 2021. Dr. Y u has served as an independent
non-executive director of YNBY International Limited, a company listed on the Stock
Exchange (stock code: 0030), since November 2023.
Dr. Y u obtained a bachelor’s degree and a master’s degree in science, and a PhD in
philosophy at the University of Saskatchewan in May 1976, October 1980 and May 1984,
respectively. Dr. Y u has published more than 170 scientific papers and is the inventor of more
than 70 global patents.
Dr. Zhu Xun ( ϡԘ), aged 66, was appointed as an independent non-executive Director
in May 2024 with effect from the Listing Date.
Since July 2016, Dr. Zhu has been a director of Changchun Yinuoke Pharmaceutical
Technology Co., Ltd. (ப΂ʮ̡). Dr. Zhu has been a director of
Jianaishi Biomedical Technology (Hangzhou) Co., Ltd. (Ҧ(ψ)ʮ̡)
since March 2018 and was a director at Beijing Dingchi Biotechnology Co., Ltd. (͛
ʮ̡) from December 2016 to October 2022. Dr. Zhu served as the vice chairman
of the board of directors and the general manager in Feiman (Changchun) Pharmaceutical
Biotechnology Co., Ltd. ( ౵ᑃ(݆ڗ)ப΂ʮ̡) (formerly known as
Changchun Botai Medicine Biology Technology Co., Ltd. (ப΂ʮ
̡)) from April 2004 to September 2011. He also served several positions in Norman Bethune
Medical University (ɽኪ) (currently known as School of Basic Medicine of Jilin
University (ɽኪਿᓾᔼኪ৫)), including lecturer, professor and doctoral supervisor in the
immunological department, dean of the department and vice president of the University from
December 1985 to June 2018.
As of the Latest Practicable Date, he served as a non-executive director or an independent
non-executive director of two listed companies, namely HighTide Therapeutics, Inc. ( ё໋इ
ᔼᖹ), a company listed on the Stock Exchange (stock code: 2511) since November 2020, and
Sihuan Pharmaceutical Holdings Group Ltd. (ʮ̡), a company listed
on the Stock Exchange (stock code: 0460), since February 2014. From March 2018 to June
2024, he was an independent director at Shenzhen Chipscreen Biosciences Co., Ltd. ( ଉέฆ
ʮ̡), a company listed on the Shanghai Stock Exchange (stock code:
688321). From September 2022 to December 2023, Dr. Zhu was an independent non-executive
director of Lansen Pharmaceutical Holdings Limited (ʮ̡), a company
which was listed on the Main Board of the Stock Exchange before it was delisted (stock code:
0503).
Dr. Zhu obtained a bachelor’s degree in medicine from Jilin Medical College (ᔼኪ
৫) (currently known as Beihua University ( ̏ശɽኪ)) in December 1982 in the PRC and
obtained a PhD in medicine from Norman Bethune Medical University (ɽኪ)
(currently known as School of Basic Medicine of Jilin University (ɽኪਿᓾᔼኪ৫)) in
April 1989 in the PRC.
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Notwithstanding that Dr. Zhu holds a number of listed and non-listed company
directorships, the Board believes that he will still be able to devote sufficient time to our Board
because (i) none of his commitments to such other companies are of an executive nature and
none of them require him to devote his full time and attention to the day-to-day operations or
management of those companies; (ii) Dr. Zhu has demonstrated that he is able to properly
discharge his duties owed to multiple listed companies and has attended nearly all of the
required board meetings as well as board committee meetings of these listed companies; (iii)
Dr. Zhu’s experience as a director of listed companies in both Hong Kong and the PRC would
facilitate his understanding of corporate governance and his proper discharge of
responsibilities as a director of our Company; and (iv) Dr. Zhu has undertaken to devote
sufficient time to attending to the management of our Company as an independent non-
executive Director. Other than the routine board and board committee meetings, he will also
provide additional professional advice related to business development of the Company to the
Board from time to time.
Dr. Zhu was a director of Beijing Yitang Biotechnology Co., Ltd.* (ҦϞ
ʮ̡), a PRC incorporated company, which was dissolved in June 2022 because it had not
been in operations for a long time. Dr. Zhu confirmed that, Beijing Yitang Biotechnology Co.,
Ltd. ceased its business and became dormant, and was solvent before its dissolution. Dr. Zhu
was a director of Shenzhen Zhongke Huierli Biotechnology Co., Ltd.* (ي
ʮ̡), a PRC incorporated company, which was wound up due to bankruptcy on June
11, 2021 as a result of its founder’s involvement in a lawsuit, in which Dr. Zhu as an investor
representative to the board was not involved in such lawsuit. Dr. Zhu also confirmed that, there
was no wrongful act on the part of Dr. Zhu leading to the dissolution of Beijing Yitang
Biotechnology Co., Ltd. or the winding-up of Shenzhen Zhongke Huierli Biotechnology Co.,
Ltd. and that as of the Latest Practicable Date, no claims have been made against Dr. Zhu and
he was not aware of any threatened or potential claims made against him and there are no
outstanding claims and/or liabilities as a result of the dissolution of Beijing Yitang
Biotechnology Co., Ltd. or the winding-up of Shenzhen Zhongke Huierli Biotechnology
Co., Ltd.
Mr. Xia Xinsheng (ː᳅), aged 40, was appointed as an independent non-executive
Director in May 2024 with effect upon the Listing Date.
From November 2022 to the present, he has been a partner at Beijing Hongchuang Private
Equity Fund Management Co., Ltd.* (ʮ̡). From July 2017 to
September 2022, Mr. Xia was a partner at Ningbo Zehongziyue Investment Management Co.,
Ltd.* (ʮ̡). Before that, from August 2011 to June 2017, Mr. Xia
worked at BVCF Management Ltd. ( ϵෳৌబҳ༟ፔ༔(ɪऎ)ʮ̡) as the investment
general manager and finance manager.
Mr. Xia obtained a bachelor’s degree in international economics and trade from Shanghai
University of Finance and Economics ( ɪऎৌ຾ɽኪ) in the PRC in July 2007. Since March
2015, Mr. Xia has been accredited as a Certified Public Accountant in the PRC.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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SUPERVISORS
Our Supervisory Committee currently consists of three Supervisors, one of whom is the
chairperson of our Supervisory Committee. Pursuant to our Articles of Association, at least
one-third of our Supervisors must be employee representatives elected by our employees. We
have one employee representative supervisor elected by our employees and two shareholder
representative Supervisors elected and appointed by our Shareholders at the Shareholders’
meeting.
Each of the Supervisors is appointed for a term of three years which is renewable upon
re-election and re-appointment. Pursuant to the Articles of Association, the functions and
powers of the board of supervisors include, among other things, reviewing the financial
management of our Company, supervising the performance of our Directors and senior
management members, and monitoring as to whether they comply with the law, administrative
stipulations and Articles of Association when performing their duties, requesting Directors and
senior management members to rectify actions detrimental to our Company’s interests. In
addition, our board of Supervisors is responsible for exercising other powers, functions and
duties in accordance with the Articles of Association, and all applicable laws and regulations.
The following table sets forth the key information of our Supervisors:
Name Age
Position for
the current tenure
Time of joining
our Group
Date of
appointment as a
Supervisor Roles and responsibilities
Ms. Y an Xiya ( ᕙఃԭ) 60 Chairperson of the
Supervisory
Committee
November 2020 February 4, 2023 Supervising our Board and
senior management
Mr. Wu Haigang (࡝46 Supervisor September 2001 February 4, 2023 Supervising our Board and
senior management
Ms. Fu Hongying (ߵߎ43 Supervisor February 2014 February 4, 2023 Supervising our Board and
senior management
Ms. Y an Xiya ( ᕙఃԭ), aged 60, is the chairperson of the Supervisory Committee and
senior vice president of Chinese Peptide. Ms. Y an was appointed as a shareholders’
representative Supervisor in February 2023.
Ms. Y an joined our Group as a deputy general manager of quality assurance in November
2020. Since January 2024, she has been the senior vice president of Chinese Peptide,
overseeing its quality management and registration. Prior to joining our Group, Ms. Y an
consecutively served as a vice general manager and vice president of quality at Hai Zheng
Hangzhou Pharmaceutical Co., Ltd.* ( ऎ͍ᖹุ(ψ)ʮ̡), a wholly-owned subsidiary of
Zhejiang Hisun Pharmaceutical Co., Ltd. (ʮ̡), a company listed on
the Shanghai Stock Exchange (stock code: 600267), from August 2013 to November 2020.
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From August 2011 to August 2013, she was the vice general manager of quality at CSPC
Zhongnuo Pharmaceutical Shijiazhuang Co., Ltd. ( ͩᖹණྠʕፕᖹุ(୿)ʮ̡(߅
͛ପਜ)) and served the same position at CSPC Shijiazhuang Gaoke Pharmaceutical
Technology Development Co., Ltd.* (ʮ̡) from
September 2008 to August 2011. She served as the director of quality at North China Hua
Sheng Pharmaceutical Co., Ltd.* (ʮ̡) from April 2004 to September 2008.
From July 1986 to April 2004, she was a senior engineer at North China Pharmaceutical Co.,
Ltd* (ʮ̡).
Ms. Y an obtained a bachelor’s degree in microbiology and biochemistry from Hebei
University (̏ɽኪ) in the PRC in July 1986.
Mr. Wu Haigang (࡝)aged 46, is our shareholders’ representative Supervisor and
executive vice president of Chinese Peptide. Mr. Wu was appointed as a shareholders’
representative Supervisor in February 2023.
Mr. Wu joined Chinese Peptide in September 2001, and has successively served various
roles in Chinese Peptide, including a deputy manager of its purification department, manager
of peptide purification department, deputy manager of production department, director of
production, senior deputy manager of peptide business unit from September 2001 to December
2023. Since January 2024, he has been the executive vice president of Chinese Peptide,
responsible for oversees our CDMO operations center, including production management,
global supply chain management, and group facilities and safety management.
Mr. Wu obtained a bachelor’s degree in Biochemistry from Zhejiang University ( एϪɽ
ኪ) in the PRC in July 2000. He also obtained a master’s degree in Bioengineering from
Zhejiang University of Technology ( एϪʈุɽኪ) in the PRC in January 2015.
Ms. Fu Hongying (ߵߎ)aged 43, is our employee representative Supervisor and
senior director of human resources of Chinese Peptide. Ms. Fu was appointed as an employee
representative Supervisor in February 2023.
Ms. Fu joined our Group in February 2014, and has served various roles in the human
resources department of our Group, including a manager, a senior manager, the human
resources director, and senior director of human resources. From May 2005 to April 2012, she
worked as the human resources manager at Jeanswest International (Hong Kong) Co., Ltd.* ( ए
ʮ̡).
Ms. Fu obtained a bachelor’s degree in human resources management from Zhejiang
University ( एϪɽኪ) in the PRC in January 2010.
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SENIOR MANAGEMENT
Our senior management is responsible for our day-to-day management and business
operation. The following table sets forth the key information of our senior management:
Name Age
Position(s) for the
current tenure
Time of joining
our Group
Date of
appointment as
senior
management Roles and responsibilities
D r .X uQ i(೘) 57 Chairwoman, Executive
Director and Chief
Executive Officer
June 2003 June 2003 Responsible for overseeing the
overall business strategy and
operational management
Ms. Cheng Tao 53 Executive Director and
Chief Business Officer
July 2012 July 2012 Responsible for overseeing and
managing commercial
aspects of operations
Ms. Li Lingmei
(ૠ)
49 Executive Director, Joint
Company Secretary
and Secretary to the
Board
September 2023 September 2023 Responsible for the corporate
governance, information
disclosure, investor
relationship management
and investment and
financing
Mr. Xu Weiqun (ਃ໊) 52 Finance Director October 2020 October 2020 Responsible for the
management and operation
of finance department
D r .X uQ i(೘), aged 57, is our chairwoman of the Board, executive Director and the
Chief Executive Officer. For details of her biography, see the section headed “—Executive
Directors.”
Ms. Cheng Tao , aged 53, is our executive Director and Chief Business Officer. For
details of her biography, see the section headed “—Executive Directors.”
Ms. Li Lingmei (ૠ) aged 49, is our executive Director, joint company secretary and
Secretary to the Board. For details of her biography, see the section headed “—Executive
Directors.”
Mr. Xu Weiqun (ਃ໊), aged 52, is our finance director of our Group, and is
responsible for the management and operation of the finance department of our Company. Mr.
Xu joined our Group in October 2020 and served as our finance director from October 2020
to March 2023. In March 2024, Mr. Xu rejoined our Group as our finance director.
From August 2016 to October 2020, Mr. Xu was the senior finance director at Wanxiang
A123 Systems Corp (΅ʮ̡), a member of Wanxiang Group Corporation ( ຬΣ
ණྠ), which is primarily engaged in the development and production of battery system
solutions. He was responsible for the management of its financial accounting department,
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taxation matters, and cost and financial analysis. From August 2009 to July 2016, he worked
at Suzhou Taizhu Technology Development Co., Ltd. (ʮ̡), a
subsidiary of Merck KGaA (stock code: MRK.DE) with the last position as a financial director.
From August 1994 to December 2000, Mr. Xu worked at Hangzhou Yingtai Biology Science
and Technology Co., Ltd. (ʮ̡).
Mr. Xu graduated from Nanjing Audit Universityɽኪ) in the PRC in July 1994,
majoring in auditing. Since December 2001, Mr. Xu has been accredited as a Certified Public
Accountant in the PRC and since January 2024, he has been accredited as a Certified
Management Accountant in the United States.
FURTHER INFORMATION IN RELATION TO THE DIRECTORS
In February 2010, with a view to developing a diagnostic reagent manufacturing and sales
business in Jiangsu, Dr. Xu and Ms. Li established Jiangsu Diagnostic Biotechnology Co., Ltd.
(ʮ̡)( “ Diagnostic Biotech ”) in Jiangsu with effective
shareholding of 91% and 9%, respectively. Between 2010 and 2012, to leverage the existing
established in vitro diagnostic reagents technologies of Chinese Peptide, Diagnostic Biotech
entered into several technology transfer or licensing agreements (the “ Related Party
Transactions ”) with Chinese Peptide or its wholly-owned subsidiary, Hangzhou Acatide and
paid technology development and/or license fees of RMB1.5 million and RMB4.6 million to
Chinese Peptide and Hangzhou Acatide, respectively. In April 2013, considering the difficulty
in the business operations of Diagnostic Biotech, the entire equity interests in Diagnostic
Biotech were transferred to two Independent Third Parties at nil consideration (the “ Equity
Transfer ”), on the basis that Diagnostic Biotech did not have a substantive amount of net
assets at the time of the Equity Transfer. In 2015 and 2018, after a few years’ operation,
Diagnostic Biotech (then controlled by the independent third-party buyers) initiated two
litigations against each of Dr. Xu, Chinese Peptide and Hangzhou Acatide (the “ Litigations ”),
claiming the relevant technologies had not been transferred or licensed to Diagnostic Biotech
and initiated a claim for infringement of company’s interest with related party transactions
against among others, Dr. Xu, Chinese Peptide, and/or Hangzhou Acatide for monetary
compensation of RMB1.5 million and RMB4.6 million, respectively.
After multiple instances of court trials, appeals and retrials, the final judicial authority of
the Litigations found in December 2020 and April 2021 that (a) the co-defendants should bear
the burden of proving that the transfer of technologies did occur; and (b) the co-defendants
were unable to produce sufficient evidence pointing to the actual transfer of technologies to
Diagnostic Biotech. Dr. Xu, Chinese Peptide and/or Hangzhou Acatide were therefore held
liable to damages of RMB1.5 million and RMB4.6 million together with accrued interests,
respectively. As of the Latest Practicable Date, (i) the damages payable under the Litigations
had been settled in full by Dr. Xu; and (ii) there were no unsatisfied judgments or court orders
of continuing effect against Dr. Xu, Chinese Peptide or Hangzhou Acatide.
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Considering (a) the primary reason for Dr. Xu and the other defendants lost in the
Litigations was the lack of documentation and evidence pursuant to the final judgments of the
Litigations; (b) Dr. Xu’s involvement in the Related Party Transactions were motivated by a
genuine intention to develop the business of Diagnostic Biotech and Chinese Peptide and foster
business synergies between these two companies under her management; and (c) there was no
direct indication in the final judgments that Dr. Xu acted with malicious intent, fraud,
dishonesty or engaged in deceptive practices which would affect her suitability as a director
and a controlling shareholder of a company, the Directors are of the view that the Litigations
will not have any material adverse effect to the Group, and do not affect the suitability of Dr.
Xu to act as a Director under Rules 3.08 and 3.09 of the Listing Rules and a Controlling
Shareholder of our Company.
From August 2003 to October 2006, Dr. Xu and Dr. Li Xiang served as a director of
Hangzhou Sentai Pharmaceutical Co. Ltd.* (ʮ̡)( “ Hangzhou Sentai ”),
the business license of which was revoked by local SAIC authority in October 2006 due to the
fact that it was not engaging in any business activities for more than six months prior to the
date of the revocation. As of the time of the revocation, Hangzhou Sentai was not insolvent,
did not have any outstanding liabilities and was not involved in any pending claims. Since the
revocation and up to the Latest Practicable Date, Hangzhou Sentai had not carried out any
business activities and, so far as Dr. Xu and Dr. Li Xiang was aware, the revocation of the
business license of Hangzhou Sentai has not resulted in any punishment or fines imposed by
any competent authorities, nor has it resulted in any outstanding or potential claims or
liabilities against them.
INTERESTS OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
Save as disclosed above, to the best of the knowledge, information and belief of our
Directors having made all reasonable enquiries, as of the Latest Practicable Date, none of our
Directors, Supervisors and senior management had been a director of any public company the
securities of which were listed on any securities market in Hong Kong or overseas in the three
years immediately preceding the date of this Prospectus. There are no other matters with
respect to the appointment of our Directors and Supervisors that need to be brought to the
attention of the Shareholders, nor is there any information relating to our Directors and
Supervisors that is required to be disclosed pursuant to Rules 13.51(2)(h) to (v) of the Listing
Rules.
Save as disclosed above, as of the Latest Practicable Date, none of our Directors,
Supervisors or senior management were related to other Directors, Supervisors or senior
management of our Company.
Save as disclosed in the sections headed “Relationship with our Controlling
Shareholders”, “Substantial Shareholders” and “Appendix IV—Statutory and General
Information—Further Information about our Directors, Supervisors, Senior Management and
Substantial Shareholders—Interests and short positions of our Directors, Supervisors and chief
executive of our Company in the Shares, underlying Shares and debentures of our Company
and our associated corporations”, as of the Latest Practicable Date, none of our Directors and
Supervisors held any interest in the securities within the meaning of Part XV of the SFO.
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JOINT COMPANY SECRETARIES
Ms. Li Lingmei (ૠ), is our executive Director, joint company secretary and
Secretary to the Board. For details of her biography, see the section headed “—Executive
Directors.”
Mr. Lee Chung Shing (ϓ), was appointed as our joint company secretary on
May 14, 2024 with immediate effect. Mr. Lee has over 20 years of experience in auditing,
financial management, company secretarial and investors relation in listed companies in Hong
Kong. He is currently a vice president of Governance Services of Computershare Hong Kong
Investor Services Limited and the joint company secretary/company secretary of various
companies, whose shares are listed on the Stock Exchange. Mr. Lee was admitted as an
associate of the Hong Kong Institute of Certified Public Accountants in March 1999 and a
fellow member of the Association of Chartered Certified Accountants in July 2003. He
obtained a bachelor’s degree in accountancy from City University of Hong Kong in December
1994 and a master’s degree in business administration (financial services) from The Hong
Kong Polytechnic University in November 2002.
BOARD COMMITTEES
Our Board delegates certain responsibilities to various committees. In accordance with
the relevant PRC laws and regulations and the Corporate Governance Code, Appendix C1 to
the Listing Rules, our Company has formed three Board committees, namely the Audit
Committee, the Remuneration Committee and the Nomination Committee.
Audit Committee
We have established an Audit Committee with written terms of reference in compliance
with Rule 3.21 of the Listing Rules and paragraph C.4 and paragraph D.3 of Part 2 of the
Corporate Governance Code, Appendix C1 to the Listing Rules. The Audit Committee consists
of three Directors, namely Mr. Xia Xinsheng (ː᳅), Dr. Y u Cheung Hoi ( ɲ੬ऎ) and Dr.
Zhu Xun ( ϡԘ). Mr. Xia Xinsheng (ː᳅), who holds the appropriate professional
qualifications as required under Rules 3.10(2) and 3.21 of the Listing Rules, serves as the
Chairperson of the Audit Committee. The primary duties of the Audit Committee include, but
are not limited to, the following:
 proposing the appointment or change of external auditors to our Board, monitoring
the independence of external auditors and evaluating their performance;
 guiding internal audit work;
 examining the financial information of our Company, reviewing financial reports
and statements of our Company and giving comments on relevant matters;
 assessing the effectiveness of internal control;
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 coordinating the communication among management, internal audit department,
related departments and external audit agency; and
 dealing with other matters that are authorized by the Board or involved in relevant
laws and regulations.
Remuneration Committee
We have established a Remuneration Committee with written terms of reference in
compliance with paragraph E.1 of Part 2 of the Corporate Governance Code, Appendix C1 to
the Listing Rules. The Remuneration Committee consists of three Directors, namely Dr. Zhu
Xun ( ϡԘ), Dr. Xu and Mr. Xia Xinsheng (ː᳅). Dr. Zhu Xun ( ϡԘ) serves as the
Chairperson of the Remuneration Committee. The primary duties of the Remuneration
Committee include, but are not limited to, the following:
 formulating individual remuneration plans for Directors, Supervisors and members
of the senior management in accordance with the terms of reference of the job
responsibilities, the importance of their positions as well as the remuneration
benchmarks for the relevant positions in other comparable companies;
 examining the criteria of performance evaluation of Directors and the senior
management of our Company, and conducting annual performance evaluation;
 supervising the implementation of the remuneration plan of the Company;
 reviewing and/or approving matters relating to share schemes under Chapter 17 of
the Listing Rules; and
 dealing with other matters that are authorized by the Board.
Nomination Committee
We have established a Nomination Committee with written terms of reference in
compliance with paragraph B.3 of Part 2 of the Corporate Governance Code, Appendix C1 to
the Listing Rules. The Nomination Committee consists of three Directors, namely Dr. Xu,
Dr. Y u Cheung Hoi ( ɲ੬ऎ) and Mr. Xia Xinsheng (ː᳅). Dr. Xu serves as the Chairperson
of the Nomination Committee. The primary duties of the Nomination Committee include, but
are not limited to, the following:
 making recommendations to our Board with regards to the size and composition of
our Board based on our Company’s business operation, asset scale and equity
structure;
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 researching and developing standards and procedures for the election of our Board
members, general managers and members of the senior management, and making
recommendations to our Board;
 conducting extensive search and providing to our Board suitable candidates for
Directors, general managers and other members of the senior management;
 examining our Board candidates, general manager and members of the senior
management and making recommendations to our Board;
 assessing and reviewing the independence of independent non-executive Directors;
and
 dealing with other matters that are authorized by our Board.
CONFIRMATION FROM OUR DIRECTORS
Rule 8.10 of the Listing Rules
Each of our Directors confirms that as of the Latest Practicable Date, he or she did not
have any interest in a business which competes or is likely to compete, directly or indirectly,
with our business, and requires disclosure under Rule 8.10 of the Listing Rules.
As of the Latest Practicable Date, Dr. Li Xiang was a director of Zhejiang Handing and
held more than 30% equity interests in Zhejiang Handing. Zhejiang Handing is a biotechnology
company, primarily engaged in development of innovative therapies targeting vascular
diseases, fibrosis, and cancer. From time to time, Zhejiang Handing will procure CRDMO
services from our Company. As Zhejiang Handing is our customer, and considering Zhejiang
Handing and our Group engaged in different businesses, the Directors are of the view that, the
business of Zhejiang Handing will not compete or will not be likely to compete, either directly
or indirectly, with our Group’s business. For details of the services procured by Zhejiang
Handing from our Company, please see the section headed “Connected Transaction.”
Rule 3.09D of the Listing Rules
Each of our Directors confirms that he or she (i) has obtained the legal advice referred
to under Rule 3.09D of the Listing Rules on May 16 and May 29, 2024, respectively, and (ii)
understands his or her obligations as a director of a listed issuer on the Stock Exchange under
the Listing Rules.
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Rule 3.13 of the Listing Rules
Each of the independent non-executive Directors confirms (i) his independence as regards
each of the factors referred to in Rules 3.13(1) to (8) of the Listing Rules, (ii) that he has no
past or present financial or other interest in the business of the Company or its subsidiaries or
any connection with any core connected person of the Company under the Listing Rules as of
the Latest Practicable Date, and (iii) that there are no other factors that may affect his
independence at the time of his appointments.
COMPENSATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
The Directors, Supervisors and senior management receive their remuneration in the form
of Directors’ or Supervisors’ salary and allowances, contributions to our retirement benefit
scheme, discretionary bonuses and other benefits in kind (if applicable).
For the years ended December 31, 2022, 2023 and 2024, the total remuneration paid to
our then Directors amounted to approximately RMB4.3 million, RMB3.9 million and RMB13.3
million, respectively.
For the years ended December 31, 2022, 2023 and 2024, the total remuneration paid to
our then Supervisors amounted to approximately RMB0.8 million, RMB3.0 million and
RMB4.8 million, respectively.
Under the arrangement currently in force, we estimate the total compensation before
taxation to be accrued to our Directors and our Supervisors in kind for their service for the year
ending December 31, 2025 to be approximately RMB16.2 million. The actual remuneration of
Directors and Supervisors in 2025 may be different from the expected remuneration.
For the years ended December 31, 2022, 2023 and 2024, the total emoluments paid to the
five highest paid individuals (including Directors and Supervisors) by our Group amounted to
approximately RMB13.9 million, RMB12.3 million and RMB17.3 million, respectively.
For the years ended December 31, 2022, 2023 and 2024, no fees were paid by our Group
to any of the Directors, Supervisors or the five highest paid individuals as an inducement to
join us or as compensation for loss of office.
Save as disclosed above, none of the Directors or Supervisors waived their remuneration
during the relevant period. The remuneration of Directors, Supervisors and senior management
is determined with reference to factors including operating results of our Company, market
comparable and the achievement of major operating indicators of our Company.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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CORPORATE GOVERNANCE
Our Company is committed to achieving high standards of corporate governance with a
view to safeguarding the interests of our Shareholders. To accomplish this, our Company
intends to comply with Corporate Governance Code set out in Appendix C1 to the Listing
Rules and the Model Code for Securities Transactions by Directors of Listed Issuers set out in
Appendix C3 to the Listing Rules after the Listing.
Pursuant to code provision C.2.1 of the Corporate Governance Code, companies listed on
the Stock Exchange are expected to comply with, but may choose to deviate from, the
requirement that the roles of chairperson and chief executive should be separate and should not
be performed by the same individual. We do not have a separate chairperson and chief
executive and Dr. Xu, our chairperson of the Board, executive Director and chief executive
officer, currently performs these two roles. The Board believes that vesting the roles of both
chairperson and chief executive in the same person has the benefit of ensuring consistent
leadership within the Group and enables more effective and efficient overall strategic planning
for the Group. The Board considers that the balance of power and authority for the present
arrangement will not be impaired, given that: (1) decision to be made by our Board requires
approval by at least a majority of our Directors; (2) Dr. Xu and the other Directors are aware
of and undertake to fulfill their fiduciary duties as Directors, which require, among other
things, that she acts for the benefit and in the best interests of our Company and will make
decisions for our Company accordingly; (3) the balance of power and authority is ensured by
the operations of the Board, including three independent non-executive Directors, and has a
fairly strong independence element; and (4) the overall strategic and other key business,
financial, and operational policies of our Company are made collectively after thorough
discussion at both Board, and senior management levels.
The Board will continue to review and consider splitting the roles of chairperson and
chief executive of the Company if and when it is appropriate taking into account the
circumstances of the Group as a whole. For further information relating to the Company’s
corporate governance measures, please see the section headed “Relationship with our
Controlling Shareholders—Corporate Governance Measures.”
BOARD DIVERSITY POLICY
We are committed to promoting the culture of diversity in the Company. We have strived
to promote diversity to the extent practicable by taking into consideration a number of factors
in our corporate governance structure.
We have adopted the board diversity policy (the “ Board Diversity Policy ”) which sets
out the objective and approach to achieve and maintain diversity of our Board in order to
enhance the effectiveness of our Board. Pursuant to the board diversity policy, we seek to
achieve Board diversity through the consideration of a number of factors, including but not
limited to gender, age, race, cultural background, educational background, industry experience
and professional experience. Our Directors have a balanced mix of knowledge and skills,
including knowledge and experience in the areas of automotive, finance, corporate
management and governance. They obtained degrees in various areas including automotive,
pharmacy, engineering, management and business administration. Our Board Diversity Policy
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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is well implemented as evidenced by the fact that there are Directors ranging from 40 years old
to 70 years old and comprises four female Directors and five male Directors. We will use our
best efforts to maintain at least two female representations on the Board and continue to take
steps to promote diversity at all levels of the Company including but without limitation to our
Board and senior management levels, to enhance the effectiveness of corporate governance of
the Company as a whole. In particular, the Company will continue to put effort into
maintaining a pipeline of potential successors of the Board to maintain or achieve gender
diversity via different channels, such as by engaging human resources agencies to identify
potential successors for the Board.
Our Nomination Committee is responsible for ensuring the diversity of our Board
members. After the Listing, our Nomination Committee will review the board diversity policy
from time to time, develop and review measurable objectives for implementing the policy, and
monitor the progress on achieving these measurable objectives to ensure its continued
effectiveness. We will disclose in our corporate governance report about the implementation of
the board diversity policy on an annual basis.
COMPLIANCE ADVISER
We have appointed Altus Capital Limited as our compliance adviser (the “ Compliance
Adviser ”) pursuant to Rule 3A.19 of the Listing Rules. The Compliance Adviser will provide
us with guidance and advice as to compliance with the Listing Rules and other applicable laws,
rules, codes and guidelines. Pursuant to Rule 3A.23 of the Listing Rules, the Compliance
Adviser will advise our Company in certain circumstances including:
(a) before the publication of any regulatory announcement, circular or financial report;
(b) where a transaction, which might be a notifiable or connected transaction, is
contemplated, including share issues and share repurchases;
(c) where we propose to use the proceeds of the Global Offering in a manner different
from that detailed in this Prospectus or where our business activities, developments
or results deviate from any forecast, estimate or other information in this Prospectus;
and
(d) where the Stock Exchange makes an inquiry to our Company regarding unusual
movements in the price or trading volume of its listed securities or any other matters
in accordance with Rule 13.10 of the Listing Rules.
Pursuant to Rule 3A.24 of the Listing Rules, the Compliance Adviser will, on a timely
basis, inform our Company of any amendment or supplement to the Listing Rules that are
announced by the Stock Exchange. The Compliance Adviser will also inform our Company of
any new or amended law, regulation or code in Hong Kong applicable to us, and advise us on
the continuing requirements under the Listing Rules and applicable laws and regulations.
The term of the appointment will commence on the Listing Date and is expected to end
on the date on which our Company complies with Rule 13.46 of the Listing Rules in respect
of our financial results for the first full financial year commencing after the Listing Date.
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
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THE CORNERSTONE PLACING
We have entered into cornerstone investment agreements (each a “ Cornerstone
Investment Agreement ”, and together the “ Cornerstone Investment Agreements ”) with the
cornerstone investors set out below (each a “ Cornerstone Investor ”, and together the
“Cornerstone Investors ”), pursuant to which the Cornerstone Investors have agreed to
subscribe, subject to certain conditions, or cause their designated entities to subscribe (as the
case may be) at the Offer Price with certain investment amount (the “ Cornerstone Placing ”).
The calculations in this section, which are based on the exchange rate as disclosed in the
section headed “Information about this Prospectus and the Global Offering”, are for illustration
purpose.
Assuming an Offer Price of HK$28.40, being the low-end of the Offer Price range set out
in this Prospectus, the total number of Offer Shares to be subscribed by the Cornerstone
Investors would be 2,763,800 Offer Shares, representing approximately (i) 16.45% of the H
Shares offered pursuant to the Global offering, and (ii) 1.95% of our total issued share capital
immediately upon completion of the Global Offering, and the total subscription amount by the
Cornerstone Investors would be approximately US$10 million (approximately HK$78.49
million).
Assuming an Offer Price of HK$29.50, being the mid-point of the Offer Price range set
out in this Prospectus, the total number of Offer Shares to be subscribed by the Cornerstone
Investors would be 2,660,800 Offer Shares, representing approximately (i) 15.84% of the H
Shares offered pursuant to the Global offering, and (ii) 1.88% of our total issued share capital
immediately upon completion of the Global Offering, and the total subscription amount by the
Cornerstone Investors would be approximately US$10 million (approximately HK$78.49
million).
Assuming an Offer Price of HK$30.60, being the high-end of the Offer Price range set out
in this Prospectus, the total number of Offer Shares to be subscribed by the Cornerstone
Investors would be 2,565,000 Offer Shares, representing approximately (i) 15.27% of the H
Shares offered pursuant to the Global offering, and (ii) 1.81% of our total issued share capital
immediately upon completion of the Global Offering, and the total subscription amount by the
Cornerstone Investors would be approximately US$10 million (approximately HK$78.49
million).
Our Company is of the view that the Cornerstone Placing will help to raise the profile of
our Company and to signify that such investors have confidence in our business and prospect.
To the best knowledge of our Company, each of the Cornerstone Investors (i) is an
Independent Third Party; (ii) none of the Cornerstone Investors is accustomed to taking
instructions from our Company, the Directors, the Supervisors, chief executive, our Controlling
Shareholders, substantial shareholders, existing Shareholders or any of their respective
subsidiaries or their respective close associates in relation to the acquisition, disposal, voting
or other disposition of the Offer Shares; (iii) none of the subscription of the relevant Offer
CORNERSTONE INVESTORS
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Shares by any of the Cornerstone Investors is financed by our Company, the Directors, the
Supervisors, chief executive, our Controlling Shareholders, substantial shareholders, existing
Shareholders or any of their respective subsidiaries or their respective close associates; (iv)
each Cornerstone Investor will be utilizing their internal resources as their source of funding
for the subscription of the Offer Shares; and (v) no approval from other stock exchange is
required for each Cornerstone Investor’s investment in our Company as described in this
section.
The Cornerstone Placing will form part of the International Offering and the Cornerstone
Investors will not subscribe for any Offer Shares under the Global Offering (other than
pursuant to the Cornerstone Investment Agreements). The Offer Shares to be subscribed by the
Cornerstone Investors will rank pari passu in all respect with the fully paid Shares in issue and
will be counted towards the public float of our Company under Rule 8.08 of the Listing Rules.
Immediately following the completion of the Global Offering, none of the Cornerstone
Investors will become a substantial shareholder of the Company, and the Cornerstone Investors
will not have any Board representation in our Company. Other than a guaranteed allocation of
the relevant Offer Shares at the final Offer Price, the Cornerstone Investors do not have any
preferential rights in the Cornerstone Investment Agreements compared with other public
Shareholders. There are no side agreements or arrangements between our Company and the
Cornerstone Investors or any benefit, direct or indirect, conferred on the Cornerstone Investors
by virtue of or in relation to the Cornerstone Placing.
The total number of Offer Shares to be subscribed by the Cornerstone Investors may be
affected by reallocation of the Offer Shares between the International Offering and the Hong
Kong Public Offering in the event of over-subscription under the Hong Kong Public Offering
as described in the paragraph headed “Structure of the Global Offering—The Hong Kong
Public Offering—Reallocation and Clawback” in this Prospectus. Each of the Cornerstone
Investors has agreed that if the total demand for the H Shares in the Hong Kong Public Offering
falls within the circumstances as set out in the aforesaid section of this Prospectus, the number
of Offer Shares to be subscribed by such Cornerstone Investor shall be reduced on a pro rata
basis to satisfy the shortfall, after taking into account the requirements under Appendix F1 to
the Listing Rules.
Each of the Cornerstone Investors will pay and settle in full for the Offer Shares that the
Cornerstone Investors have subscribed for before dealings in the Offer Shares commence on
the Stock Exchange. As such, there will be no deferred settlement of the investment amount for
the Offer Shares to be subscribed by the Cornerstone Investors pursuant to the Cornerstone
Investment Agreements. Since there is no over-allotment option in the International Offering,
there will be no delayed delivery or deferred settlement of Offer Shares to be subscribed by the
Cornerstone Investors. Details of the actual number of Offer Shares to be allocated to the
Cornerstone Investors will be disclosed in the allotment results announcement to be issued by
us on or around June 27, 2025.
CORNERSTONE INVESTORS
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OUR CORNERSTONE INVESTORS
Set out below in the aggregate number of Offer Shares, and the corresponding percentages
to the Offer Shares and our Company’s total issued share capital under the Cornerstone
Placing:
Based on the Offer Price of HK$28.40 (being the low-end of the Offer Price range)Name
Investment
Amount (1)
Number of Offer
Shares (rounded
down to nearest
whole board lot of
100 H Shares)
Approximately %
of total number of
Offer Shares
Approximately %
of total
H Shares in issue
immediately
following the
completion of
the Global
Offering
Approximately %
of total
Shares in issue
immediately
following the
completion of
Global Offering
CSPC US$5 million (2) 1,381,900 8.23% 1.88% 0.97%
Welight Capital US$5 million (2) 1,381,900 8.23% 1.88% 0.97%
Total US$10 million 2,763,800 16.45% 3.76% 1.95%
Based on the Offer Price of HK$29.50 (being the mid-point of the Offer Price range)
Name
Investment
Amount (1)
Number of Offer
Shares (rounded
down to nearest
whole board lot of
100 H Shares)
Approximately %
of total number of
Offer Shares
Approximately %
of total
H Shares in issue
immediately
following the
completion of
the Global
Offering
Approximately %
of total
Shares in issue
immediately
following the
completion of
Global Offering
CSPC US$5 million (2) 1,330,400 7.92% 1.81% 0.94%
Welight Capital US$5 million (2) 1,330,400 7.92% 1.81% 0.94%
Total US$10 million 2,660,800 15.84% 3.62% 1.88%
CORNERSTONE INVESTORS
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Based on the Offer Price of HK$30.60 (being the high-end of the Offer Price range)
Name
Investment
Amount (1)
Number of Offer
Shares (rounded
down to nearest
whole board lot of
100 H Shares)
Approximately %
of total number of
Offer Shares
Approximately %
of total
H Shares in issue
immediately
following the
completion of
the Global
Offering
Approximately %
of total
Shares in issue
immediately
following the
completion of
Global Offering
CSPC US$5 million (2) 1,282,500 7.63% 1.74% 0.90%
Welight Capital US$5 million (2) 1,282,500 7.63% 1.74% 0.90%
Total US$10 million 2,565,000 15.27% 3.49% 1.81%
Notes:
(1) Calculated based on the exchange rate set out in the section headed “Information about this Prospectus and the
Global Offering—Exchange Rate Conversion” in this Prospectus.
(2) The investment amount is exclusive of the brokerage fee, the SFC transaction levy, the Stock Exchange trading
fee, and the AFRC transaction levy.
The following information about the Cornerstone Investors was provided to our Company
by the Cornerstone Investors in relation to the Cornerstone Placing. Other than CSPC, none of
the Cornerstone Investors is a listed company or a subsidiary of a listed company.
CSPC
Dragon Merit Holdings Limited, a limited liability company established in Hong Kong,
is wholly-owned by CSPC Pharmaceutical Group Limited (“ CSPC ”, Stock Code: 1093). CSPC
is a well-known pharmaceutical company in China, with its shares listed on the Main Board of
the Stock Exchange since 1994 and became a constituent of the Hang Seng Index in 2018.
Currently, CSPC is mainly engaged in businesses of research and development, as well as
production and sales of pharmaceutical products. It takes innovative drugs as the core
development strategy. At present, CSPC has strong product portfolios in therapeutic areas such
as nervous system, oncology, cardiovascular and metabolic diseases. It also has a national top
research and development team, with research and development bases in Shijiazhuang,
Shanghai, Beijing and the United States. CSPC focuses on the discovery and research and
development of small molecule targeted drugs, nanodrugs, monoclonal antibody drugs,
bispecific antibody drugs and antibody-drug conjugates.
CORNERSTONE INVESTORS
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As confirmed by Dragon Merit Holdings Limited, the approvals from CSPC’s
shareholders and Stock Exchange are not required for Dragon Merit Holdings Limited’s
subscription for the Shares pursuant to the relevant Cornerstone Investment Agreement.
Dragon Merit Holdings Limited became aware of the cornerstone investment opportunities
through commercial cooperation with the Company.
Welight Capital
Welight Capital L.P . (“ Welight Capital ”) is a limited partnership established in the
Cayman Islands in October 2015. The sole general partner of Welight Capital is Welight Capital
Management Limited, which is a limited liability company incorporated in the Cayman Islands,
and wholly owned by Welight Assets Limited. The sole limited partner of Welight Capital is
Welight Assets Limited. Welight Assets Limited is a limited liability company incorporated in
the BVI, and is wholly owned by Mr. Wu Xiaoguang (Έ). Mr. Wu Xiaoguang has
extensive experience in product research and development, product planning, product
operation and marketing of Internet business. Mr. Wu Xiaoguang joined Tencent Holdings
Limited, a company listed on the Stock Exchange (stock code: 0700), in 1999 and had served
as the product manager, general manager of instant messaging products, general manager of
Internet business division and senior vice president of Internet services division. From 2012 to
2015, Mr. Wu Xiaoguang had served as the chief executive officer of Tencent E-Commerce
Holdings Limited and was responsible for the development and management of the
e-commerce business of the said company. Mr. Wu Xiaoguang has been the founding partner
of Welight Capital (Hongkong) Limited ( ฆΈ௴ҳ(ಥ)ʮ̡) since 2015. Mr. Wu
Xiaoguang has been an independent non-executive director of Haidilao International Holding
Ltd., a company listed on the Stock Exchange (stock code: 6862), since August 2021. The
Company became acquainted with Welight Capital through the introduction by one of the
Underwriters.
CLOSING CONDITIONS
The obligation of each Cornerstone Investor to subscribe for the Offer Shares under the
respective Cornerstone Investment Agreement is subject to, among other things, the following
closing conditions:
(i) the Underwriting Agreements being entered into and having become effective and
unconditional (in accordance with their respective original terms or as subsequently
waived or varied by agreement of the parties thereto) by no later than the time and
date as specified in the Underwriting Agreements, and neither of the Underwriting
Agreements having been terminated;
(ii) the Offer Price having been agreed according to the Underwriting Agreements and
price determination agreement to be signed among the parties thereto in connection
with the Global Offering;
CORNERSTONE INVESTORS
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(iii) the Listing Committee having granted the listing of, and permission to deal in, the
H Shares (including the investors’ Shares as well as other applicable waivers and
approvals) and such approval, permission or waiver having not been revoked prior
to the commencement of dealings in the H Shares on the Stock Exchange;
(iv) no laws shall have been enacted or promulgated by any governmental authority
which prohibits the consummation of the transactions contemplated in the Global
Offering or the Cornerstone Investment Agreements and there shall be no orders or
injunctions from a court of competent jurisdiction in effect precluding or prohibiting
consummation of such transactions; and
(v) the respective representations, warranties, undertakings and confirmations of the
relevant Cornerstone Investor under the relevant Cornerstone Investment Agreement
are and will be accurate and true in all respects and not misleading and that there is
no material breach of the Cornerstone Investment Agreements on the part of the
relevant Cornerstone Investor.
RESTRICTIONS ON THE CORNERSTONE INVESTORS
Each of the Cornerstone Investors has agreed that it will not, whether directly or
indirectly, at any time during the period of six months from and including the Listing Date (the
“Lock-up Period ”), dispose of any of the Offer Shares they have purchased pursuant to the
relevant Cornerstone Investment Agreements, save for certain limited circumstances, such as
transfers to any of its wholly-owned subsidiaries who will be bound by the same obligations
of such Cornerstone Investor, including the Lock-up Period restriction.
CORNERSTONE INVESTORS
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OUR CONTROLLING SHAREHOLDERS
Since the establishment of our Company, Dr. Xu and Ms. Li have been acting in concert
with each other in respect of all major affairs concerning our Group, having (i) discussed with
one another to reach consensual decisions; and (ii) voted in a consistent manner (by themselves
and/or through companies controlled by them, since the establishment of such companies,
where applicable) in respect of all corporate matters relating to the financials and operations
of our Group. Dr. Xu and Ms. Li have agreed to, provided that they remain key members in
our Group or they remain interested in the share capital of our Company, continue to act in
concert with each other after the Listing in the following manner: (i) act in concert and
collectively for all material management affairs and the arrival and/or execution of all
commercial decisions, including but not limited to financial and operational matters of our
Group; (ii) cast unanimous vote collectively for or against all resolutions in all Shareholders’
meetings of our Group; and (iii) cooperate with each another to maintain control and
management of our Group. As of the Latest Practicable Date, Dr. Xu and Ms. Li collectively
control the voting rights of approximately 76.42% of the total issued share capital of the
Company, held directly by Ms. Li and indirectly by their respective controlled entities as set
out below.
Immediately following the completion of the Global Offering, Dr. Xu and Ms. Li will
control the voting rights of approximately 67.37% of the total issued share capital of our
Company, held (a) directly by Ms. Li as to 7.24% of the total issued share capital of our
Company; and (b) indirectly as to 60.12% by their respective controlled entities, including:
(i) Qikang International, being a company wholly-owned by Healthy Angel which is in
turn wholly-owned by Dr. Xu, which holds approximately 42.01% of the total issued
share capital of our Company;
(ii) Hangzhou Haiding, being a company held by Ms. Li as to 99% and her spouse, Mr.
Li Congyan as to 1%, which holds approximately 10.87% of the total issued share
capital of our Company; and
(iii) Employee Incentive Platforms, being limited partnerships of which Ms. Li is the
sole general partner, which together hold approximately 7.25% of the total issued
share capital of our Company.
Accordingly, upon the Listing, Dr. Xu and Ms. Li, together with Qikang International,
Healthy Angel, Mr. Li Congyan, Hangzhou Haiding and the Employee Incentive Platforms, are
a group of Controlling Shareholders of our Company. For details of Dr. Xu and Ms. Li, see the
sections headed “History, Development and Corporate Structure” and “Directors, Supervisors
and Senior Management.”
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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RULE 8.10 OF THE LISTING RULES
The Controlling Shareholders and the Directors confirm that as of the Latest Practicable
Date, they did not have any interest in a business, apart from the business of our Group, which
competes or is likely to compete, directly or indirectly, with our business, which would require
disclosure under Rule 8.10 of the Listing Rules.
INDEPENDENCE OF OUR BUSINESS
Having considered the following factors, our Directors are satisfied that we are able to
carry out our business independently from our Controlling Shareholders and their respective
close associates upon and after the Listing.
Operational Independence
Our Company has full rights to make all decisions on, and to carry out, our own business
operations independently. We hold our own operation resources including but not limited to
franchisees and suppliers, as well as our own registered patents which can be used for
producing our products. We have a team of senior management to operate the business
independently from our Controlling Shareholders and their respective close associates. We also
have access to third parties independently from, and not connected with, our Controlling
Shareholders for sources of customers, suppliers, franchisees and business partners.
Based on the above, our Directors believe that we are operationally independent from our
Controlling Shareholders and their respective close associates.
Management Independence
Our management and operational decisions are made by the Board in a collective manner.
The Board comprises nine Directors, including five executive Directors, one non-executive
Director and three independent non-executive Directors.
Our Directors have relevant experience to ensure the proper functioning of the Board. We
further believe that our Directors and members of the senior management are able to perform
their roles in our Company in managing our business independently from our Controlling
Shareholders and their respective close associates for the following reasons:
(a) each of our Directors is aware of his or her fiduciary duties as a director, which
requires, among other things, that he or she acts for our Company’s best interests
and he or she must not allow any conflict between his or her duties as a Director and
his or her personal interests;
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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(b) our independent non-executive Directors have extensive experience in different
areas. We believe that they will be able to exercise their independent judgment and
will be able to provide impartial opinions in the decision-making process of our
Board to protect the interests of our Shareholders;
(c) all of the independent non-executive Directors are independent of our Controlling
Shareholders, and decisions of our Board require the approval of a majority vote
from members of our Board. They have substantial experience in the industry,
management or in corporate governance as further described in the section headed
“Directors, Supervisors and Senior Management,” which will enable them to
discharge their duties independently from the Controlling Shareholders;
(d) where a Board meeting or Shareholders’ meeting is held to consider a proposed
transaction in which our Directors or Controlling Shareholders or any of their
respective close associates have a material interest, the relevant Directors or our
Controlling Shareholders and their respective close associates shall abstain from
voting on the relevant resolutions and shall not be counted towards the quorum for
the voting; and
(e) our Company has appointed Altus Capital Limited as our Compliance Adviser, who
will provide advice and guidance to our Company in respect of compliance with the
applicable laws and Listing Rules including various requirements relating to
Directors’ duties and corporate governance.
Financial Independence
Our Group has its own internal control, accounting, funding, reporting and financial
management system as well as accounting and finance department. Moreover, our Group opens
and manages bank accounts independently, and has never shared any bank account with the
Controlling Shareholders. Our Group has independent taxation registration according to the
relevant laws, and makes tax payments independently according to the applicable PRC taxation
laws and regulations. Our Group has never made any tax payment jointly with the Controlling
Shareholders or any other entities controlled by them.
As of the Latest Practicable Date, our Group did not rely on the Controlling Shareholders
and/or their close associates for any provision of financial assistance. In addition, we are
capable of obtaining financing from third parties without relying on any guarantee or security
provided by our Controlling Shareholders and their respective close associates. During the
Track Record Period and as of the Latest Practicable Date, we had received the Pre-IPO
Investments from third party investors independently. For details of the Pre-IPO Investments,
see the section headed “History, Development and Corporate Structure”. During the Track
Record Period, our Controlling Shareholders had provided loans to our Company. All such
loans had been repaid as of the Latest Practicable Date. For more details, please see note 38
to the Accountants’ Report in Appendix I to this Prospectus. Save as disclosed above, during
the Track Record Period and up to the Latest Practicable Date, there was no loan, advance or
guarantee provided by our group of Controlling Shareholders or his/its close associates, nor
were there any pledges and guarantees provided by and to our Controlling Shareholders or their
respective close associates.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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CORPORATE GOVERNANCE MEASURES
Our Directors believe that there are adequate corporate governance measures in place to
manage the potential conflict of interests between our Controlling Shareholders and our Group
and to safeguard the interests of our Shareholders taken as a whole for the following reasons:
 where a Shareholders’ meeting is to be held for considering proposed transactions
in which our Controlling Shareholders or any of their respective close associates has
a material interest, our Controlling Shareholders will not vote on the resolutions and
shall not be counted in the quorum in the voting;
 our Group has established internal control mechanisms to identify connected
transactions. Upon the Listing, if any transaction is proposed between our Group and
our Controlling Shareholders and their respective associates, we will comply with
the requirements of the Articles of Association and the Listing Rules, including,
where appropriate, the reporting, annual review by the independent non-executive
Directors, announcement and independent shareholders’ approval;
 our Board consists of a balanced composition of executive Directors, non-executive
Director and independent non-executive Directors, with independent non-executive
Directors representing not less than one-third of our Board to ensure that our Board
is able to effectively exercise independent judgment in its decision-making process
and provide independent advice to our Shareholders. Our independent non-executive
Directors individually and collectively possess the requisite knowledge and
experience to perform their duties. They will review whether there is any conflict of
interests between our Group and our Controlling Shareholders and provide impartial
and professional advice to protect the interests of our minority Shareholders;
 where our Directors reasonably request the advice of independent professionals,
such as financial advisers, the appointment of such independent professionals will
be made at our Company’s expenses; and
 we have appointed Altus Capital Limited as our Compliance Adviser, which will
provide advice and guidance to us in respect of compliance with the applicable laws
and the Listing Rules including various requirements relating to directors’ duties and
corporate governance, and inform us on a timely basis of any amendment or
supplement to the Listing Rules or applicable laws and regulations in Hong Kong.
Based on the above, our Directors are satisfied that sufficient corporate governance
measures have been put in place to manage conflicts of interest that may arise between our
Company and our Controlling Shareholders, and to protect our minority Shareholders’ interests
after the Listing.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
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We have entered into certain transaction with the following connected person, which will
constitute continuing connected transaction of our Company upon Listing under Chapter 14A
of the Listing Rules:
SUMMARY OF OUR CONNECTED PERSON
Name of connected person Business of connected person Connected relationship
Zhejiang Handing Pharmaceutical Co.,
Ltd.* (ʮ̡), a
limited liability company established
in the PRC on August 18, 2017
(“Zhejiang Handing ”)
Zhejiang Handing is a biotechnology
company, primarily engaged in
developing innovative therapies
targeting vascular diseases, fibrosis,
and cancer.
As of the Latest Practicable Date, Dr.
Li Xiang, our executive Director,
held approximately 64.25% interest
in aggregate in Zhejiang Handing,
(i) by himself as to approximately
41.45% and (ii) through Hangzhou
Hongkang Enterprise Management
Partnership (Limited Partnership)
(ੰΆุ၍ଣΥྫΆุ(Υ
ྫ)) as to approximately 22.80%,
which was owned by Dr. Li Xiang
as to 99%. As such, Zhejiang
Handing is an associate of Dr. Li
Xiang, and therefore a connected
person of our Company. Dr. Li
Xiang also served as a director and
the chairman of Zhejiang Handing.
FULLY EXEMPT CONTINUING CONNECTED TRANSACTION
Historically, Zhejiang Handing purchased and may, from time to time, purchase our
CRDMO services. For each of the years ended December 31, 2022, 2023 and 2024, the total
transaction amount on the purchase of CRDMO services by Zhejiang Handing from our Group
was RMB0.4 million, RMB0.9 million, and RMB0.4 million, representing 0.1%, 0.3%, and
0.1% of our total revenue in the same year. The transactions between Zhejiang Handing and us
are in the ordinary and usual course of business and on normal commercial terms or better than
those available to independent third parties.
Our Company has entered into a service framework agreement with Zhejiang Handing
(the “ Services Framework Agreement ”) for a term of three years commencing from the
Listing until December 31, 2027, and may be renewed conditional on the fulfillment of the
relevant requirements under the relevant laws, regulations and the Listing Rules. Pursuant to
the Services Framework Agreement, our Group will provide CRDMO services or CDMO
CONNECTED TRANSACTION
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services to Zhejiang Handing as requested from time to time (the “ Services ”). We and Zhejiang
Handing will enter into separate individual agreements or work orders to provide for the
specific terms and conditions according to the principles provided in the Services Framework
Agreement.
The Directors currently expect that the estimated amount of fees relating to transactions
under the Services Framework Agreement for the three years ending December 31, 2027 are
approximately RMB1.5 million, RMB2.0 million and RMB2.0 million, respectively.
The fees for the Services will be charged at rates no less favorable to our Group than those
offered to independent third parties for comparable services, and will be determined by our
Group and Zhejiang Handing through arm’s length negotiation based on factors applicable to
all customers, including but not limited to the nature, complexity, and specification of services
to be provided, the fees charged by our Group for historical transactions of a similar nature,
and the then prevailing market rates.
As each of the applicable percentage ratios in respect of the transactions contemplated
under the Services Framework Agreement is expected to be less than 5% on an annual basis
and the total consideration on an annual basis is less than HK$3 million, the aforesaid
continuing connected transaction contemplated under the Services Framework Agreement will
be fully exempt from the independent shareholders’ approval, reporting, annual review,
announcement and all disclosure requirements pursuant to Rule 14A.76(1) of the Listing Rules.
CONNECTED TRANSACTION
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SUBSTANTIAL SHAREHOLDERS
So far as our Directors are aware, immediately following the completion of the Global
Offering and the conversion of our Unlisted Shares to H Shares, the following persons will
have an interest and/or short position in the Shares or the underlying Shares which would fall
to be disclosed to us and the Stock Exchange under the provisions of Divisions 2 and 3 of Part
XV of the SFO, or, will be, directly or indirectly interested in 10% or more of the nominal
value of any class of our share capital carrying rights to vote in all circumstances at general
meetings of our Company:
Shares held as of the
Latest Practicable Date
Shares held immediately following the completion
of the Global Offering and Conversion of
Unlisted Shares into H Shares
Name of Shareholder Nature of interest
Description
of Shares
Number of
Shares (1)
Percentage of
shareholding in
our total issued
share capital
Number of
Shares (1)
Percentage of
shareholding in
our Unlisted
Shares/
H Shares (2)
Percentage of
shareholding in
our total issued
share capital
Dr. Xu (3) Interest in controlled
corporation
Unlisted Shares 59,567,875 47.65% 47,654,300 69.87% 32.40%
H Shares – – 11,913,575 16.19% 8.10%
Interests held jointly
with another
person
(4)
Unlisted Shares 35,957,000 28.77% 20,546,812 30.13% 13.97%
H Shares – – 15,410,188 20.94% 10.48%
Healthy Angel (3) Interest in controlled
corporation
Unlisted Shares 59,567,875 47.65% 47,654,300 69.87% 32.40%
H Shares – – 11,913,575 16.19% 8.10%
Qikang International (3) Beneficial owner Unlisted Shares 59,567,875 47.65% 47,654,300 69.87% 32.40%
H Shares – – 11,913,575 16.19% 8.10%
Ms. Li (4) Beneficial owner Unlisted Shares 10,273,375 8.22% 5,136,687 7.53% 3.49%
H Shares – – 5,136,688 6.98% 3.49%
Interest in controlled
corporations
Unlisted Shares 25,683,625 20.55% 15,410,125 22.60% 10.48%
H Shares – – 10,273,500 13.96% 6.99%
Interests held jointly
with another
person
(3)
Unlisted Shares 59,567,875 47.65% 47,654,300 69.87% 32.40%
H Shares – – 11,913,575 16.19% 8.10%
Hangzhou Haiding (4) Beneficial owner Unlisted Shares 15,410,125 12.33% 15,410,125 22.60% 10.48%
H Shares – – – – –
Mr. Wu Yihui
(юɓฯ)(5)
Interest in controlled
corporation
Unlisted Shares 9,131,875 7.31% – – –
H Shares – – 9,131,875 12.41% 6.21%
Hangzhou Puyang
Investment
Management Co.,
Ltd. (ψ౷ජҳ༟
ʮ̡)
(5)
Interest in controlled
corporation
Unlisted Shares 9,131,875 7.31% – – –
H Shares – – 9,131,875 12.41% 6.21%
SUBSTANTIAL SHAREHOLDERS
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Shares held as of the
Latest Practicable Date
Shares held immediately following the completion
of the Global Offering and Conversion of
Unlisted Shares into H Shares
Name of Shareholder Nature of interest
Description
of Shares
Number of
Shares (1)
Percentage of
shareholding in
our total issued
share capital
Number of
Shares (1)
Percentage of
shareholding in
our Unlisted
Shares/
H Shares (2)
Percentage of
shareholding in
our total issued
share capital
Puhua Xiaxing (5) Beneficial owner Unlisted Shares 9,131,875 7.31% – – –
H Shares – – 9,131,875 12.41% 6.21%
Mr. Xie Li ( ᑽɢ)(6) Unlisted Shares 9,492,375 7.60% – – –
H Shares – – 9,492,375 12.90% 6.45%
Zhejiang Fenghua
Investment
Management Co.,
Ltd. ( एϪ㋘ശҳ༟
ʮ̡)
(6)
Interest in controlled
corporations
Unlisted Shares 9,492,375 7.60% – – –
H Shares – – 9,492,375 12.90% 6.45%
Haibang Fenghua (6) Interest in controlled
corporations
Unlisted Shares 9,492,375 7.60% – – –
H Shares – – 9,492,375 12.90% 6.45%
Haibang Taida (6) Beneficial owner Unlisted Shares 7,209,375 5.77% – – –
H Shares – – 7,209,375 9.80% 4.90%
Hangzhou Heda
Xinyiyao (7)
Beneficial owner Unlisted Shares 5,371,750 4.30% – – –
H Shares – – 5,371,750 7.30% 3.65%
Notes:
1. All interests stated are long positions.
2. The calculation is based on the total number of 68,201,112 Unlisted Shares and 73,598,888 H Shares in issue
immediately after completion of the Global Offering and conversion of the Unlisted Shares into H shares under
full circulation, since 56,798,888 Unlisted Shares will be converted into H Shares and 16,800,000 H Shares
will be issued pursuant to the Global Offering.
3. Qikang International is wholly-owned by Healthy Angel which is in turn wholly-owned by Dr. Xu. As such,
Dr. Xu and Healthy Angel are deemed to be interested in the Shares held by Qikang International under the
SFO. Since the establishment of our Company, Dr. Xu and Ms. Li have been acting in concert with each other
in respect of all major affairs concerning our Group. Dr. Xu and Ms. Li have agreed to, provided that they
remain key members in our Group or they remain interested in the share capital of our Company, continue to
act in concert with each other after the Listing. As such, each of Dr. Xu and Ms. Li is deemed to be interested
in the Shares held by each other by virtue of the SFO.
4. Hangzhou Haiding is owned by Ms. Li and her spouse, Mr. Li Congyan (֧as to 99% and 1%,
respectively. As such, Ms. Li is deemed to be interested in the Shares held by Hangzhou Haiding.
Each of Hangzhou Xiyong and Hangzhou Y uanxi is our Employee Incentive Platform established as a limited
partnership and is controlled by Ms. Li as its general partner. Ms. Li is responsible for the management of
Hangzhou Xiyong and Hangzhou Y uanxi and exercising the voting rights attaching to the Shares held by
Hangzhou Xiyong and Hangzhou Y uanxi, in accordance with the partnership agreements entered into among
the general and limited partners of Hangzhou Xiyong and Hangzhou Y uanxi, respectively. As of the Latest
Practicable Date, the Employee Incentive Platforms held 10,273,500 Shares in aggregate, representing
approximately 8.22% of the total issued Shares of our Company. By virtue of the SFO, Ms. Li is deemed to
be interested in the respective Shares held by Hangzhou Xiyong and Hangzhou Y uanxi.
SUBSTANTIAL SHAREHOLDERS
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5. Puhua Xiaxing is a limited partnership established in the PRC, the general partner of which is Hangzhou
Puyang Investment Management Co., Ltd. (ʮ̡), which is controlled by Mr. Wu Yihui
(юɓฯ), our non-executive Director. As such, Mr. Wu Yihui ( юɓฯ) and Hangzhou Puyang Investment
Management Co., Ltd. (ʮ̡) are deemed to be interested in the Shares held by Puhua
Xiaxing under the SFO.
6. Each of Haibang Taida and Haibang Boyuan is a limited partnership established in the PRC, the general partner
of which is Hangzhou Haibang Fenghua Investment Management Co., Ltd. (ʮ̡,
“Haibang Fenghua ”). Haibang Fenghua is in turn controlled as to 75% by Zhejiang Fenghua Investment
Management Co., Ltd. (ʮ̡), which is a company controlled by Mr. Xie Li ( ᑽɢ)a s
to 46% equity interests. As such, Mr. Xie Li ( ᑽɢ), Haibang Fenghua and Zhejiang Fenghua Investment
Management Co., Ltd. (ʮ̡) are deemed to be interested in the respective Shares held
by Haibang Taida and Haibang Boyuan.
Other than Haibang Fenghua being a general partner, Haibang Boyuan has five limited partners, among which
Hangzhou Haibang Xinrun V enture Capital Partnership (Limited Partnership) (ψऎԞ㒥ᆗ௴ุҳ༟ΥྫΆ
ุ(Υྫ)) holds approximately 49.05% partnership interests therein. As such, Haibang Xinrun V enture
Capital Partnership (Limited Partnership) (ψऎԞ㒥ᆗ௴ุҳ༟ΥྫΆุ(Υྫ)) is deemed to be
interested in the Shares held by Haibang Boyuan under the SFO.
7. Hangzhou Heda Xinyiyao is a limited partnership established in the PRC, which is owned as to (i) 0.1% by
its general partner, Hangzhou Heda Investment Management Co., Ltd., (ii) 80% by its limited partner, Hangyin
Wealth Management Co., Ltd., and (iii) 19.9% by its limited partner, Hangzhou Heda Industry Fund Investment
Co., Ltd. Hangzhou Heda Investment Management is controlled by Hangzhou Heda Financial Services Group
Co., Ltd., which is wholly owned by Hangzhou Qiantang New Area Industrial Development Group Co., Ltd.
As such, Hangzhou Heda Investment Management Co., Ltd., Hangyin Wealth Management Co., Ltd. and
Hangzhou Heda Financial Services Group Co., Ltd. are deemed to be interested in the Shares held by
Hangzhou Heda Xinyiyao under the SFO.
Save as disclosed above and the section headed “Appendix IV—Statutory and General
Information—Further Information about our Directors, Supervisors, Senior Management and
Substantial Shareholders – Interests and short positions of our Directors, Supervisors and chief
executive of our Company in the Shares, underlying Shares and debentures of our Company
and our associated corporations”, our Directors are not aware of any person who will,
immediately following completion of the Global Offering, have any interest and/or short
position in the Shares or underlying Shares of our Company which will be required to be
disclosed to our Company and the Stock Exchange pursuant to the provisions of Divisions 2
and 3 of Part XV of the SFO, or, who are, directly or indirectly interested in 10% or more of
the nominal value of any class of share capital carrying rights to vote in all circumstances at
general meeting of the Company or any other member of our Group.
SUBSTANTIAL SHAREHOLDERS
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This section presents certain information regarding our share capital before and upon
completion of the Global Offering.
BEFORE THE COMPLETION OF THE GLOBAL OFFERING
As of the Latest Practicable Date, the registered capital of our Company was
RMB125,000,000, comprising 125,000,000 Unlisted Shares of nominal value RMB1.00 each.
UPON THE COMPLETION OF THE GLOBAL OFFERING
Immediately following the completion of the Global Offering and the conversion of
certain Unlisted Shares into H Shares, the issued share capital of our Company will be as
follows:
Description of Shares
Number of
Shares
Approximate
Percentage of
the Total
Share Capital
of Our
Company
Unlisted Shares in issue 68,201,112 48.10%
H Share to be converted from Unlisted Shares 56,798,888 40.06%
H Shares to be issued under the Global Offering 16,800,000 11.85%
Total 141,800,000 100.00%
RANKING
Upon completion of the Global Offering, the Shares will consist of H Shares and Unlisted
Shares. H Shares and Unlisted Shares are all ordinary Shares in the share capital of our
Company. However, apart from certain qualified domestic institutional investors in the PRC,
the qualified PRC investors under the Shanghai – Hong Kong Stock Connect or the Shenzhen
– Hong Kong Stock Connect and other persons who are entitled to hold our H Shares pursuant
to relevant PRC laws and regulations or upon approvals of any competent authorities, H Shares
generally cannot be subscribed for by or traded between legal or natural persons of the PRC.
Unlisted Shares and H Shares will rank pari passu with each other in all respects and, in
particular, will rank equally for all dividends or distributions declared, paid or made after the
date of this Prospectus. All dividends in respect of the H Shares are to be paid by us in Hong
Kong dollars or in the form of H Shares.
SHARE CAPITAL
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CONVERSION OF OUR UNLISTED SHARES INTO H SHARES
According to the regulations issued by the CSRC, the holders of our Unlisted Shares may,
at their own option, authorize the Company to apply to the CSRC for conversion of their
respective Unlisted Shares to H Shares, and such converted Shares may be listed and traded on
an overseas stock exchange provided that the required filings with the CSRC for the
conversion, listing and trading of such converted Shares have been completed. Additionally,
such conversion, trading and listing shall meet any requirement of internal approval process
and in all respects comply with the regulations prescribed by the securities regulatory
authorities of the State Council and the regulations, requirements and procedures prescribed by
the relevant overseas stock exchange. Save as disclosed in this Prospectus and to the best
knowledge of our Directors, we are not aware of the intention of such existing Shareholders
to convert their Unlisted Shares.
If any of the Unlisted Shares are to be converted, listed and traded as H Shares on the
Stock Exchange, the filings with the relevant PRC regulatory authorities, including the CSRC,
and the approval of the Stock Exchange are necessary for such conversion. Based on the
procedures for the conversion of Unlisted Shares into H Shares as set forth below, we will
apply for the listing of all or any portion of the Unlisted Shares on the Stock Exchange as H
Shares in advance of any proposed conversion after the Global Offering to ensure that the
conversion process can be completed promptly upon notice to the Stock Exchange and delivery
of Shares for entry on the H Share register. As the listing of additional Shares after the Listing
on the Stock Exchange is ordinarily considered by the Stock Exchange to be a purely
administrative matter, it does not require such prior application for listing at the time of our
listing in Hong Kong. No class Shareholder voting is required for the conversion of such
Shares or the listing and trading of such converted Shares on an overseas stock exchange. Any
application for listing of the converted shares on the Stock Exchange after our initial listing is
subject to prior notification by way of announcement to inform our Shareholders and the public
of any proposed conversion.
After all the requisite filings have been completed and approvals have been obtained, the
relevant Unlisted Shares will be withdrawn from the Unlisted Share register, and our Company
will re-register such Shares on the H Share register maintained in Hong Kong and instruct the
H Share Registrar to issue H Share certificates. Registration on the H Share register of our
Company will be on the conditions that (i) the H Share Registrar lodges with the Stock
Exchange a letter confirming the entry of the relevant H Shares on the H Share register and the
due dispatch of H Share certificates; and (ii) the admission of the H Shares to be traded on the
Stock Exchange complies with the Listing Rules and the General Rules of HKSCC and HKSCC
Operational Procedures in force from time to time.
Until the converted Shares are re-registered on the H Share register of our Company, such
Shares would not be listed as H Shares. For details of our existing Shareholders’ proposed
conversion of Unlisted Shares into H Shares, see “History, Development and Corporate
Structure—Capitalization.”
SHARE CAPITAL
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--- page 333 ---
TRANSFER OF SHARES ISSUED PRIOR TO THE GLOBAL OFFERING
Pursuant to the PRC Company Law, our Shares issued prior to the Listing shall not be
transferred within one year from the Listing Date.
Shares transferred by our Directors, Supervisors and members of the senior management
each year during their term of office shall not exceed 25% of their total respective
shareholdings in our Company unless otherwise permitted by applicable laws and regulations.
The Shares that the aforementioned persons hold in our Company cannot be transferred within
half a year after they leave their positions as Directors, Supervisors and members of the senior
management in our Company.
See “Underwriting—Hong Kong Underwriting Arrangements—Undertakings to the Stock
Exchange pursuant to the Listing Rules—Undertakings by our Controlling Shareholders.” for
details of the lock-up undertaking given by our Controlling Shareholders.
PRE-IPO EMPLOYEE INCENTIVE SCHEME
We established Employee Incentive Platforms, and adopted the Pre-IPO Employee
Incentive Scheme in December 2020 and amended in November 2021 and November 2022. See
the section headed “Statutory and General Information—Pre-IPO Employee Incentive Scheme”
in Appendix IV to this Prospectus.
GENERAL MANDATE TO ISSUE SHARES SELL AND/OR TRANSFER TREASURY
SHARES AND REPURCHASE MANDATE
Subject to the Global Offering becoming unconditional, our Directors have been granted
general unconditional mandates to issue our Shares and sell and/or transfer our Shares out of
treasury that are held as treasury shares and repurchase our Shares. See the section headed
“Appendix IV—Statutory and General Information—Further Information about our
Company—Resolutions of our Shareholders” for further details.
SHAREHOLDERS’ GENERAL MEETING
See the section headed “Appendix III—Summary of Articles of Association” for details
of circumstances under which our general Shareholders’ meeting is required.
SHARE CAPITAL
– 324 –


--- page 334 ---
You should read the following discussion in conjunction with the consolidated
financial statements and the notes thereto included in the Accountants’ Report set out in
Appendix I to this Prospectus which have been prepared in accordance with IFRS and the
selected historical financial information and operating data included elsewhere in this
Prospectus. Our historical results do not necessarily indicate results expected for any
future periods. The following discussion and analysis contain forward-looking statements
that involve risks and uncertainties. Our actual results may differ from those anticipated
in these forward-looking statements as a result of any number of factors, including those
set forth in “Forward-looking Statements” and “Risk Factors.” In evaluating our
business, you should carefully consider the information provided in “Risk Factors” in
this Prospectus.
OVERVIEW
We are the third largest peptide-focused CRDMO worldwide in terms of sales revenue in
2023, according to Frost & Sullivan. We are also one of the most comprehensive peptide-
focused CRDMO globally, offering full-cycle services ranging from early-stage discovery,
preclinical research and clinical development to commercial-stage production. We mainly
provide (i) CRO services, namely peptide NCE discovery synthesis; and (ii) CDMO services,
namely peptide CMC development and commercial manufacturing. Our services primarily
focus on providing customers with APIs rather than drug products. We have established stable
customer relationships and service footprint in over 50 countries, including major markets such
as China, the United States, Japan, Europe, South Korea, and Australia. We provide our
customers with peptide drug development, production, and CMC filing support services that
meet regulatory requirements in major markets worldwide.
Our revenue was RMB350.8 million, RMB336.8 million, and RMB442.2 million in 2022,
2023 and 2024, respectively. Our profit for the year was RMB54.0 million, RMB48.9 million,
and RMB59.2 million during the same year, respectively. Our adjusted net profit (non-IFRS
measure) for the year was RMB122.9 million, RMB96.2 million, and RMB172.0 million in
2022, 2023 and 2024, respectively, and our adjusted EBITDA (non-IFRS measure) was
RMB162.8 million, RMB132.3 million, and RMB209.0 million during the same year,
respectively. See “—Non-IFRS Measure.”
BASIS OF PRESENTATION
We were incorporated in the PRC on June 11, 2020. The historical financial information
has been prepared in accordance with the International Financial Reporting Standards
(“IFRS ”), which comprise all standards and interpretations approved by the International
Accounting Standards Board. See Note 2.1 to the Accountants’ Report in Appendix I to this
Prospectus for more information on the basis of preparation of our historical financial
information.
FINANCIAL INFORMATION
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In the application of our accounting policies, our Directors are required to make
judgments, estimates and assumptions about the carrying amounts of assets that are not readily
apparent from other sources. The estimates and underlying assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results may differ from
these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the estimate is revised
if the revision affects only that period, or in the period of the revision and future periods if
revision affects both current and future periods. Judgments made by our management in the
application of IFRS that have significant effect on the financial statements and major sources
of estimation uncertainty are stated in Note 3 to the Accountants’ Report in Appendix I to this
Prospectus.
KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our results of operations, financial condition and the period-to-period comparability of
our financial results are principally affected by the following factors:
Growth of the Global TIDES and CRDMO Industry
The growth of the global TIDES and TIDES CRDMO industries has a material impact on
our business operations and results of operations. TIDES drugs primarily consist of peptide
drugs and oligonucleotide drugs. According to Frost & Sullivan, the global peptide drug market
by sales revenue grew from US$60.7 billion in 2018 to US$89.5 billion in 2023, representing
a CAGR of 8.1%, and is expected to further grow to US$261.2 billion in 2032, representing
a CAGR of 12.6%. The global oligonucleotide drug market by sales revenue grew from US$2.0
billion in 2018 to US$4.5 billion in 2023, representing a CAGR of 16.9%, and is expected to
further grow to US$45.9 billion by 2032, representing a CAGR of 29.6%. Such growth will
drive the growth of TIDES related outsourcing of research, development and large-scale
production to third-party CRDMOs such as ourselves. Consequently, according to Frost &
Sullivan, the global peptide CRDMO market by sales revenue grew from US$1.6 billion in
2018 to US$3.1 billion in 2023, representing a CAGR of 14.8%, and is expected to further
grow to US$18.8 billion by 2032, representing a CAGR of 22.0%, and the global
oligonucleotide CDMO market by sales revenue grew from US$0.5 billion in 2018 to US$2.3
billion in 2023, representing a CAGR of 33.8%, and is expected to further grow to US$18.4
billion in 2032, representing a CAGR of 26.0%. We believe that the entry barrier in the global
TIDES CRDMO industry is high, and our competitiveness in the industry is strong. We expect
to continue to maintain our industry competitiveness leveraging our strengths and
implementing our development strategies to expand our customer base, obtain more projects,
and deepen our market penetration in more regions. The growth of the overall TIDES industry
and TIDES CRDMO industry worldwide, therefore, determines our total addressable market,
and has a tremendous impact on the growth of our business operations, results of operations
and financial condition.
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Project Pipeline and Customer Base
Our business operations, results of operations and financial condition depend on our
ability to obtain new projects from existing and new customers. Maintaining and enriching our
integrated and comprehensive project pipeline plays a key role in our ability to sustainably
grow our business. Our ability to obtain new projects from existing customers depends on our
full-cycle service capabilities, service quality, responsiveness, and speed. Our ability to obtain
projects from new customers depends on our business reputation, proven track record and our
strategic business development plans and efforts. The number of projects in our pipeline and
the size of our customer base affects the amount of service fees we can charge and the amount
of revenue we can recognize.
Success, Service Mix and Pricing of Our Projects
Our results of operations and financial performance are affected by whether the discovery
and development of our customers’ drug candidates can successfully progress as planned, and
whether our customers’ drug products receive wide market recognition which leads to
significant sales volume and need for large-scale production. We generally enter into
project-based service contracts or long-term service contracts under an FFS model for the
services provided. Our service contracts and work orders under the FFS model typically
include a detailed schedule that sets forth specifications of and anticipated time required for
completing each step as well as the corresponding payment. We may also adopt the FTE model,
under which we designate employees to the customer’s projects at a fixed rate per FTE
employee per period of time. If a peptide drug candidate becomes unsuccessful at a certain
stage, the demand for our services at later development and production stages may no longer
exist; and under the above fee models, our ability to receive further payments would be
materially adversely affected. If a project is delayed due to technical or other issues by us or
by our customers, we will be required to spend more time and effort on such project than
originally expected and may experience delays in recognizing revenue, especially under the
FFS model. The use of FTE and FFS models have an impact on our results of operations due
to the different accounting treatment under these models. However, due to the relatively small
amount of revenue recognised under the FTE model, the differences between these models did
not materially affect our profitability during the Track Record Period.
Our results of operations, especially profitability, are also affected by the nature, type and
mix of different projects. Projects at different stages may have varied gross profit margin
profiles, primarily due to the differences in the technology and amount of resources involved.
As a result, our overall results of operations are affected by the mix among different types of
projects (research, clinical development, or commercial-stage production).
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Our Ability to Manage Costs
Our ability to manage costs is crucial to our overall results of operations. In particular,
the price of key raw materials is a primary factor in determining our cost of sales. In 2022,
2023 and 2024, our material costs were RMB58.3 million, RMB51.9 million, and RMB69.8
million, respectively, representing 38.9%, 33.2%, and 36.3%, respectively, of our cost of sales
during the same year. Our raw materials primarily include protected amino acid, whose price
remained relatively stable in 2021 and 2022, and experienced a slight decline in the second half
of 2023. Our staff compensation was RMB47.3 million, RMB55.7 million, and RMB64.5
million in 2022, 2023 and 2024, respectively representing 31.6%, 35.5%, and 33.5% of our
total cost of sales, respectively. Our ability to implement measures to control our procurement
costs, such as establishing long-term relationships with suppliers, purchasing in larger
volumes, having multiple sources of supplies, among other measures, are key to our ability to
control our gross profit and overall results of operations. We must improve our control of staff
compensation through optimized hiring plans and management. In addition, we must also
carefully manage our operating expenses to ensure that our selling and marketing,
administrative and R&D expenses are not excessive or inefficient in light of the benefits
received, such as expanded sales channel and business opportunities, streamlined corporate
management, and advanced technologies.
Our Ability to Expand Our Production Capacity to Match Customer Demand
Production is a significant part of our business. We must timely assess future customer
needs and establish production capacities with sufficient volume and geographical coverage in
order to satisfy the demands of customers from different parts of the world in a timely manner.
As of the Latest Practicable Date, our cGMP-compliant production facility in Hangzhou has a
total gross floor area of over 15,000 square meters, with an annual API production capacity of
500kg and per-batch production capacity of 20kg, capable of handling multiple 100kg level
purchase orders. We need to continue to expand our production capacity to match and respond
to changes in customer demand, and to promptly deliver high-quality products. See
“Business—Our Facility Expansion Plans” for further details. We may not be able to
successfully execute our expansion plan. See “Risk Factors—Risks Relating to Our Business
and Our Industry—If we fail to implement our expansion plan to enhance our manufacturing
capabilities as planned, or if such plan fails to achieve expected benefits, our business and
prospects could be materially and adversely affected.”
Geopolitical Tension and Demand by Customers in the U.S. and Other Markets
We generate a substantial portion of revenue from customers headquartered in the U.S.
and other markets besides China. In 2022, 2023 and 2024, revenue from overseas countries and
regions amounted to RMB249.4 million, RMB262.7 million, and RMB347.7 million,
respectively, representing 71.1%, 78.0%, and 78.6% of our total revenue, respectively, during
the same year. Geopolitical issues, however, may hinder our ability to deliver products to
overseas customers or otherwise affect our ability to fully serve our overseas customers, which
in turn may result in reductions of demand for our services from overseas customers. For
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examples, geopolitical tensions may cause disruption in the global supply chain, which may
affect our ability to timely ship products to offshore customers. See “Risk Factors—Changes
in geopolitical relationships, international trade policies and other tensions may impact our
business operations” for more details.
In response, we are devoting significant resources in establishing overseas services and
production capabilities in order to better serve customers worldwide and reduce the impact of
geopolitical tensions. For example, we are constructing a production facility in Rocklin,
California with an expected production capacity of approximately 100-300kg each year.
MATERIAL ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES
Material Accounting Policies
Revenue Recognition
Revenue from Contracts with Customers
Revenue from contracts with customers is recognized when control of goods or services
is transferred to the customers at an amount that reflects the consideration to which we expect
to be entitled in exchange for those goods or services.
When the consideration in a contract includes a variable amount, the amount of
consideration is estimated to which we will be entitled in exchange for transferring the goods
or services to the customer. The variable consideration is estimated at contract inception and
constrained until it is highly probable that a significant revenue reversal in the amount of
cumulative revenue recognized will not occur when the associated uncertainty with the variable
consideration is subsequently resolved.
We generate revenue primarily from peptide CRDMO services for pharmaceutical and
biotech companies provided by fee model of FFS or FTE.
(a) CRDMO Services
The majority of revenue are generated through contracts under FFS model. The CRDMO
services promised in the FFS contracts usually contain multiple deliverables, which are
generally in the form of technical laboratory reports and/or manufactured peptide or
oligonucleotides products at different scales, including laboratory scale, pilot scale and
cGMP-compliant commercial scale. We allocate the transaction price to each performance
obligation on a relative stand-alone selling price basis, except for the allocation of discounts
and variable consideration. Revenue is recognized at a point in time when we transfer control
of the distinct services or products to our customer upon (i) receipt for domestic customers and
(ii) delivery to designated carriers for overseas customers in accordance with applicable
delivery terms in the FFS contracts.
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For the research services provided on a FTE basis, we provide our customer with a project
team of scientists and technical staff dedicated to our customer’s studies for a specific period
of time and charges the customer at a fixed rate per employee. For the services under FTE
model, we have assessed that the customers simultaneously receive and consume benefit
provided by our performances. Therefore, the performance obligation of FTE services is
satisfied over time and FTE revenue is recognized over the service period.
(b) Other Revenue
Sales of diagnostics products
Prometheus Bio and UCP Biosciences, our disposed subsidiaries, were primarily engaged
in the sales of diagnostics products. Revenue is recognized at a point in time when these
subsidiaries transfer control of the goods to its customer, generally upon delivery of such
diagnostics products. Prometheus Bio and UCP Biosciences were disposed by us in March
2021.
Revenue from Other Sources
Rental income is recognized on a time proportion basis over the lease terms.
Research and Development Expenses
All research and development expenses are charged to the profit or loss as incurred.
Expenditure incurred on projects to develop new products is capitalized and deferred only
when we can demonstrate the technical feasibility of completing the intangible asset so that it
will be available for use or sale, its intention to complete and its ability to use or sell the asset,
how the asset will generate future economic benefits, the availability of resources to complete
the project and the ability to measure reliably the expenditure during the development. Product
development expenditure which does not meet these criteria is expensed when incurred.
Property and Equipment and Depreciation
Property and equipment other than construction in progress, are stated at cost less
accumulated depreciation and any impairment losses. The cost of an item of property and
equipment comprises its purchase price and any directly attributable costs of bringing the asset
to its working condition and location for its intended use.
Expenditure incurred after items of property and equipment have been put into operation,
such as repairs and maintenance, is normally charged to profit or loss in the period in which
it is incurred. In situations where the recognition criteria are satisfied, the expenditure for a
major inspection is capitalized in the carrying amount of the asset as a replacement. Where
significant parts of property and equipment are required to be replaced at intervals, we
recognize such parts as individual assets with specific useful lives and depreciates them
accordingly.
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Depreciation is calculated on the straight-line basis to write off the cost of each item of
property and equipment to its residual value over its estimated useful life. The principal annual
depreciation rates used for this purpose are as follows:
Buildings 3.23%
Machinery and equipment 9.7%-48.5%
Computer and office equipment 9.7%-48.5%
Motor vehicles 6.06%-9.7%
Where parts of an item of property and equipment have different useful lives, the cost of
that item is allocated on a reasonable basis among the parts and each part is depreciated
separately. Residual values, useful lives and the depreciation methods are reviewed, and
adjusted if appropriate, at least at each financial year end.
An item of property and equipment including any significant part initially recognized is
derecognized upon disposal or when no future economic benefits are expected from its use or
disposal. Any gain or loss on disposal or retirement recognized in profit or loss in the year the
asset is derecognized is the difference between the net sales proceeds and the carrying amount
of the relevant asset.
Construction in progress represents buildings and leasehold improvements under
construction, which is stated at cost less any impairment losses, and is not depreciated. Cost
comprises the direct costs of construction during the period of construction. Construction in
progress is reclassified to the appropriate category of property, plant and equipment when
completed and ready for use.
Fair Value Measurement
We measure our certain financial instruments at fair value at the end of each year during
the Track Record Period. Fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement
date. The fair value measurement is based on the presumption that the transaction to sell the
asset or transfer the liability takes place either in the principal market for the asset or liability,
or in the absence of a principal market, in the most advantageous market for the asset or
liability. The principal or the most advantageous market must be accessible by us. The fair
value of an asset or a liability is measured using the assumptions that market participants would
use when pricing the asset or liability, assuming that market participants act in their economic
best interest.
A fair value measurement of a non-financial asset takes into account a market
participant’s ability to generate economic benefits by using the asset in its highest and best use
or by selling it to another market participant that would use the asset in its highest and best use.
We use valuation techniques that are appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable
inputs and minimizing the use of unobservable inputs.
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All assets and liabilities for which fair value is measured or disclosed in the historical
financial information are categorized within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the fair value measurement as a whole:
Leve l 1 – based on quoted prices (unadjusted) in active markets for identical assets or
liabilities
Leve l 2 – based on valuation techniques for which the lowest level input that is significant
to the fair value measurement is observable, either directly or indirectly
Leve l 3 – based on valuation techniques for which the lowest level input that is significant
to the fair value measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring
basis, we determine whether transfers have occurred between levels in the hierarchy by
reassessing categorization (based on the lowest level input that is significant to the fair value
measurement as a whole) at the end of each year during the Track Record Period.
Intangible Assets (Other than Goodwill)
Intangible assets acquired separately are measured on initial recognition at cost. The cost
of intangible assets acquired in a business combination is the fair value at the date of
acquisition. The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are subsequently amortized over the useful economic life and
assessed for impairment whenever there is an indication that the intangible asset may be
impaired. The amortization period and the amortization method for an intangible asset with a
finite useful life are reviewed at least at each financial year end.
Software
Purchased software is stated at cost less any impairment losses and is amortized on the
straight-line basis over its estimated useful lives of 3 to 10 years.
Knowhows
Knowhows with finite useful lives are measured initially at cost less any impairment
losses and are amortized on the straight-line basis over the estimated useful lives of 10 years.
Share-based Payments
We operate a share award scheme for the purpose of providing incentives and rewards to
eligible participants who contribute to the success of our operations. Employees (including
directors) receive remuneration and rewards in the form of share-based payments, whereby
employees render services in exchange for equity instruments (“ equity-settled transactions ”).
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The cost of equity-settled transactions with employees is measured by reference to the
fair value at the date at which they are granted. Further details are given in Note 35 to the
Accountants’ Report included in Appendix I to this Prospectus. The cost of equity-settled
transactions is recognized in employee benefit expense, together with a corresponding increase
in equity, over the period in which the performance and/or service conditions are fulfilled. The
cumulative expense recognized for equity-settled transactions at the end of each year during
the Track Record Period until the vesting date reflects the extent to which the vesting period
has expired and our best estimate of the number of equity instruments that will ultimately vest.
The charge or credit to profit or loss for a period represents the movement in the cumulative
expense recognized as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when
determining the grant date fair value of awards, but the likelihood of the conditions being met
is assessed as part of our best estimate of the number of equity instruments that will ultimately
vest.
For awards that do not ultimately vest because non-market performance and/or service
conditions have not been met, no expense is recognized. Where awards include a market or
non-vesting condition, the transactions are treated as vesting irrespective of whether the market
or non-vesting condition is satisfied, provided that all other performance and/or service
conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum an expense is
recognized as if the terms had not been modified, if the original terms of the award are met.
In addition, an expense is recognized for any modification that increases the total fair value of
the share-based payments, or is otherwise beneficial to the employee as measured at the date
of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of
cancellation, and any expense not yet recognized for the award is recognized immediately. This
includes any award where non-vesting conditions within the control of either our Group or the
employee are not met. However, if a new award is substituted for the cancelled award, and is
designated as a replacement award on the date that it is granted, the cancelled and new awards
are treated as if they were a modification of the original award, as described in the previous
paragraph.
Impairment of Financial Assets
We recognize an allowance for expected credit losses (“ ECLs ”) for all debt instruments
not held at fair value through profit or loss. ECLs are based on the difference between the
contractual cash flows due in accordance with the contract and all the cash flows that we expect
to receive, discounted at an approximation of the original effective interest rate. The expected
cash flows will include cash flows from the sale of collateral held or other credit enhancements
that are integral to the contractual terms.
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General Approach
ECLs are recognized in two stages. For credit exposures for which there has not been a
significant increase in credit risk since initial recognition, ECLs are provided for credit losses
that result from default events that are possible within the next 12 months (a 12-month ECL).
For those credit exposures for which there has been a significant increase in credit risk since
initial recognition, a loss allowance is required for credit losses expected over the remaining
life of the exposure, irrespective of the timing of the default (a lifetime ECL).
At the end of each year during the Track Record Period, we assess whether the credit risk
on a financial instrument has increased significantly since initial recognition. When making the
assessment, we compare the risk of a default occurring on the financial instrument as at the
reporting date with the risk of a default occurring on the financial instrument as at the date of
initial recognition and considers reasonable and supportable information that is available
without undue cost or effort, including historical and forward-looking information. We
consider that there has been a significant increase in credit risk when contractual payments are
more than 30 days past due.
We consider a financial asset in default when contractual payments are 60 days past due.
However, in certain cases, we may also consider a financial asset to be in default when internal
or external information indicates that we are unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by us. A financial asset
is written off when there is no reasonable expectation of recovering the contractual cash flows.
Financial assets at amortized cost are subject to impairment under the general approach
and they are classified within the following stages for measurement of ECLs except for trade
receivables which apply the simplified approach as detailed below.
Stag e 1 – Financial instruments for which credit risk has not increased significantly since
initial recognition and for which the loss allowance is measured at an amount equal to
12-month ECLs.
Stag e 2 – Financial instruments for which credit risk has increased significantly since
initial recognition but that are not credit-impaired financial assets and for which the loss
allowance is measured at an amount equal to lifetime ECLs.
Stag e 3 – Financial assets that are credit-impaired at the reporting date (but that are not
purchased or originated credit-impaired) and for which the loss allowance is measured at an
amount equal to lifetime ECLs.
Simplified Approach
For trade receivables that do not contain a significant financing component or when we
apply the practical expedient of not adjusting the effect of a significant financing component,
we apply the simplified approach in calculating ECLs. Under the simplified approach, we do
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not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs
at each reporting date. We have established a general matrix that is based on its historical credit
loss experience, adjusted for forward-looking factors specific to the debtors and the economic
environment.
RESULTS OF OPERATIONS
The following table sets forth our consolidated statements of profit or loss and other
comprehensive income for the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Revenue 350,840 336,774 442,226
Cost of sales (149,771) (156,603) (192,452)
Gross profit 201,069 180,171 249,774
Other income and gains 22,725 23,144 59,057
Selling and marketing expenses (22,245) (28,071) (42,494)
Administrative expenses (43,475) (43,771) (73,406)
Research and development expenses (21,020) (23,144) (28,748)
Impairment losses on financial assets
under expected credit loss (“ ECL”)
model, net of reversal (1,125) (600) (916)
Other expenses (27) (156) (285)
Finance costs (1,281) (224) (1,141)
Profit before fair value losses on
financial liabilities at fair value
through profit or loss (“ FVTPL ”) 134,621 107,349 161,841
Fair value losses on financial liabilities
at FVTPL (67,065) (45,371) (83,392)
PROFIT BEFORE TAX 67,556 61,978 78,449
Income tax expense (13,576) (13,073) (19,276)
PROFIT FOR THE YEAR 53,980 48,905 59,173
Attributable to:
Owners of the parent 53,980 48,905 59,173
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NON-IFRS MEASURE
Our consolidated financial information was prepared in accordance with IFRS. To
supplement our consolidated results which were prepared and presented in accordance with
IFRS, we use adjusted net profit (non-IFRS measure) for the year, EBITDA (non-IFRS
measure), and adjusted EBITDA (non-IFRS measure) as additional financial measures, which
are not required by, or presented in accordance with, IFRS. We believe that these measures
facilitate comparisons of operating performance from period to period and company to
company by eliminating the potential impact of certain items. The use of these non-IFRS
measures has limitations as an analytical tool, and you should not consider them in isolation
from, as a substitute for, analysis of, or superior to, our results of operations or financial
condition as reported under IFRS. In addition, these non-IFRS measures may be defined
differently from similar terms used by other companies, and may not be comparable to other
similarly titled measures used by other companies.
We define adjusted net profit (non-IFRS measure) for the year as profit for the year
adjusted by adding back fair value loss on financial liabilities at FVTPL comprises fair value
loss on convertible bonds and redemption liabilities, of which the redemption liabilities will
convert to equity upon the Listing, share-based payment compensation, which are non-cash in
nature, and Listing expenses. The following table sets forth a reconciliation of our adjusted net
profit (non-IFRS measure) for 2022, 2023 and 2024.
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Profit for the year 53,980 48,905 59,173
Add
Fair value losses on financial
liabilities at FVTPL 67,065 45,371 83,392
Share-based payment compensation 1,890 1,912 4,441
Listing expenses – – 25,019
Adjusted net profit (non-IFRS
measure) for the year 122,935 96,188 172,025
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We define EBITDA (non-IFRS measure) as profit for the year adjusted by adding back
income tax expenses, depreciation of property and equipment, amortization of intangible
assets, depreciation of right-of-use assets, and net finance costs/(income). We define adjusted
EBITDA (non-IFRS measure) as EBITDA (non-IFRS measure), adjusted by adding back fair
value losses on financial liabilities at FVTPL, share-based payment compensation and Listing
expenses. The following table sets forth a reconciliation of our EBITDA (non-IFRS measure)
and adjusted EBITDA (non-IFRS measure) for 2022, 2023 and 2024 to the nearest measures.
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Profit for the year 53,980 48,905 59,173
Add
Income tax expenses 13,576 13,073 19,276
Depreciation of property and
equipment 16,443 20,164 20,743
Amortization of intangible assets 6,362 6,393 6,503
Depreciation of right-of-use assets 3,128 3,224 2,843
Net finance costs/(income) 367 (6,696) (12,419)
EBITDA (non-IFRS measure) 93,856 85,063 96,119
Add
Fair value losses on financial
liabilities at FVTPL 67,065 45,371 83,392
Share-based payment compensation 1,890 1,912 4,441
Listing expenses – – 25,019
Adjusted EBITDA
(non-IFRS measure) 162,811 132,346 208,971
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KEY COMPONENTS OF OUR RESULTS OF OPERATIONS
Revenue
Revenue by Fee Model
The following table sets forth a breakdown of our revenue by fee model for the years
indicated:
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
FFS 331,576 94.5 326,803 97.1 425,322 96.2
FTE 17,981 5.1 9,550 2.8 16,551 3.7
Others 1,283 0.4 421 0.1 353 0.1
Total 350,840 100.0 336,774 100.0 442,226 100.0
Our revenue recorded under FFS model primarily represents revenue from contracts or
work orders under the FFS model where we receive payments according to a pre-agreed
payment schedule which is prepared based on the scope of work, estimated costs and expenses,
estimated amount of delivery time, and market prevailing rate. Revenue under FFS model
include revenue from NCE discovery synthesis, peptide CMC development, and peptide and
generic drug commercial manufacturing services. For details, see “Business—Our
Services—Peptide CRDMO Services” in this Prospectus.
Our revenue recorded under FTE model represents revenue from contracts or work orders
under the FTE model where we receive payments according to the number of employees
allocated to projects at fixed rate per employee per period of time. Revenue under FTE model
represents revenue from peptide drug discovery and synthesis services leveraging our extensive
peptide synthesis and modification techniques.
Others relate to (i) lease income; (ii) revenue generated by sales of diagnostics products
from our disposed subsidiaries (Prometheus Bio and UCP Biosciences); and (iii) revenue from
sales of raw material products to Prometheus Bio.
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Revenue by Geographic Coverage
The following table sets forth a breakdown of our revenue based on the locations of the
contract entities of our customers, both in absolute amount and as a percentage of our total
revenue for the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
Mainland China 101,431 28.9 74,124 22.0 94,576 21.4
U.S. 132,309 37.7 114,794 34.1 243,207 55.0
Japan 55,157 15.7 73,752 21.8 31,187 7.1
Europe 45,016 12.8 62,591 18.6 48,615 11.0
Other countries
and regions
(1) 16,927 4.9 11,693 3.5 24,641 5.5
Total 350,840 100.0 336,774 100.0 442,226 100.0
Note:
(1) Other countries and regions comprise Australia, Brazil, Canada, Chile, Hong Kong, India, Israel,
Mexico, Namibia, Philippines, Republic of Korea, Saudi Arabia, Singapore, South Africa, Taiwan,
Thailand, United Arab Emirates, and Uruguay.
Revenue by Service Offering
The following table sets forth a breakdown of its revenue by service offering, both in
absolute amount and as a percentage of our total revenue for the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
CDMO Service (3) 240,455 68.5 258,355 76.7 329,957 74.6
CRO Service 109,102 31.1 77,998 23.2 111,916 25.3
Others 1,283
(1) 0.4 421 (2) 0.1 353 (2) 0.1
Total 350,840 100.0 336,774 100.0 442,226 100.0
FINANCIAL INFORMATION
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Notes:
(1) Others in 2022 relate to (i) lease income; and (ii) revenue from sales of raw material. In March 2021,
we disposed of the entire equity interests of Prometheus Bio to Hangzhou Haiding. Despite this disposal,
one contract remained effective in 2022, under which we sold raw material to Prometheus Bio in 2022,
generating revenue. For further details of our disposal, please refer to the section headed “History,
Development and Corporate Structure.”
(2) Others in 2023 and 2024 relate to lease income.
(3) Revenue from CDMO Service consists of revenue from NCEs projects and generic drug projects. Our
revenue from NCEs projects increased from RMB184.3 million in 2022 to RMB194.2 million in 2023
and further increased to RMB236.6 million in 2024. Our revenue from generic drug projects increased
from RMB56.1 million in 2022 to RMB64.1 million in 2023, and further increased to RMB93.4 million
in 2024.
Cost of Sales
Cost of Sales by Nature
Our cost of sales consists of material costs, staff compensation, utilities and other
overhead, depreciation and amortization, share-based payment compensation, and others. The
following table sets forth a breakdown of its cost of sales by nature, both in absolute amount
and as a percentage of total cost of sales for the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
Material costs 58,257 38.9 51,923 33.2 69,769 36.3
Staff
compensation 47,295 31.6 55,650 35.5 64,549 33.5
Utilities and other
overhead 21,085 14.1 20,667 13.2 26,184 13.6
Depreciation and
amortization 15,464 10.3 16,735 10.7 18,153 9.4
Share-based
payment
compensation 607 0.4 752 0.5 1,880 1.0
Others
(1) 7,063 4.7 10,876 6.9 11,917 6.2
Total 149,771 100.0 156,603 100.0 192,452 100.0
Note:
(1) Includes inventory write-down and freight costs.
FINANCIAL INFORMATION
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Costs of Sales by Service Offering
The following table sets forth a breakdown of its cost of sales by service offering, both
in absolute amount and a percentage of total cost of sales for the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
CDMO Service 106,610 71.2 121,297 77.5 151,525 78.7
CRO Service 41,878 28.0 34,885 22.3 40,574 21.1
Others 1,283 0.8 421 0.2 353 0.2
Total 149,771 100.0 156,603 100.0 192,452 100.0
Gross Profit and Gross Profit Margin
The following table sets forth a breakdown of our gross profits and gross profits margin
by service offering for the years indicated.
Y ear ended December 31,
2022 2023 2024
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
Gross
Profit
Gross
Profit
Margin
RMB’000 % RMB’000 % RMB’000 %
CDMO Service 133,845 55.7 137,058 53.1 178,432 54.1
CRO Service 67,224 61.6 43,113 55.3 71,342 63.7
Total/Overall 201,069 57.3 180,171 53.5 249,774 56.5
Our gross profit was RMB201.1 million, RMB180.2 million and RMB249.8 million in
2022, 2023 and 2024, respectively, and our gross profit margin was 57.3%, 53.5% and 56.5%
during the same year, respectively.
FINANCIAL INFORMATION
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Other Income and Gains
The following table sets forth our other income and gains, both in absolute amount and
as a percentage of total other income and gains during the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
Other income
Government
grants 1,018 4.5 3,461 15.0 34,967 59.2
convertible bond
related
government
grant – – – – 27,583 46.7
other
government
grants 1,018 4.5 3,461 15.0 7,384 12.5
Bank interest
income 914 4.0 6,920 29.9 13,560 23.0
Subtotal 1,932 8.5 10,381 44.9 48,527 82.2
Gains
Foreign
exchange
differences,
net 11,944 52.5 5,065 21.8 7,312 12.4
Fair value gains
on financial
assets at fair
value through
profit or loss 7,920 34.9 7,585 32.8 3,086 5.2
Gains on
disposal of
items of
property,
plant and
equipment 384 1.7 – – – –
Others 545 2.4 113 0.5 132 0.2
Subtotal 20,793 91.5 12,763 55.1 10,530 17.8
Total 22,725 100.0 23,144 100.0 59,057 100.0
FINANCIAL INFORMATION
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--- page 352 ---
The government grants primarily represent subsidies and funding to help us initiate and
conduct more R&D projects and engage and retain more talents with robust academic and
professional R&D experience. Such grants include convertible bonds related government grant,
covering interest expense under our convertible bond. See “—Description of Major Balance
Sheet Items—Other Payables and Accruals” and “—Indebtedness—Convertible Bonds.” The
government grants also include awards for R&D achievements and contributions we have
made. These government grants were generally awarded by various government authorities in
China, especially in Hangzhou. There are no unfulfilled conditions or contingencies relating to
these government grants.
Selling and Marketing Expenses
Our selling and marketing expenses primarily consist of staff compensation, marketing,
promotion and advertising expenses, depreciation and amortization, utilities and office
expenses, travel expenses, share-based payment compensation, and others. We incurred selling
and marketing expenses of RMB22.2 million, RMB28.1 million and RMB42.5 million in 2022,
2023 and 2024, respectively. The following table sets forth a breakdown of our selling and
marketing expenses, both in absolute amount and as a percentage of total selling and marketing
expenses for the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
Staff
compensation 18,543 83.4 21,838 77.8 34,262 80.6
Marketing,
promotion and
advertising
expenses 1,015 4.6 2,448 8.7 4,085 9.6
Depreciation and
amortization 1,098 4.9 1,155 4.1 940 2.2
Utilities and office
expenses 120 0.5 543 1.9 155 0.4
Travel expenses 358 1.6 757 2.7 885 2.1
Share-based
payment
compensation 761 3.4 701 2.5 808 1.9
Others
(1) 350 1.6 629 2.3 1,359 3.2
Total 22,245 100.0 28,071 100.0 42,494 100.0
Note:
(1) Includes meal expenses, accommodation expenses and other miscellaneous disbursements.
FINANCIAL INFORMATION
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Administrative Expenses
Our administrative expenses primarily consist of staff compensation, depreciation and
amortization, Professional service fees, utilities and office expenses, travel expenses, share-
based payment compensation, listing expenses, and others. We incurred administrative
expenses of RMB43.5 million, RMB43.8 million and RMB73.4 million in 2022, 2023 and
2024, respectively. The following table sets forth a breakdown of our administrative expenses,
both in absolute amount and as a percentage of total administrative expenses for the years
indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
Staff
compensation 26,243 60.4 26,733 61.1 29,715 40.5
Depreciation and
amortization 4,144 9.5 4,742 10.8 4,400 6.0
Professional
service fees (1) 6,058 13.9 4,930 11.3 4,709 6.4
Utilities and office
expenses 3,688 8.5 4,115 9.4 5,546 7.6
Travel expenses 398 0.9 470 1.1 379 0.5
Share-based
payment
compensation 275 0.6 226 0.5 1,453 2.0
Listing expense – – – – 25,019 34.0
Others
(2) 2,669 6.2 2,555 5.8 2,185 3.0
Total 43,475 100.0 43,771 100.0 73,406 100.0
Note:
(1) Includes IT, audit and legal related service fees.
(2) Includes bank charges, meal expenses, accommodation expenses and other miscellaneous
disbursements.
FINANCIAL INFORMATION
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Research and Development Expenses
Our research and development expenses primarily consist of staff compensation, material
costs, depreciation and amortization, repair and maintenance, share-based payment
compensation and others. We incurred research and development expenses of RMB21.0
million, RMB23.1 million and RMB28.7 million in 2022, 2023 and 2024, respectively. The
following table sets forth a breakdown of our research and development expenses, both in
absolute amount and as a percentage of total research and development expenses for the years
indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
Staff
compensation 13,125 62.4 15,079 65.1 16,296 56.7
Material costs 5,167 24.6 4,091 17.7 5,789 20.1
Depreciation and
amortization 1,946 9.3 2,403 10.4 4,235 14.7
Repair and
maintenance 276 1.3 674 2.9 790 2.7
Share-based
payment
compensation 247 1.2 232 1.0 300 1.0
Others
(1) 259 1.2 665 2.9 1,338 4.8
Total 21,020 100.0 23,144 100.0 28,748 100.0
Note:
(1) Includes testing fees, utilities and office expenses and consulting fees.
FINANCIAL INFORMATION
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Other Expenses
Our other expenses primarily consist of foreign exchange losses, net, donations to
not-for-profit organizations, loss on disposal of plant and equipment, and others. The following
table sets forth a breakdown of our other expenses, for the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
Loss on disposal
of plant and
equipment – – 156 100.0 228 80.0
Others 27 100.0 – – 57 20.0
Total 27 100.0 156 100.0 285 100.0
Finance Costs
Finance costs consist of interest on lease liabilities and interest on bank loans. The
following table sets forth a breakdown of our finance costs for the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 % RMB’000 % RMB’000 %
Interest on lease
liabilities 367 28.6 224 100.0 76 6.7
Interest on bank
loans 914 71.4 – – 1,065 93.3
Total 1,281 100.0 224 100.0 1,141 100.0
FINANCIAL INFORMATION
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Fair Value Losses on Financial Liabilities at FVTPL
Fair value losses on financial liabilities at FVTPL primarily reflect changes in the fair
value of financial liabilities at FVTPL that arose from issuance of Series A Shares and
convertible bonds. We incurred fair value losses on financial liabilities at FVTPL of RMB67.1
million, RMB45.4 million and RMB83.4 million, in 2022, 2023 and 2024, respectively.
Income Tax Expenses
Our income tax expenses primarily consist of current tax at the statutory rates applicable
to our assessable profit before taxation as determined under relevant laws and regulations. We
are subject to a 15% tax rate for “High and New Technology Companies” for one of our PRC
subsidiaries, a 25% tax rate for other PRC subsidiaries, a 16.5% income tax rate for our Hong
Kong subsidiaries, and a federal corporate tax rate of 21% and applicable state tax rates for
consolidated entities incorporated in the U.S. In 2022, 2023 and 2024, our income tax expense
was RMB13.6 million, RMB13.1 million and RMB19.3 million, respectively. During the Track
Record Period and up to the Latest Practicable Date, we had paid all relevant taxes when due
and there were no matters in dispute or unresolved with the relevant tax authorities.
Profit for the Y ear
As a result of the above, our profit for the year was RMB54.0 million, RMB48.9 million
and RMB59.2 million in 2022, 2023 and 2024, respectively. Our net profit margin was 15.4%,
14.5% and 13.4% in the same year, respectively.
YEAR-TO-YEAR COMPARISON
Y ear Ended December 31, 2024 Compared to Y ear Ended December 31, 2023
Revenue
Our revenue increased by 31.3% from RMB336.8 million in the 2023 to RMB442.2
million in 2024, primarily due to an increase in revenue from one customer in the U.S., driven
by its respective drug development progress and increased demand for our services.
Our revenue in Mainland China increased by 27.6% from RMB74.1 million in 2023 to
RMB94.6 million in 2024, primarily due to increased demand from two of our customers in
Mainland China with increased demand for our CDMO services.
FINANCIAL INFORMATION
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--- page 357 ---
Our revenue overseas increased by 32.4% from RMB262.7 million in 2023 to RMB347.7
million in 2024, primarily due to an increase in demand by a customer in the U.S. focusing on
the development of GLP-1 related drug products; partially offset by a decrease in revenue from
other regions such as Japan and Europe where customers therein had decreased their demands
according to their respective drug development progress.
Our revenue from CRO service increased from RMB78.0 million in 2023 to RMB111.9
million in 2024, primarily due to an increase in the average revenue of CRO projects compared
to the last year.
Our revenue from CDMO service increased from RMB258.4 million in 2023 to
RMB330.0 million in 2024, primarily due to an increase in revenue from one customer in the
U.S. and one customer in Mainland China, driven by their respective drug development
progress and increased demand for our services.
Cost of Sales
Our cost of sales increased by 22.9% from RMB156.6 million in 2023 to RMB192.5
million in 2024, primarily due to (i) an RMB17.8 million increase in material costs which is
in line with our expanded CRDMO service revenue; and (ii) an RMB8.9 million increase in
staff costs driven by an increase in the number of staff headcount and average salary level to
support our expanding business scale.
Gross Profit and Gross Profit Margin
Our gross profit margin for CDMO service remained relatively stable at 53.1% and 54.1%
in 2023 and 2024, respectively.
Our gross profit margin for CRO service increased from 55.3% in 2023 to 63.7% in 2024,
which contributed to significant increases in CRO service revenue, while the labor and
manufacturing costs for CRO services were relatively fixed and did not experience similar
increases.
Our gross profit increased by 38.6% from RMB180.2 million in 2023 to RMB249.8
million in 2024. Our gross profit margin remained relatively stable at 53.5% and 56.5% in 2023
and 2024, respectively.
Other Income and Gains
Our other income and gains increased from RMB23.1 million in 2023 to RMB59.1
million in 2024, primarily due to (i) an RMB28.0 million convertible bond related government
grant recognized as other income in 2024 to cover our interest expense under our convertible
bond. See “—Description of Major Balance Sheet Items—Other Payables and Accruals” and
“—Indebtedness—Convertible Bonds”; and (ii) an RMB6.6 million increase in bank interest
income driven by the relatively high interest rates enjoyed by some of our bank accounts.
FINANCIAL INFORMATION
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Selling and Marketing Expenses
Our selling and marketing expenses increased by 51.2% from RMB28.1 million in 2023
to RMB42.5 million in 2024, primarily due to an increase in selling and marketing headcount
and spending in marketing, promotion and advertising activities.
Administrative Expenses
Our administrative expenses increased by 67.6% from RMB43.8 million in 2023 to
RMB73.4 million in 2024, primarily due to an RMB25.0 million listing expense in 2024.
Research and Development Expenses
Our research and development expenses increased by 24.2% from RMB23.1 million in
2023 to RMB28.7 million in 2024, primarily due to an increase in material costs and an
increase in depreciation and amortization, which is in line with an increase in our R&D
activities.
Fair V alue Losses on Financial Liabilities at FVTPL
Our fair value losses on financial liabilities at FVTPL increased from RMB45.4 million
in 2023 to RMB83.4 million in 2024, primarily due to changes in the valuation of our
Company.
Income Tax Expense
We recorded income tax expenses of RMB13.1 million and RMB19.3 million in 2023 and
2024, respectively.
Profit for the year
As a result of the foregoing, our profit for the year increased from RMB48.9 million in
2023 to RMB59.2 million in 2024.
Y ear Ended December 31, 2023 Compared to Y ear Ended December 31, 2022
Revenue
Our revenue decreased by 4.0% from RMB350.8 million in 2022 to RMB336.8 million
in 2023, primarily due to a 10.4% decrease in average revenue per customer from
approximately RMB528.0 thousand in 2022 to RMB474.0 thousand in 2023. Such decrease in
average revenue per customer is primarily attributable to an approximately RMB34.0 million
decrease in revenue from three of our customers who significantly reduced their demands due
FINANCIAL INFORMATION
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--- page 359 ---
to changes in their peptide drug development resources, plans, and cycles in the United States
and Mainland China. The effect of reduction in average revenue per customer from 2022 to
2023 was partially offset by an increase in the number of customers from 664 to 711 during
the same years.
Our revenue in Mainland China decreased by 26.9% from RMB101.4 million in 2022 to
RMB74.1 million in 2023, primarily due to reduced demand from our customers in Mainland
China. According to Frost & Sullivan, the healthcare industry experienced a general decline in
terms of the amount of financing in recent years, forcing industry players (including our
customers) to reduce their NCE development pipeline to focus on fewer pipeline products with
more potential of commercialization success. This has in turn affected our customers’ demand
for our services, which partially led to the decline in our revenue in Mainland China from 2022
to 2023.
Our revenue overseas increased by 5.3% from RMB249.4 million in 2022 to RMB262.7
million in 2023, primarily due to an increase in business volume as reflected by an increase in
the number and sizes of projects from overseas customers.
Our revenue from CRO service decreased from RMB109.1 million in 2022 to RMB78.0
million in 2023, primarily because (i) several CRO projects with relatively large revenue
contribution in 2022 were completed or discontinued in 2023. Some of these projects
progressed into clinical development, with revenue recorded under CDMO service, while
others did not progress further or contribute to our revenue in 2023; (ii) we experienced
downward pricing pressure in 2023 in Mainland China driven by intensified market
competition amidst the reduced demand from our customers in Mainland China, which has led
to aggressive pricing strategies adopted by various CRO service providers; and (iii)
particularly, our projects with one customer on FTE basis with revenue contribution of
approximately RMB8.4 million were completed in 2022.
Our revenue from CDMO service increased from RMB240.5 million in 2022 to
RMB258.4 million in 2023, primarily due to an increase in demand from commercial stage
projects as more projects progressed from clinical stage into commercial stage in 2023,
partially offset by a decrease in average spending per customer in 2023.
Cost of Sales
Our cost of sales increased by 4.5% from RMB149.8 million in 2022 to RMB156.6
million in 2023, primarily due to (i) an RMB8.4 million increase in staff costs driven by an
increase in the number of staff headcount and average salary level; (ii) an RMB1.3 million
increase in fixed costs such as depreciation and amortization and (iii) an RMB1.4 million
increase in inventory write-down.
FINANCIAL INFORMATION
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--- page 360 ---
Gross Profit and Gross Profit Margin
Our gross profit margin for CDMO service decreased from 55.7% in 2022 to 53.1% in
2023, primarily due to a decrease in pricing of our APIs for generic drugs due to competition
in China.
Our gross profit margin for CRO service decreased from 61.6% in 2022 to 55.3% in 2023,
primarily due to a decrease in the number of high-value CRO projects from six to three, while
the labor and manufacturing costs for CRO services were relatively fixed and did not
experience similar decreases.
Our gross profit decreased by 10.4% from RMB201.1 million in 2022 to RMB180.2
million in 2023. Our gross profit margin decreased from 57.3% in 2022 to 53.5% in 2023,
primarily because while our revenue declined from RMB350.8 million in 2022 to RMB336.8
million in 2023, our cost of sales increased driven by increases in staff headcount, staff salary
level, and fixed costs from 2022 to 2023.
Other Income and Gains
Our other income and gains increased from RMB22.7 million in 2022 to RMB23.1
million in 2023, primarily due to an increase in bank interest income driven by an increase in
the balance of structured deposits and wealth management products, as well as an increase in
government grants, partially offset by negative changes in foreign exchange gains driven by
fluctuations in the exchange rate between U.S. dollars and Renminbi.
Selling and Marketing Expenses
Our selling and marketing expenses increased by 26.6% from RMB22.2 million in 2022
to RMB28.1 million in 2023, primarily due to an increase in selling and marketing headcount
and spending in marketing, promotion and advertising activities.
Administrative Expenses
Our administrative expenses remained stable at RMB43.5 million in 2022 and RMB43.8
million in 2023.
Research and Development Expenses
Our research and development expenses increased by 10.0% from RMB21.0 million in
2022 to RMB23.1 million in 2023, primarily due to an increase in R&D headcount.
FINANCIAL INFORMATION
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--- page 361 ---
Finance Costs
Our finance costs decreased by 84.6% from RMB1.3 million in 2022 to RMB0.2 million
in 2023, primarily because of a RMB0.9 million decrease in interest on bank loans as we fully
repaid our bank borrowings in September 2022 and did not incur any new borrowings in 2023.
Fair V alue Losses on Financial Liabilities at FVTPL
Our fair value losses on financial liabilities at FVTPL decreased from RMB67.1 million
in 2022 to RMB45.4 million in 2023, primarily due to changes in the fair value of financial
liabilities at FVTPL that arose from the issuance of Series A Shares.
Income Tax Expense
Our income tax expenses remained stable at RMB13.6 million in 2022 and RMB13.1
million in 2023.
Profit for the Y ear
As a result of the foregoing, our profit for the year decreased by 9.4% from RMB54.0
million in 2022 to RMB48.9 million in 2023, primarily due to (i) a decrease in our revenue
from RMB350.8 million in 2022 to RMB336.8 million in 2023, and (ii) an increase in our cost
of sales from RMB149.8 million in 2022 to RMB156.6 million in 2023, partially offset by a
decrease in fair value losses on financial liabilities at FVTPL from RMB67.1 million in 2022
to RMB45.4 million in 2023. Our net profit margin decreased from 15.4% in 2022 to 14.5%
in 2023.
FINANCIAL INFORMATION
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DISCUSSION OF MAJOR BALANCE SHEET ITEMS
The following table sets forth details of our summary consolidated statements of financial
position as of the dates indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
NON-CURRENT ASSETS
Property and equipment 258,153 296,418 300,484
Goodwill 95,406 95,406 95,406
Other intangible assets 47,014 41,090 36,016
Right-of-use assets 42,864 39,691 38,082
Financial assets at fair value through
profit or loss (“ FVTPL ”) 1,728 1,530 1,634
Time deposits – non current 51,634 53,409 –
Prepayments, other receivables and
other assets 7,157 9,330 7,183
Deferred tax assets 139 62 23
Total non-current assets 504,095 536,936 478,828
Total current assets 735,057 771,810 693,800
Total current liabilities 505,816 501,519 172,043
NET CURRENT ASSETS 229,241 270,291 521,757
TOTAL ASSETS LESS CURRENT
LIABILITIES 733,336 807,227 1,000,585
NON-CURRENT LIABILITIES
Redemption liabilities on equity shares 517,667 542,038 639,805
Deferred government grants – – 29,072
Lease liabilities 1,815 – 764
Deferred tax liabilities 11,387 11,305 12,194
Total non-current liabilities 530,869 553,343 681,835
Net assets 202,467 253,884 318,750
FINANCIAL INFORMATION
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--- page 363 ---
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
EQUITY
Equity attributable to owners of the
parent
Paid-in capital 121,673 – –
Share capital – 125,000 125,000
Reserves 80,794 128,884 193,750
Total equity 202,467 253,884 318,750
Current Assets and Current Liabilities
The following table sets forth our current assets and liabilities as of the dates indicated.
As of December 31,
As of
April 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
CURRENT ASSETS
Inventories 79,305 73,005 84,777 94,844
Amounts due from related
parties 2,955 1,659 – –
Trade and notes receivables 19,800 36,418 57,720 30,280
Prepayments, other
receivables and
other assets 7,175 11,621 16,098 18,982
Financial assets at FVTPL 332,126 110,082 – –
Restricted cash 430 435 439 440
Time deposits – current 10,000 – 143,032 144,457
Prepaid income tax 4,218 7,578 4,551 4,653
Cash and cash equivalents 279,048 531,012 387,183 472,529
Total current assets 735,057 771,810 693,800 766,185
FINANCIAL INFORMATION
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--- page 364 ---
As of December 31,
As of
April 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
CURRENT LIABILITIES
Trade payables 12,711 6,731 23,469 22,508
Convertible bonds 321,000 321,000 – –
Other payables and accruals 100,391 120,534 53,460 34,639
Interest-bearing bank
borrowings – – 40,000 40,090
Contract liabilities 59,099 49,435 37,444 73,514
Lease liabilities 2,474 1,846 379 393
Amounts due to related
parties 2,333 1,855 1,811 –
Deferred government grants – – 6,438 6,421
Income tax payable 7,808 118 9,042 161
Total current liabilities 505,816 501,519 172,043 177,726
NET CURRENT ASSETS 229,241 270,291 521,757 588,459
Our net current assets increased from RMB521.8 million as of December 31, 2024 to
RMB588.5 million as of April 30, 2025, primarily due to an increase in cash and cash
equivalents of RMB85.3 million and a decrease in trade payables and other payables and
accruals of RMB19.8 million, and partially offset by an increase in contract liabilities of
RMB36.1 million.
Our net current assets increased from RMB270.3 million as of December 31, 2023 to
RMB521.8 million as of December 31, 2024, primarily due to (i) a decrease in convertible
bonds of RMB321.0 million, and (ii) a decrease in other payables of RMB67.1 million.
Our net current assets increased from RMB229.2 million as of December 31, 2022 to
RMB270.3 million as of December 31, 2023, primarily due to an increase of cash and cash
equivalents of RMB252.0 million and in trade and notes receivables of RMB16.6 million, and
a decrease in contract liabilities of RMB9.7 million, partially offset by a decrease of
RMB222.0 million of financial assets at FVTPL and an increase of RMB20.1 million of other
payables and accruals.
FINANCIAL INFORMATION
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--- page 365 ---
Property and Equipment
Our property and equipment primarily consist of building, machinery and equipment,
computer and office equipment, motor vehicles, and construction in progress. We had property
and equipment of RMB258.2 million, RMB296.4 million and RMB300.5 million as of
December 31, 2022, 2023 and 2024, respectively. The following table sets forth a breakdown
of our property and equipment as of the dates indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Building 105,024 102,041 99,560
Machinery and equipment 63,607 76,357 84,143
Computer and office equipment 2,373 2,955 2,194
Motor vehicles 1,642 1,140 669
Construction in progress 85,507 113,925 113,918
Total 258,153 296,418 300,484
Our property and equipment increased by 14.8% from RMB258.2 million as of December
31, 2022 to RMB296.4 million as of December 31, 2023, primarily due to (i) an increase of
RMB12.8 million in machinery and equipment as we further expanded the production capacity
of our existing Qiantang Site; and (ii) an increase of RMB28.4 million in construction in
progress in relation to the Rocklin Site and the Hangzhou Biopharma Town Site which are
currently under construction.
Our property and equipment remained relatively stable at RMB296.4 million and
RMB300.5 million as of December 31, 2023 and 2024, respectively.
Goodwill
We recorded goodwill of RMB95.4 million, RMB95.4 million and RMB95.4 million as
of December 31, 2022, 2023 and 2024, respectively, in relation to our acquisition of Chinese
Peptide in June 2020, and the goodwill has been allocated to cash generating unit of Chinese
Peptide and its subsidiaries for impairment testing. Goodwill is tested by our management for
impairment annually or more frequently if events or changes in circumstances indicate that the
carrying value may be impaired. We engaged an independent third-party valuer to conduct
annual goodwill impairment testing and did not record any impairment during the Track Record
Period based on such testing.
FINANCIAL INFORMATION
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The following describes each key assumption on which we based our cash flow
projections to undertake impairment testing of goodwill:
As of December 31,
2022 2023 2024
Pre-tax discount rate (1) 15.30% 15.31% 15.37%
Revenue (2) (% compound growth rate) 14.97% 14.65% 13.16%
Terminal growth rate (3) 2.30% 2.20% 2.00%
Notes:
(1) Pre-tax discount rate – The discount rate used is before tax and reflects specific risks relating to Chinese
Peptide Group CGU.
(2) Revenue growth rate – The basis used to determine the budgeted revenue is based on management’s
expectation and expectation of the future market.
(3) Terminal growth rate – The forecasted terminal growth rate is based on management’s expectations and
does not exceed the long-term average growth rate for the industry relevant to Chinese Peptide Group
CGU.
We have performed sensitivity test by decreasing 1% of revenue growth rate, decreasing
1% of terminal growth rate or increasing 1% of pre-tax discount rate, with all other
assumptions held constant. The impacts on the amount by which Chinese Peptide recoverable
amount above its carrying amount (headroom) are as below:
As of December 31,
2022 2023 2024
Headroom 1,356,424 1,414,047 1,846,704
Impact by decreasing revenue growth rate (61,374) (63,779) (81,731)
Impact by decreasing terminal growth rate (101,673) (105,370) (127,085)
Impact by increasing pre-tax discount rate (127,969) (132,972) (164,713)
No impairment loss in relation to goodwill is recognized for Chinese Peptide during the
Track Record Period. Considering there was still sufficient headroom based on the assessment.
We believe that a reasonably possible change in the key parameters would not cause the
carrying amount of the Chinese Peptide to exceed its recoverable amount as of December 31,
2022, 2023 and 2024.
IAS 36 requires an entity to preform impairment tests on goodwill on an annual basis.
Meanwhile, we did not identify any significant adverse changes in the operating results and
macro environment in 2024, and we have concluded there was no impairment indicator of
goodwill as of December 31, 2024. Accordingly, we did not perform impairment testing on
goodwill as of December 31, 2024.
FINANCIAL INFORMATION
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For more details, please see Note 18 to the Accountants’ Report in Appendix I to this
Prospectus.
Other Intangible Assets
Our other intangible assets primarily consist of knowhows and software. Changes in other
intangible assets from RMB47.0 million as of December 31, 2022 to RMB41.1 million as of
December 31, 2023 and further to RMB36.0 million as of December 31, 2024 were primarily
due to amortization.
Right-of-Use Assets
Our right-of-use assets primarily relate to our land use rights and leased offices. Changes
in right-of-use assets from RMB42.9 million as of December 31, 2022 to RMB39.7 million as
of December 31, 2023 and further to RMB38.1 million as of December 31, 2024 were primarily
due to depreciation.
Inventories
Our inventories primarily consist of raw materials, work in progress and finished goods.
Our inventories decreased from RMB79.3 million as of December 31, 2022 to RMB73.0
million as of December 31, 2023 and then increased to RMB84.8 million as of December 31,
2024. Changes in raw materials during the Track Record Period was primarily due to
preparation for the planned production volume. Our work in progress decreased from RMB10.9
million as of December 31, 2022 to RMB7.0 million as of December 31, 2023, primarily due
to the settlement of an overseas purchase order. Our work in progress subsequently increased
to RMB22.2 million as of December 31, 2024, primarily due to an increase in purchase order
placed in 2024. Changes in our finished goods as of December 31, 2022 to 2023 was primarily
in response to the changes in planned delivery based on orders at hand. Our finished goods
decreased to RMB29.2 million as of December 31, 2024, primarily due to the orders delivered
in November and December of 2024. The following table sets forth a breakdown of our
inventories by type as of the dates indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Raw materials 28,174 26,249 33,308
Work in progress 10,888 7,046 22,234
Finished goods
(1) 40,243 39,710 29,235
Total 79,305 73,005 84,777
Note:
(1) Finished goods primarily include oligonucleotide and peptide products.
FINANCIAL INFORMATION
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--- page 368 ---
Our inventory turnover days was 178.9 days, 177.5 days and 149.6 days in 2022, 2023
and 2024, respectively. Our inventory turnover days remained steady from 2022 to 2023. The
decrease in inventory turnover days from December 31, 2023 to December 31, 2024 was
primarily due to the orders delivered in November and December of 2024. The following table
sets forth our inventory turnover days for the years indicated.
For the year ended December 31,
2022 2023 2024
Inventory turnover days (1) 178.9 177.5 149.6
(1) Inventory turnover days were calculated based on the average of opening and ending inventory balance
for the relevant period, divided by the cost of sales for the same period, and multiplied by the number
of days in that period.
The following table sets forth an aging analysis of our inventories as of the dates
indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within six months 53,312 45,652 65,914
Over six months but within one year 12,175 11,085 7,733
Over one year 13,818 16,268 11,130
Total 79,305 73,005 84,777
The following table set forth an aging analysis of our finished goods as of the dates
indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within six months 25,722 30,762 19,652
Over six months but within one year 6,134 2,448 4,468
Over one year 8,387 6,500 5,115
40,243 39,710 29,235
FINANCIAL INFORMATION
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--- page 369 ---
Our Directors concluded that we do not have any material recoverability issue for our
inventories and the write-down of inventories was adequate and reasonable. Our finished goods
are all within the warranty period and with an average shelf life of two years. We have in place
dedicated personnel who continually monitor aging conditions of our inventories with a view
to identify obsolete and slow-moving inventories so that we can promptly take appropriate
remedial measures accordingly. Our management also reviews the recoverability of our
inventories as of the end of each year to ensure that adequate impairment losses are made for
irrecoverable amounts. During the Track Record Period, we recorded balance of write-down of
inventories, net of reversal, of RMB6.3 million, RMB10.2 million and RMB11.5 million as of
December 31, 2022, 2023 and 2024, respectively. In light of the foregoing, we do not expect
to experience any material issue in recoverability of inventories in the foreseeable future.
As of April 30, 2025, approximately RMB54.3 million, or 56.5%, of our inventories
before the adjustment of write-down or reversal as of December 31, 2024 had been consumed.
Trade and Notes Receivable
The following table sets forth a breakdown of our trade and notes receivable as of the
dates indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Notes receivable 3,008 – –
Trade receivables 20,744 40,902 62,645
Less: Allowance for credit losses (3,952) (4,484) (4,925)
Total 19,800 36,418 57,720
Our trade receivables increased from RMB20.7 million as of December 31, 2022 to
RMB40.9 million as of December 31, 2023, primarily due to significant receivable from one
customer outstanding of RMB24.6 million as of December 31, 2023 which had been fully
recovered as of December 31, 2024. Our trade receivables increased from RMB40.9 million as
of December 31, 2023 to RMB62.6 million as of December 31, 2024, primarily due to an
increased receivable from a customer in the U.S. focusing on the development of GLP-1 related
drug products.
Our notes receivable as of December 31, 2022 of RMB3.0 million was primarily in
relation to a promissory note issued by a customer to settle its payments to us. We did not
record notes receivables as of December 31, 2023, because we transferred the notes to settle
accounts payable to suppliers in 2023.
FINANCIAL INFORMATION
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--- page 370 ---
The following table sets forth an aging analysis of our trade receivables (less allowance
for credit losses), based on the invoice date and net of loss allowance, as of the dates indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within 1 year 15,771 35,483 57,460
1 to 2 years 1,071 869 240
2 to 3 years 4 66 20
Total 16,792 36,418 57,720
The expected credit loss rate of trade receivables amounted to 19.1%, 11.0% and 7.9% as
of December 31, 2022, 2023 and 2024. For details of our trade and notes receivables, see Note
22 to the Accountants’ Report in Appendix I to this Prospectus.
The following table sets forth our trade receivables turnover days during the year
indicated.
For the year ended December 31,
2022 2023 2024
Trade receivables turnover days (1) 20.4 33.4 42.7
(1) Trade receivables turnover days were calculated based on the average of opening and ending trade
receivables balance for the relevant period, net of loss allowance for the same period, divided by the
revenue for the same period, and multiplied by the number of days in that period.
Our trade receivables turnover days was 20.4 days, 33.4 days and 42.7 days in 2022, 2023
and 2024, respectively. The increase in trade receivable turnover days from 2022 to 2023 was
primarily due to the high balance of trade receivables of RMB24.6 million as of December 31,
2023, from one of our customers, RMB24.6 million of which had been recovered as of
December 31, 2024. The increase in trade receivables turnover days from 2023 to 2024, was
primarily due to an increased receivable from a customer in the U.S. focusing on the
development of GLP-1 related drug products. See “—Material Accounting Policies, Judgments
and Estimates—Material Accounting Policies—Impairment of Financial Assets” for details on
our policies regarding allowance for credit losses.
As of April 30, 2025, approximately RMB53.6 million, or 85.5% of our trade receivables
as of December 31, 2024 had been settled.
FINANCIAL INFORMATION
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--- page 371 ---
Prepayments, Other Receivables and Other Assets
The following table sets forth a breakdown of our prepayments, other receivables and
other assets as of the dates indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Non-current:
V alue-added tax recoverable – – 5,228
Deposits 403 514 246
Prepayments for purchase of property
and equipment 6,754 8,816 1,709
7,157 9,330 7,183
Current:
Prepayments 3,052 6,971 4,761
Staff advances 504 334 618
V alue added tax recoverable 3,273 4,415 1,948
Other receivables 391 14 –
Deferred listing expense – – 8,907
Impairment (45) (113) (136)
Total 7,175 11,621 16,098
Our prepayments for purchase of property and equipment increased from RMB6.8 million
as of December 31, 2022, to RMB8.8 million as of December 31, 2023, primarily due to an
increase in purchase volume of property and equipment in relation to our expansion of the
Hangzhou Biopharma Town Site and the Rocklin Site. Our increases in current prepayment,
other receivables and other assets during the Track Record Period was primarily due to the
expansion of our business scale and the resulting increases in prepayments for raw materials
and value added tax. Our prepayments for purchase of property and equipment decreased from
RMB8.8 million as of December 31, 2023 to RMB1.7 million as of December 31, 2024,
primarily due to receipt of the property and equipment. Our deferred listing expenses of
RMB8.9 million as of December 31, 2024 relate to payment for expenses in relation to this
Global Offering that had not been recognized as listing expenses as of December 31, 2024.
FINANCIAL INFORMATION
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--- page 372 ---
Financial Assets at FVTPL
Our financial assets measured at FVTPL primarily consist of our structured deposits,
investment in wealth management products, and equity investment. The wealth management
products included investments in treasury bonds, financial bonds, central bank bills, bank
deposits, bond repurchases, and interbank certificates of deposit. We had financial assets at
FVTPL of RMB333.9 million, RMB111.6 million and RMB1.6 million as of December 31,
2022, 2023 and 2024, respectively. We fully redeemed the structured deposits and wealth
management products in 2024, which led to the significant decrease in financial assets at
FVTPL from December 31, 2023 to December 31, 2024. The fair values of our financial assets
at FVTPL are measured using level 2 and level 3 input. For the structured deposits, returns are
determined with reference to the performance of the underlying instruments in the currency
market. The average return rate of our structured deposits and wealth management products
was from 1.5% to 4.0% per annum as at December 31, 2022 and 2023 and 2024.
We believe we can make better use of our cash by making appropriate investments in
wealth management products of low-to-medium risk, which generate income without
interfering with our business operation or capital expenditures. Our investment decisions with
respect to financial products are made on a case-by-case basis and after due and careful
consideration of a number of factors, including, but not limited to, the market conditions, the
economic developments, the anticipated investment conditions, the investment cost, the
duration of the investment and the expected benefit and potential loss of the investment. We
have established a set of internal measures which allow us to achieve reasonable returns on our
investment while mitigating our exposure to high investment risks. Our finance department is
responsible for the analysis and research of investment in wealth management products based
on our cash positions. Investment decisions on wealth management products must be approved
by our finance director. Redemption of wealth management products prior to their maturity
must be initiated by finance managers and approved by our finance director. These policies and
measures were formulated by our senior management, and the implementation of our
investment policies and measures was supervised by our Board. We will comply with
requirements under Chapter 14 of the Listing Rules and disclose the details of our investments
and other notifiable transactions to the extent necessary and as appropriate after the Global
Offering.
Trade Payables
Our trade payables decreased from RMB12.7 million as of December 31, 2022 to RMB6.7
million as of December 31, 2023, primarily due to a decrease in unit price of our raw materials.
Our trade payables increased from RMB6.7 million as of December 31, 2023 to RMB23.5
million as of December 31, 2024, primarily due to an increase in purchases of raw materials,
packaging materials and other supplies in 2024. Our trade payable turnover days decreased
from 24.4 days in 2022 to 22.7 days in 2023 and subsequently increased to 28.6 days in 2024,
primarily driven by changes in cycle of receiving invoices from and making payments to
suppliers.
FINANCIAL INFORMATION
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The following table sets forth our trade payable turnover days during the year indicated.
For the year ended December 31,
2022 2023 2024
Trade payable turnover days (1) 24.4 22.7 28.6
(1) Trade payable turnover days were calculated based on the average of opening and ending trade payable
balance for the relevant period, divided by the cost of sales for the same period, and multiplied by the
number of days in that period.
The following table sets forth an aging analysis of our trade payables as of the dates
indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within 1 year 12,474 6,546 23,328
1 to 2 years 88 16 22
Over 2 years 149 169 119
Total 12,711 6,731 23,469
As of April 30, 2025, approximately RMB19.8 million, or 84.4%, of our trade payables
as of December 31, 2024 had been settled.
Other Payables and Accruals
Our other payables and accruals primarily consist of (i) deferred government grants; (ii)
payroll and welfare payable; (iii) payables for acquisition of plant and equipment; and (iv)
accrued listing expenses.
Our deferred government grants primarily consist of (i) subsidies received from local
governments in relation to our RMB300.0 million convertible bond (the “Bond-related Grant”),
and (ii) project related government grants.
The Bond-related Grant was in form of interest reimbursements and effectively rendered
our RMB300.0 million convertible bond (the “Bond”) interest-free. This Bond-related Grant
was intended to support our business operations and the development of local manufacturing
infrastructure. The granting government authority made payments of RMB21.9 million,
RMB21.0 million and RMB6.6 million, under the Bond-related Grant in December 2021,
March 2023 and June 2024, respectively. Specifically, the amount of deferred Bond-related
Grant as of December 31, 2022 and 2023 was RMB21.9 million and RMB42.9 million,
FINANCIAL INFORMATION
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--- page 374 ---
respectively, recorded as deferred government grants in other payables and accruals. We did
not record deferred Bond-related Grant that was recorded as deferred government grants in
other payables and accruals as of December 31, 2024. Due to the changes in interest rate in
China and as agreed by the relevant government authority and us, the accrued unpaid interest
under the Bond was reduced to RMB6.6 million in March 2024. We have repaid the interests
for the Bond in December 2021 and March 2023 and fully repaid the outstanding interest in
cash of RMB6.6 million in June 2024.
According to our agreements with the relevant government authority, the Bond-related
Grant was subject to certain conditions such as the Company’s financial performance, capital
investments and local tax contributions (as amended by mutual agreements, the “ Conditions ”),
which were determined based on various factors primarily related to our long-term
contributions to the local economy. We could be subject to a potential clawback of the
Bond-related Grant if the Conditions were not fulfilled. In June 2024, we have fulfilled all
Conditions after repaying the outstanding interest in cash of RMB6.6 million and returning
RMB21.9 million of the received Bond-related Grant to the relevant government authority. The
amount of Bond-related Grant returned to the relevant government authority was the difference
between the accumulated Bond-related Grant received and the finalized grant as definitely
agreed by the relevant government authority and us. As all the Conditions attaching to the
Bond-related Grant were fulfilled in June 2024, the remaining Bond-related Grant is
recognized as other income in 2024 and is one-off in nature. We did not record deferred
government grants related to the Bond-related Grant as of December 31, 2024.
For further detail for the recognition and conditions of our Bond-related Grant, see Note
26 and Note 31 of the Accountants’ Report in Appendix I to this Prospectus.
We also received other government grants of RMB39.0 million subsidy in relation to a
particular R&D project in November 2019 which is subject to final inspection by the granting
authority. Upon acceptance of inspection results in June 2024 by the granting authority, the
deferred government grant is eliminated, and is recognized as other income over the rest of
useful life of the related assets.
Our other payables and accruals increased from RMB100.4 million as of December 31,
2022 to RMB120.5 million as of December 31, 2023, primarily due to an increase in deferred
government grants in relation to the receipt of interest subsidies on convertible bond. Our other
payables and accruals further decreased to RMB53.5 million as of December 31, 2024,
primarily due to a decrease in deferred government grants as explained above in relation to the
receipt of interest subsidies on convertible bond.
FINANCIAL INFORMATION
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--- page 375 ---
The following table sets forth a breakdown of our other payables and accruals as of the
dates indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Deferred government grants 60,875 81,875 –
Other payables 5,458 4,370 6,933
Other taxes payable 3,163 1,578 1,385
Payroll and welfare payable 16,914 14,657 23,289
Payables for acquisition of plant and
equipment 13,201 17,955 14,208
Accrued listing expenses – – 7,645
Others 780 99 –
Total 100,391 120,534 53,460
Our Directors confirm that during the Track Record Period, we did not have any material
defaults on our trade and other payables and accruals.
Contract Liabilities
Our contract liabilities represent the obligations to transfer goods or deliver services to
customers from which we had received consideration. The fluctuation of contractual liabilities
is mainly due to whether we deliver services at the end of the year. Our contract liabilities
decreased from RMB49.4 million as of December 31, 2023 to RMB37.4 million as of
December 31, 2024, primarily due to the increased services delivery during the year end of
2024, resulting in revenue recognition.
As of April 30, 2025, approximately RMB17.6 million, or 47.0%, of our contract
liabilities as of December 31, 2024 had been recognized as revenue.
Net Assets
Our net assets further increased from RMB202.5 million as of December 31, 2022 to
RMB253.9 million as of December 31, 2023, primarily due to our total comprehensive income
for the year of RMB49.5 million in 2023. Our net assets further increased to RMB318.8 million
as of December 31, 2024, primarily due to our total comprehensive income for the year of
RMB60.4 million in 2024.
FINANCIAL INFORMATION
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--- page 376 ---
LIQUIDITY AND CAPITAL RESOURCES
During the Track Record Period, we primarily relied on cash from business operations,
capital contribution from shareholders, issuance of equity shares and convertible bonds as
major sources of liquidity. With respect to cash management, our objective is to optimize
liquidity to secure a stable return for shareholders in a risk-averse manner. Specifically, we
have policies in place to monitor and manage the settlement of trade receivables. When
determining the credit term of a customer, we consider a number of factors, including length
of past cooperation and its past payment timeliness. To monitor the settlement of our trade
receivables and avoid credit losses, we conduct annual review of each customer’s financial
performance, which is primarily based on the amount and aging of the trade receivables due
from such customer in the respective period.
Cash Flows
The following table sets forth a summary of our cash flows for the years indicated.
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Profit before tax 67,556 61,978 78,449
Operating cash flows before movements
in working capital 146,196 124,392 177,150
Cash generated from operations 145,848 105,535 114,912
Net cash generated from operating
activities 134,798 88,327 120,507
Net cash (used in)/generated from
investing activities (350,932) 182,426 5,153
Net cash used in financing activities (60,085) (23,726) (276,471)
Net (decrease)/increase in cash and
cash equivalents (276,219) 247,027 (150,811)
Cash and cash equivalents at
beginning of the year 538,264 279,048 531,012
Cash and cash equivalents at end
of the year 279,048 531,012 387,183
FINANCIAL INFORMATION
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--- page 377 ---
Net Cash Generated from Operating Activities
Net cash generated from operating activities was RMB120.5 million in 2024, primarily
due to our profit before tax of RMB78.4 million, less income tax paid of RMB6.4 million and
plus interest received of RMB12.0 million, as adjusted by (i) certain non-cash and
non-operating items, primarily including depreciation of property plant and equipment of
RMB20.7 million and amortization of other intangible assets of RMB6.5 million and partially
offset by bank interest income of RMB13.6 million; (ii) changes in working capital that
positively affected the cash flow from operating activities, primarily including increase in
deferred government grants of RMB35.5 million due to a transfer from other payables and
accruals in 2024 and a decrease in contract liabilities of RMB12.0 million; (iii) an increase of
RMB16.7 million in trade payables; (iv) partially offset by changes in working capital that
negatively affected the cash flow from operating activities, primarily including a decrease in
other payables and accruals of RMB65.5 million and an increase in inventories of RMB14.2
million; and (v) an increase and trade and note receivables of RMB22.2 million.
Net cash generated from operating activities was RMB88.3 million in 2023, primarily due
to our profit before tax of RMB62.0 million, less income tax paid of RMB24.1 million and plus
interest received of RMB6.9 million, as adjusted by (i) certain non-cash and non-operating
items, primarily including loss on fair value changes of financial liabilities measured at FVTPL
of RMB45.4 million and depreciation of property plant and equipment of RMB20.2 million;
(ii) changes in working capital that positively affected the cash flow from operating activities,
primarily including increase in other payables and accruals of RMB15.4 million; and (iii)
partially offset by changes in working capital that negatively affected the cash flow from
operating activities, primarily including an increase in trade and notes receivables of RMB17.2
million, a decrease in contract liabilities of RMB9.7 million and a decrease in trade payables
of RMB6.0 million.
Net cash generated from operating activities was RMB134.8 million in 2022, primarily
due to our profit before tax of RMB67.6 million, less income tax paid of RMB12.0 million and
plus interest received of RMB0.9 million, as adjusted by (i) certain non-cash and non-operating
items, primarily including loss on fair value changes of financial liabilities measured at FVTPL
of RMB67.1 million and depreciation of property and equipment of RMB16.4 million and
partially offset by fair value change of financial assets at FVTPL of RMB7.9 million; and (ii)
changes in working capital that positively affected the cash flow from operating activities,
primarily including an increase in contract liabilities of RMB8.9 million and an increase in
other payables and accruals of RMB6.3 million; and (iii) partially offset by changes in working
capital that negatively affected the cash flow from operating activities, primarily including an
increase in inventories of RMB14.3 million.
FINANCIAL INFORMATION
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--- page 378 ---
Net Cash (Used in)/Generated from Investing Activities
Net cash flows generated from investing activities was RMB5.2 million in 2024,
primarily due to the redemption of wealth management products of RMB210.0 million,
partially offset by placement of time deposits of RMB142.4 million, purchase of financial
assets at FVTPL of RMB100.0 million.
Net cash flows generated from investing activities was RMB182.4 million in 2023,
primarily due to the redemption of wealth management products of RMB332.1 million,
partially offset by purchase of financial assets at FVTPL of RMB110.0 million and purchase
of property and equipment of RMB55.2 million.
Net cash flows used in investing activities was RMB350.9 million in 2022, primarily due
to the purchase of financial assets at FVTPL of RMB420.2 million, purchase of property and
equipment of RMB92.1 million and placement of time deposits of RMB50.0 million, partially
offset by the redemption of wealth management products of RMB201.4 million.
Net Cash Used in Financing Activities
Net cash flows used in financing activities was RMB276.5 million in 2024, primarily due
to repayment for principal of convertible bonds of RMB300.0 million and partially offset by
new bank borrowing of RMB40.0 million.
Net cash flows used in financing activities was RMB23.7 million in 2023, primarily due
to payment for interests of convertible bonds of RMB21.0 million.
Net cash flows used in financing activities was RMB60.1 million in 2022, primarily due
to repayment of bank borrowing of RMB87.6 million and partially offset by capital injection
from shareholders of RMB36.3 million.
CAPITAL EXPENDITURES AND COMMITMENTS
Our capital expenditures during the Track Record Period primarily related to our purchase
of property and equipment and intangible assets, and amounted to RMB92.2 million, RMB55.6
million and RMB22.5 million, respectively, in 2022, 2023 and 2024. We funded our capital
expenditure requirements during the Track Record Period mainly from a combination of cash
generated from our operating activities, loans and advances from related parties and capital
injection from shareholders.
We plan to fund our planned capital expenditure by using the cash flow generated from
our operations and the net proceeds received from the Global Offering. See “Future Plans and
Use of Proceeds” for the portion of capital expenditures to be funded by the proceeds from the
Global Offering.
FINANCIAL INFORMATION
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Capital Commitments
Our capital commitments primarily related to purchase of property and equipment and
building construction. The following sets forth a summary of our capital commitments as of the
dates indicated.
As of December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Contracted but not provided for:
Property and equipment 60,481 45,001 39,912
Total 60,481 45,001 39,912
INDEBTEDNESS
Our indebtedness during the Track Record Period consists of convertible bonds,
redemption liabilities on equity shares, non-trade related amounts due to related parties,
interest-bearing bank borrowing and lease liabilities. The following table sets forth our
indebtedness position as of December 31, 2022, 2023, 2024 and April 30, 2025 (being the latest
practicable date for the purpose of indebtedness statement).
As of December 31,
As of
April 30,
2022 2023 2024 2025
RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current
Convertible bonds 321,000 321,000 – –
Non-trade related
amounts due to
related parties 183 – – –
Interest-bearing bank
borrowing – – 40,000 40,090
Lease liabilities 2,474 1,846 379 393
Non-current
Lease liabilities 1,815 – 764 629
Redemption liabilities
on equity shares 517,667 542,038 639,805 639,865
Total 843,139 864,884 680,948 680,977
FINANCIAL INFORMATION
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Convertible Bonds
Our convertible bonds were issued to Heda Kontide in December 2020 in exchange for
a cash loan of RMB300.0 million. We had repaid the principal of the convertible bonds in
March 2024 and the convertible bonds were fully redeemed.
Non-trade Related Amounts Due to Related Parties
See “—Related Party Transactions” for details on the background and amounts of
amounts due to related parties.
Interest-bearing Bank Borrowing
We had one interest-bearing bank borrowing of RMB40.0 million as of December 31,
2024. Such borrowing had an interest rate of 2.95% and have been repaid in January 2025.
We had one interest-bearing bank borrowing of RMB40.0 million as of April 30, 2025.
Such borrowing had an interest rate of 2.7% and was made in February 2025.
In addition, we had total banking facilities of RMB280.0 million, of which RMB240.0
million was unutilized banking facilities as of April 30, 2025.
Lease Liabilities
Our lease liabilities primarily relate to our leases of offices in Beijing and the U.S. The
decrease in our lease liabilities during the Track Record Period was primarily due to lease
payments under the relevant lease agreements.
Redemption Liabilities on Equity Shares
Our redemption liabilities on equity shares were in relation to our issuance of Series A
Shares. Changes in redemption liabilities on equity shares were primarily due to fluctuations
in the fair value of our Series A Shares. We engage independent third-party valuers to assess
the market value of our Series A Shares each year during the Track Record Period.
Save as disclosed above, we did not have any outstanding loan, capital issued or agreed
to be issued, debt securities, mortgages, charges, debentures, bank overdrafts, loans or other
similar indebtedness, liabilities under acceptances or acceptance credits, hire purchase
commitments, guarantees or other contingent liabilities as of April 30, 2025.
We had not guaranteed the indebtedness of any independent third parties as of the Latest
Practicable Date. Our Directors confirm that there has not been any material change in our
indebtedness since April 30, 2025 and up to the date of this Prospectus.
FINANCIAL INFORMATION
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Our Directors confirm that as of the Latest Practicable Date, there was no material
covenant on any of our outstanding debt and there was no breach of any covenant during the
Track Record Period and up to the Latest Practicable Date. Our Directors further confirm that
we did not experience any difficulty in obtaining bank loans and other borrowings, default in
payment of bank loans and other borrowings during the Track Record Period and up to the
Latest Practicable Date.
CONTINGENT LIABILITIES
As of the Latest Practicable Date, we did not have any material contingent liabilities,
guarantees or any litigations or claims of material importance, pending or threatened against
any member of our Company.
WORKING CAPITAL CONFIRMATION
Taking into account the financial resources available to us including our cash and cash
equivalents on hand, the available banking facilities and the estimated net proceeds from the
Global Offering, our Directors are of the view that we have sufficient working capital to meet
our present requirements and for the next 12 months from the date of this Prospectus.
OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS
As of the Latest Practicable Date, we had not entered into any off-balance sheet
transactions.
LISTING EXPENSES
The total listing expenses payable by our Company are estimated to be approximately
HK$84.4 million, representing 17.0% of the total gross proceeds from the Global Offering, and
based on an Offer Price of HK$29.50. These listing expenses mainly comprise legal and other
professional fees paid and payable to the professional parties, commissions payable to the
Underwriters, and printing and other expenses for their services rendered in relation to the
Listing and the Global Offering. Approximately HK$49.4 million of the total listing expenses
is expected to be charged to our consolidated statements of profit or loss, and approximately
HK$35.0 million is expected to be deducted from equity (relating to listing expenses directly
attributable to the issue of shares).
FINANCIAL INFORMATION
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The following table sets forth a breakdown of the listing expenses for the Global Offering
based on the mid-point Offer Price of HK$29.50 per Offer Share.
Listing Expenses
Based on an
Offer Price of
HK$29.50 per
Offer Share
(HK$’000)
Non-underwriting related expenses
Legal and audit expenses 34,979
Other expenses 24,580
Underwriting related expenses 24,822
Total 84,381
KEY FINANCIAL RATIOS
The following table sets forth key financial ratios for the years or as of the dates
indicated.
As of/for the year ended December 31,
2022 2023 2024
Gross profit margin (1) 57.3% 53.5% 56.5%
Net profit margin (2) 15.4% 14.5% 13.4%
Return on assets (3) 4.5% 3.8% 4.8%
Return on equity (4) 35.1% 21.4% 20.7%
Current ratio (5) 1.5 1.5 4.0
(1) Gross profit margin equals our gross profit divided by revenue for the same year.
(2) Net profit margin equals our profit for the year divided by revenue for the same year.
(3) Return on assets equals profit (on an actual basis for 2022, 2023 and 2024) for the year divided by the
average of the opening and ending balances of total assets for the same year and multiplied by 100%.
(4) Return on equity equals profit (on an actual basis for 2022, 2023 and 2024) for the year divided by the
average of the opening and ending balances of total equity for the same year and multiplied by 100%.
(5) Current ratio equals our current assets divided by current liabilities as of the end of the year.
FINANCIAL INFORMATION
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Analysis of Key Financial Ratios
Gross Profit Margin and Net Profit Margin
See “—Y ear to Y ear Comparison” for a discussion of the factors affecting our gross profit
margin and net profit margin during the Track Record Period.
Return on Assets
Our return on assets ratio decreased from 4.5% in 2022 to 3.8% in 2023, primarily due
to a decrease in our profit for the year from RMB54.0 million in 2022 to RMB48.9 million in
2023. Our return on assets ratio increased to 4.8% in 2024, primarily due to an increase in our
profit for the year from RMB48.9 million in 2023 to RMB59.2 million in 2024.
Return on Equity
Our return on equity ratio decreased from 35.1% in 2022 to 21.4% in 2023, primarily due
to a decrease in our profit for the year from RMB54.0 million in 2022 to RMB48.9 million in
2023. Our return on equity ratio remained relatively stable at 20.7% in 2024.
Current Ratio
Our current ratio remained stable of 1.5 as of December 31, 2022 and December 31, 2023.
Our current ratio increased from 1.5 as of December 31, 2023 to 4.0 as of December 31, 2024,
primarily due to a decrease in convertible bonds, an increase in time deposits and a decrease
in other payables and accruals.
RELATED PARTY TRANSACTIONS
We enter into transactions with our related parties from time to time during our ordinary
course of business and on terms of transactions with other entities that are not related parties.
During the Track Record Period, we entered into a number of related party transactions. For
details of our related party transactions, see Note 38 to the Accountants’ Report in Appendix
I to this Prospectus. Our Directors are of the view that each of the related party transactions
was conducted in the ordinary and usual course of business and on normal commercial terms
between the relevant parties and does not distort our Track Record Period results or make our
historical results not reflective of future performance.
Amounts Due From Related Parties
Our advances due from related parties primarily relate to non-trade advances to UCP
Biosciences and Dr. Xu Qi. Our amounts due from related parties decreased from RMB3.0
million as of December 31, 2022 to RMB1.7 million and as of December 31, 2023, primarily
due to our disposal of UCP Biosciences. Our advances to Dr. Xu Qi had been repaid in full in
May 2024. The advances was fully settled by December 31, 2024.
FINANCIAL INFORMATION
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--- page 384 ---
Amounts Due to Related Parties
As of December 31, 2022, 2023 and 2024, we had amounts due to related parties of
RMB2.3 million, RMB1.9 million and RMB1.8 million, respectively. During the Track Record
Period, amounts due to related parties primarily comprised (i) amounts that were non-trade in
nature due to Hangzhou Jicheng Pharmaceutical Technology Co., Ltd (ࠢ
ʮ̡) and Prometheus Bio; and (ii) amounts that were trade in nature due to Zhejiang Handing
Pharmaceutical Co., Ltd (ʮ̡) and Prometheus Bio.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
We are exposed to currency, credit and liquidity risks arising from the normal course of
our business. We manage and monitor these exposures to ensure appropriate measures are
implemented on a timely and effective manner.
Currency Risk
Our foreign currency transactions, including sales, expose us to foreign currency risk.
Certain of our bank balances and cash, trade receivables and trade payables are denominated
in currencies other than the functional currency of the relevant group entities and expose us to
such foreign currency risk.
Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations
resulting in financial loss to us. At the end of each year during the Track Record Period, our
maximum exposure to credit risk which cause a financial loss to us due to failure to discharge
an obligation by the counterparties is arising from the carrying amount of the respective
recognized financial assets as stated in the consolidated statement of the financial position.
In order to minimize credit risk, we have developed and maintained our credit risk
grading to categorize exposures according to their degree of risk of default. Management uses
publicly available financial information and our own historical repayment records to rate its
major customers and other debtors. Our exposure and the credit ratings of its counterparties are
continuously monitored and reviewed at the end of each year during the Track Record Period
to ensure the adequate impairment losses are made for irrecoverable amount. For more details
about our credit risk, see Note 41 to the Accountants’ Report in Appendix I to this Prospectus.
Liquidity Risk
In the management of the liquidity risk, we monitor and maintain a level of bank balances
and cash deemed adequate by our management to finance our operations and mitigate the
effects of fluctuations in cash flows. For more details about our liquidity risk, including a
maturity profile of our financial liabilities, see Note 41 to the Accountants’ Report in Appendix
I to this Prospectus.
FINANCIAL INFORMATION
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DIVIDEND
During the Track Record Period, we did not pay any dividends, nor did we declare any
dividends. As of the Latest Practicable Date, we did not have a formal dividend policy or a
fixed dividend payout ratio. Any declaration and payment as well as the amount of dividends
will be subject to our Articles of Association and applicable laws and regulations. The
declaration and payment of any dividends in the future will be determined by our shareholders’
meeting, in its discretion, and will depend on a number of factors, including but not limited to
our earnings, capital requirements, overall financial condition and contractual restrictions. We
may by ordinary resolution resolve to declare dividends in any currency and authorize payment
of the dividends out of the funds of our Company lawfully available. There is no assurance that
dividends of any amount will be declared to be distributed in any year. We will continue to
re-evaluate our dividend policy in light of our financial condition and the prevailing economic
environment.
PRC laws require that dividends be paid only out of net profits calculated according to
PRC accounting principles, which differ in many aspects from generally accepted accounting
principles in other jurisdictions, including IFRS. PRC laws also require foreign invested
enterprises, such as some of our subsidiaries in China, to set aside part of their net profit as
statutory reserves, which are not available for distribution as cash dividends. Distributions
from our subsidiaries may also be restricted if they incur debt or losses, or in accordance with
any restrictive covenants in bank credit facilities or other agreements that we or our
subsidiaries may enter into in the future.
DISTRIBUTABLE RESERVE
As of December 31, 2024, we did not have any distributable reserves.
DISCLOSURE REQUIRED UNDER CHAPTER 13 OF THE LISTING RULES
Our Directors have confirmed that, as of the Latest Practicable Date, there are no
circumstances which, had we been required to comply with Rules 13.13 to 13.19 in Chapter 13
of the Listing Rules, would have given rise to a disclosure requirement under Rules 13.13 to
13.19 of the Listing Rules.
NO MATERIAL ADVERSE CHANGES
Our Directors confirm that up to the date of this Prospectus, there has been no material
adverse changes in our financial, operational, or trading position, indebtedness, mortgage,
contingent liabilities, guarantees or prospects since December 31, 2024, being the end of the
period reported on the Accountants’ Report included in Appendix I; and there has been no
event since December 31, 2024 and up to the date of this Prospectus which would materially
affect the information shown in the Accountants’ Report set out in Appendix I to this
Prospectus. However, our financial performance may be affected by changes in the fair value
of redemption liabilities on equity shares until their conversion into equity upon Listing.
FINANCIAL INFORMATION
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--- page 386 ---
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma adjusted consolidated net tangible assets prepared in
accordance with paragraph 4.29 of the Listing Rules and with reference to Accounting
Guideline 7 Preparation of Pro Forma Financial Information for inclusion in Investment
Circulars for illustration purposes only, and is set out here to illustrate the effect of the Global
Offering on the consolidated net tangible assets of our Group attributable to owners of the
parent as of December 31, 2024 as if the Global Offering had taken place on December 31,
2024.
Our unaudited pro forma adjusted consolidated net tangible assets has been prepared for
illustrative purpose only and, because of its hypothetical nature, it may not give a true picture
of the consolidated net tangible assets attributable to owners of the parent had the Global
Offering been completed as of December 31, 2024 or as at any future date.
Consolidated
net tangible
assets of
our Group
attributable to
owners of the
parent as of
December 31,
2024
Estimated net
Proceeds from
the Global
Offering
Estimated
impact to the
consolidated
net tangible
assets upon the
derecognition
of redemption
liabilities on
equity shares
upon Listing
Unaudited pro
forma adjusted
consolidated
net tangible
assets
attributable to
owners of the
parent as of
December 31,
2024
Unaudited pro forma
adjusted consolidated net
tangible assets attributable
to owners of the parent
per Share as of
December 31, 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4) (Note 5)
Based on an Offer
Price of HK$28.40
per Offer Share 187,328 385,053 639,805 1,212,186 8.55 9.35
Based on an Offer
Price of HK$30.60
per Offer Share 187,328 417,162 639,805 1,244,295 8.78 9.59
Notes:
1. The consolidated net tangible assets of our Group attributable to owners of the parent as of December 31, 2024
was equal to the consolidated net assets attributable to owners of the parent as of December 31, 2024 of
RMB318,750,000 after deducting goodwill of RMB95,406,000 and other intangible assets of RMB36,016,000
set out in the Accountants’ Report in Appendix I to this Prospectus.
2. The estimated net proceeds from the Global Offering are based on estimated low-end and high-end offer prices
of HK$28.40 and HK$30.60 per Share after deduction of the underwriting fees and other related expenses
payable by the Company excluding the listing expenses that had been charged to profit and loss during the
Track Record Period.
FINANCIAL INFORMATION
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3. Upon the Listing and the completion of the Global Offering, all redemption liabilities on equity shares will be
automatically derecognized. The redemption liabilities on equity shares will then be transferred from liabilities
to equity. Accordingly, for the purpose of the unaudited pro forma financial information, the unaudited pro
forma adjusted net tangible assets attributable to owners of the parent will be increased by RMB639,805,000,
being the carrying amount of the redemption liabilities on equity shares as of December 31, 2024.
4. The unaudited pro forma adjusted consolidated net tangible assets attributable to owners of the parent per
Share is arrived at after adjustments referred to in the preceding notes 2, 3 and on the basis that 141,800,000
Shares were in issue assuming the Global Offering has been completed on December 31, 2024.
5. For the purpose of this unaudited pro forma adjusted net tangible assets per Share, the balances stated in RMB
are converted into HK$ at the rate of RMB1.00 to HK$1.0934.
6. No other adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to
reflect any trading results or open transactions of our Group entered into subsequent to December 31, 2024.
FINANCIAL INFORMATION
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FUTURE PLANS
For further details of our future plans, please see the section headed “Business—Our
Strategies” in this Prospectus.
USE OF PROCEEDS
We estimate that the net proceeds of the Global Offering, after deducting the estimated
underwriting commissions and other fees and expenses payable by us in connection with the
Global Offering, will be approximately HK$411.2 million, assuming an Offer Price of
HK$29.50 per H Share.
We intend to apply such net proceeds from the Global Offering for the following
purposes:
(i) Approximately 76.4% of the net proceeds, or HK$314.0 million, will be used to
further expand our service capability and capacity by constructing our facilities in
the United States and China. The intended use of such facilities is for peptide and
oligonucleotide production.
The rationale behind our strategic choice to expand our service capability and
capacity rests on the following factors: (i) the worldwide footprint of an expanding
customer base, with 78% of our revenue originating from international clients
beyond China in 2023, (ii) the escalating number of ongoing projects, (iii) the
tremendous industry growth potential. According to Frost & Sullivan, the global
peptide CRDMO market by sales revenue grew from US$1.6 billion in 2018 to
US$3.1 billion in 2023, representing a CAGR of 14.8%, and is expected to further
grow to US$18.8 billion by 2032, representing a CAGR of 22.0% from 2023, and
the global oligonucleotide CDMO market by sales revenue grew from US$0.5
billion in 2018 to US$2.3 billion in 2023, representing a CAGR of 33.8%, and is
expected to further grow to US$18.4 billion in 2032, representing a CAGR of 26.0%
from 2023. We expect the projected growth of the global peptide CRDMO services
and oligonucleotide CDMO services market, combined with the benchmark effect of
our industry leadership, will further drive the market demand for our integrated
CRDMO services; and (iv) based on current negotiation and communication with
our customers, we expect that our project numbers will increase. Thus, it is pivotal
for us to strengthen our service capabilities and scale up production capacity in
advance so as to continue to provide high-quality services and successfully
accommodate the surge in demand for our services.
Additionally, we need to establish and maintain smaller capacity production lines,
because the product batches required by different customers can vary significantly,
ranging from milligrams to kilograms. For instance, it is impractical to utilize a
kilogram-scale purification line to purify a milligram-scale product. The costs of
maintaining small production lines are not significant. Furthermore, we cannot
utilize multiple smaller capacity production lines to produce orders of larger
FUTURE PLANS AND USE OF PROCEEDS
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volume, because the same batch product must be produced on the same production
line. First, customers often require that large quantities of products be produced in
the same batch, accompanied by a single certificate of analysis. Producing large
quantities of products across different smaller capacity lines would result in separate
batches, each batch requiring its own certificates of analysis. Second, each batch of
products needs to be inspected before release to customers. In the case of multiple
small batches from different smaller capacity lines, each small batch needs to be
separately inspected, which increases both production cost and inspection costs.
Given the expected growth of the global peptide CRDMO market, we believe that
customer demand will likely continue to increase in the coming years, and that we
should continue to expand our production capacity in preparation for the anticipated
increase in demand.
In addition to the expected significant growth in overall demand as described above,
we believe having additional manufacturing capacity is necessary due to (i) the
currently high utilization rate of our current manufacturing facilities; and (ii) the
need for larger per-batch manufacturing capacity to respond to customer demand.
Current Utilization Rate
The current utilization rates for our key production lines have reached a very
high level. We define key production lines as (i) synthesis production lines with
reactors at high capacities; and (ii) purification lines with large diameters.
According to the above criteria, we have 14 key production lines as of the Latest
Practicable Date, including six synthesis lines and eight purification lines,
accounting for nearly 90% of our total synthesis and purification capacities. These
key lines are crucial to our operations, as they manufacture some important products
of our top customers in larger production volume.
The average utilization rates for these 14 key lines reached 73.3% and 89.6%
in 2023 and 2024, respectively. Under this methodology, the monthly utilization rate
is calculated by dividing the actual days in that month that our facilities are in
operation to carry out manufacturing projects for customers (including the days for
actual manufacturing, the necessary clean-up steps, equipment maintenance and
validation, audits, production line sharing and suitability assessments, and non-
production days including public holidays that had no production arrangement)
divided by the total number of calendar days in the respective month. In some cases,
the monthly utilization rate for certain manufacturing lines could reach as high as
93.3%. For many of our CDMO projects, demand for capacity increases as projects
advance. Thus, customers typically prefer their CDMO service providers to have
sufficient buffered capacity. If the utilization rate is too high, as ours is right now,
we risk losing potential orders. Therefore, we need to establish new production
capacity.
FUTURE PLANS AND USE OF PROCEEDS
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Need for Larger Per-batch Capacity
In addition to the need for manufacturing capacity expansion to fulfill the
increasing overall customer demand, we also need to construct new manufacturing
lines with larger per-batch volume/output to meet customers’ requirement on
minimal per-batch volume which our current production lines cannot deliver. Such
need for larger per-batch volume is in part driven by customers’ own business needs,
as well as the higher unit economies and production efficiency of larger reactors
(which could lead to higher per-batch volume/output). We are discussing service
agreements with certain customers who have larger per-batch demand than what our
current manufacturing lines can deliver right now, which requires us to have new
manufacturing lines with larger reactors in order to retain and continue our business
relationship with such customers.
Conclusion
In conclusion, based on the forecasted market development, the high utilization
rates of our key production lines, and the need for larger per-batch capacity as raised
in the latest secured orders and supply agreements with customers, our current
manufacturing facilities are expected to be unable to fully satisfy the expected
increase in overall and/or per-batch customer demand. Thus, we believe our
proposed investment and use of proceeds as described in more details below is
justified.
More specifically:
(1) approximately 38.2% of the net proceeds, or HK$157.0 million, will be used
to establish our facility at Rocklin Site, the United States. In 2022, we acquired
a production facility in Rocklin, California, which occupies approximately
12,000 square meters of land, boasting a building area of approximately 4,000
square meters. We plan to complete the construction of Rocklin Site (including
installation of equipment) in the second half of 2025, which we expect will
increase our annual production capacity by approximately 100-300kg, with
five additional production lines for APIs;
 approximately 20.7%, or HK$85.2 million, to be used for the construction
of our facility at the Rocklin Site to meet the growing demand from
customers worldwide for end-to-end peptide CRDMO services and
oligonucleotide CDMO services;
FUTURE PLANS AND USE OF PROCEEDS
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--- page 391 ---
 approximately 10.9%, or HK$44.9 million, to be used to purchase
manufacturing and R&D equipment and systems for the operation of our
Rocklin Site. We plan to purchase approximately 28 sets of equipment
for GMP-compliant workshops, raw material workshops,
hydrogenation workshops, and cubic tank workshops, including
stability chambers, freezers, refrigerators, balances, synthesisers,
lyophilizers, high performance liquid chromatography systems,
liquid chromatography-mass spectrometry systems, and gas
chromatography-mass spectrometry systems;
 approximately 6.5%, or HK$26.9 million, to be used to recruit
manufacturing, R&D and management personnel for the operation of our
Rocklin Site. Specifically, we plan to use the allocated net proceeds to
recruit approximately two R&D professionals with a bachelor’s degree or
above in chemistry, pharmaceutical and other relevant fields,
approximately 30 manufacturing specialists and operators with
background in chemistry and pharmaceutical manufacturing and
approximated eight management personnels with a bachelor’s degree or
above in management and other relevant fields.
The Rocklin Site is expected to feature two synthesis production lines,
with expected per-batch production capacities per line of as high as 10kg,
respectively. Additionally, there are three planned purification production
lines, with an expected per-batch production capacities per line of as high
as 10kg. These lines are designed to meet the diverse needs of our
customers based on the stage of their product development, providing us
flexibility in meeting customer demand.
(2) approximately 19.1%, or HK$78.5 million, will be used to expand the
production capacity of our existing Qiantang Site. As of the Latest Practicable
Date, our Qiantang Site housed 19 peptide synthesis production lines ranging
from 20L to 1,000L, alongside 16 purification production lines. Our Qiantang
Site has an annual API production capacity of 500kg and per-batch production
capacity of 20kg, capable of handling multiple 100kg level purchase orders;
 approximately 8.9%, or HK$36.6 million, to be used for expanding new
production lines at Qiantang Site to meet the growing demand from
customers worldwide for end-to-end peptide CRDMO services and
oligonucleotide CDMO services. We commenced the expansion of
Qiantang Site in October 2024 and expect to complete the expansion by
the end of 2025, achieving an annual productivity of 500kg;
FUTURE PLANS AND USE OF PROCEEDS
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--- page 392 ---
 approximately 10.2%, or HK$41.9 million, to be used to purchase
additional manufacturing and R&D equipment and systems for the
operation of Qiantang Site. We plan to purchase approximately 56 sets of
equipment for GMP-compliant workshops, raw material workshops,
hydrogenation workshops, and cubic tank workshops, including freezers,
refrigerators, purified water systems, synthesizers, cleavage reactors,
high performance liquid chromatography systems, and lyophilizers;
The Qiantang Site is expected to have a total of eight new synthesis
production lines, with expected per-batch production capacities per line
of as high as 25kg, respectively. Additionally, we also plan to expand ten
new purification production lines, with an expected per-batch production
capacity per line of as high as 25kg. These lines are designed to meet the
diverse needs of our customers based on the stage of their product
development, providing us flexibility in meeting customer demand.
(3) approximately 19.1% of the net proceeds, or HK$78.5 million, will be used to
establish our facility at Hangzhou Biopharma Town Site, which will be
dedicated to research, formulation development, and pilot production of
peptide and oligonucleotide. This initiative is pivotal in our comprehensive
strategy for peptide and oligonucleotide formulation advancement. The
Hangzhou Biopharma Town Site will embody a pharmaceutical research and
production facility, featuring a ten-story main building and a three-story
podium. As of the Latest Practicable Date, the primary structural construction
of Hangzhou Biopharma Town Site had been completed. We expect the
Hangzhou Biopharma Town Site to commence operation in the second half of
2025;
 approximately 7.6%, or HK$31.4 million, to be used to purchase
manufacturing and R&D equipment and systems for the operation of our
Hangzhou Biopharma Town Site. We plan to purchase approximately 20
sets of equipment for GMP-compliant workshops, raw material
workshops, hydrogenation workshops, and cubic tank workshops,
including protein purification systems, polarimeters, ion chromatographs,
synthesizers, high performance liquid chromatography systems, and
lyophilizers;
 approximately 7.6%, or HK$31.4 million, to be used for the maintenance
and improvement of our R&D laboratories at our Hangzhou Biopharma
Town Site;
FUTURE PLANS AND USE OF PROCEEDS
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 approximately 3.8%, or HK$15.7 million, to be used recruit
manufacturing, R&D and management personnel for the operation of our
Hangzhou Biopharma Town Site. Specifically, we plan to use the
allocated net proceeds to recruit approximately 30 R&D professionals
with a bachelor’s degree or above in chemistry, pharmaceutical and other
relevant fields, approximately 10 manufacturing specialists and operators
with background in chemistry and pharmaceutical manufacturing and
approximated two management personnels with a bachelor’s degree or
above in management and other relevant fields.
(ii) Approximately 4.1% of the net proceeds, or HK$16.9 million, will be used for our
production capacity expansion in China. In addition to Qiantang Site and Hangzhou
Biopharma Town Site, we plan to construct or acquire a new production facility in
China in the next two or three years, which we expect will increase our annual
production capacity by 2,000kg. The intended use of this new production facility is
solely for GLP-1 production, which is in response to growing existing and potential
customer demand for GLP-1 products, which are approaching advanced stages of
clinical and commercial production. As of the Latest Practicable Date, we had not
identified any acquisition target or enter into any definitive investment or
acquisition agreement.
We plan to own our expanded production facilities rather than rent or lease. We
intend to select a city in major economically developed regions in China with a high
population density to acquire or construct such new facility. When selecting
potential acquisition targets, it can be an existing peptide API facility or non-peptide
API facility. We plan to also consider the following factors: (i) we plan to focus on
acquisition of tangible facilities instead of whole businesses; (ii) we plan to focus
on our search on facilities occupying approximately 33,000 sq.m. to 66,000 sq.m. in
land area; (iii) the target facilities must be able to accommodate organic synthesis
processes; (iv) the target facilities must have business sales of peptide or
oligonucleotide regardless of the size of revenue; (v) the target facility must have at
least 5-10 qualified key employees knowledgeable on the facility, its infrastructure
system, and operations; (vi) the target facilities must have established infrastructure
capable handling large scale solvents use, storage, waste collection, storage and
treatment system up to our standards, such as waste disposal, solvent supply, and
liquid raw material storage capabilities, all of which must comply with government
requirements; (vii) although we may consider facilities with different lengths of
operating history, we would require the company that operates the facility to have
at least five years of experience in the industry; (viii) we would require the
percentage of labor costs over the total cost of the facility for the part year to be no
higher than 25%, regardless of the size of revenue generated by the facility; (ix) the
target facility should have ability to bring in new business opportunities; (x) the
target facility should have good compliance track record without any material
breaches of all applicable laws and regulations since their establishments; (xi) the
target facility must have relatively clear and simple shareholding structure without
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any material litigation or arbitration proceedings; and (xii) the target facility must
have necessary permits, licenses and approvals for operating their businesses.
According to Frost & Sullivan, there are suitable acquisition targets that satisfy our
selection criteria in South China and East China, such as Chongqing or a city
selected from Jiangsu, Zhejiang or Sichuan provinces in China. We have not
identified any targets as of the Latest Practicable Date.
We also plan to purchase approximately 57 sets of equipment for GMP-compliant
workshops, raw material workshops, hydrogenation workshops, and cubic tank
workshops, including synthesisers, cleavage reactors, purified water systems, high
performance liquid chromatography systems, liquid chromatography-mass
spectrometry systems, and gas chromatography-mass spectrometry systems. In
addition, we plan to recruit approximately 10 R&D professionals with a bachelor’s
degree or above in chemistry, pharmaceutical and other relevant fields with a salary
range of RMB100,000 to RMB500,000 per year, approximately 150 manufacturing
specialists and operators with background in chemistry and pharmaceutical
manufacturing with a salary range of RMB80,000 to RMB300,000 per year, and
approximated 20 management personnels with a bachelor’s degree or above in
management and other relevant fields with a salary range of RMB200,000 to RMB1
million per year.
(iii) Approximately 9.5% of the net proceeds, or HK$39.2 million, will be used to
establish sales and after-sales service presence in more regions to enrich our
operations worldwide and enlarge our customer pool. We plan to establish sales and
after-sales service offices in Europe.
(iv) Approximately 10.0% of the net proceeds, or HK$41.1 million, will be used for our
working capital and other general corporate purposes.
To the extent that our net proceeds are not sufficient to fund the purposes set out above,
we intend to fund the balance through a variety of means, including cash generated from
operations, bank loans and other borrowings.
If the net proceeds of the Global Offering are not immediately applied to the above
purposes, we will only deposit those net proceeds into short-term interest-bearing accounts at
licensed commercial banks and/or other authorized financial institutions (as defined under the
SFO or applicable laws and regulations in other jurisdictions).
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OVERALL COORDINATORS AND JOINT GLOBAL COORDINATORS
Morgan Stanley Asia Limited
CLSA Limited
HONG KONG UNDERWRITERS
Morgan Stanley Asia Limited
CLSA Limited
(in alphabetical order)
China Everbright Securities (HK) Limited
Prime Securities Limited
Soochow Securities International Brokerage Limited
Aristo Securities Limited
HONG KONG UNDERWRITING ARRANGEMENTS
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, our Company is offering initially
1,680,000 Hong Kong Offer Shares (subject to adjustment) for subscription by the public in
Hong Kong at the Offer Price on and subject to the terms and conditions of this Prospectus.
Subject to (a) the Stock Exchange granting approval for the listing of, and permission to
deal in, the H Shares to be converted from the Unlisted Shares and to be issued pursuant to the
Global Offering as mentioned in this Prospectus and (b) certain other conditions set out in the
Hong Kong Underwriting Agreement, the Hong Kong Underwriters have severally agreed to
subscribe or procure subscriptions for their respective applicable proportions of the Hong Kong
Offer Shares now being offered but which are not taken up under the Hong Kong Public
Offering on the terms and conditions set out in this Prospectus and the Hong Kong
Underwriting Agreement.
The Hong Kong Underwriting Agreement is conditional on and subject to the
International Underwriting Agreement having been signed and becoming unconditional and not
having been terminated in accordance with its terms.
UNDERWRITING
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Grounds for Termination
The Joint Sponsors and the Overall Coordinators (for themselves and on behalf of the
Hong Kong Underwriters) shall be entitled by notice (in writing) to our Company to terminate
the Hong Kong Underwriting Agreement with immediate effect if prior to the time being 90
minutes before the trading of the H Shares first commences on the Stock Exchange:
(a) there shall develop, occur, exist or come into effect:
(i) any event or a series of local, national, regional or international event(s) or
circumstance(s) in the nature of force majeure (including any acts of
government, declaration of a national, regional or international emergency or
war, calamity, crisis, epidemic and pandemic, or interruption or delay in
transportation, outbreak, escalation, mutation or aggravation of disease,
economic sanctions, labour disputes, strikes, lock-outs, fire, explosion,
flooding, tsunami, earthquake, volcanic eruption, civil commotion, riots,
public disorder, acts of war, outbreak or escalation of hostilities (whether or
not war is declared), acts of God or acts of terrorism (whether or not
responsibility has been claimed)) in or directly or indirectly affecting Hong
Kong, the PRC, the United States, the United Kingdom, Australia, the
European Union (or any member thereof) or any other jurisdiction relevant to
our Group (collectively, the “ Relevant Jurisdictions ”); or
(ii) any change, or any development involving a prospective change, or any event
or series of events or circumstance resulting or representing any change or
development involving a prospective change, in any local, national, regional or
international financial, economic, political, military, industrial, legal, fiscal,
regulatory, currency, credit or market conditions, exchange control or any
monetary or trading settlement system (including conditions in the stock and
bond markets, money and foreign exchange markets, the interbank markets and
credit markets) in or directly or indirectly affecting any Relevant Jurisdictions;
or
(iii) any moratorium, suspension or restriction (including any imposition of or
requirement for any minimum or maximum price limit or price range) in or on
trading in securities generally on the Stock Exchange, the Shanghai Stock
Exchange, the Shenzhen Stock Exchange, the New Y ork Stock Exchange, the
NASDAQ Global Market or the London Stock Exchange; or
(iv) any general moratorium on commercial banking activities in Hong Kong
(imposed by the Financial Secretary or the Hong Kong Monetary Authority or
other competent Authority (as defined in the Hong Kong Underwriting
Agreement)), the PRC, New Y ork (imposed at the U.S. Federal or New Y ork
State level or other competent Authority), London, the European Union (or any
UNDERWRITING
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member thereof) or any other Relevant Jurisdiction, or any disruption in
commercial banking or foreign exchange trading or securities settlement or
clearance services, procedures or matters in any Relevant Jurisdiction; or
(v) any new Law (as defined in the Hong Kong Underwriting Agreement), or any
change or any development involving a prospective change or any event or
circumstance likely to result in a change or a development involving a
prospective change in (or in the interpretation or application by any court or
other competent Authority of) existing Laws, in each case, in or affecting any
of the Relevant Jurisdictions; or
(vi) the imposition of sanctions, in whatever form, directly or indirectly, under any
sanction Laws or regulations, or the withdrawal of trading privileges which
existed on the date of the Hong Kong Underwriting Agreement in, Hong Kong,
the PRC or any other Relevant Jurisdiction; or
(vii) a change or development involving a prospective change in or affecting Taxes
(as defined in the Hong Kong Underwriting Agreement) or exchange control,
currency exchange rates or foreign investment regulations (including a
material devaluation of the Hong Kong dollar or RMB against any foreign
currencies and a change in the system under which the value of the Hong Kong
currency is linked to that of the currency of the United States), or the
implementation of any exchange control, in any of the Relevant Jurisdictions;
or
(viii) any litigation, dispute, legal action or claim, regulatory investigation or action
of any third party being threatened or instigated against any member of our
Group or any Director or Supervisor; or
(ix) a contravention by any member of our Group or any Director or Supervisor of
the Listing Rules or applicable Laws; or
(x) non-compliance of this Prospectus (or any other documents used in connection
with the contemplated offer and sale of the Offer Shares) or any aspect of the
Global Offering with the Listing Rules or any other applicable Laws; or
(xi) other than with the prior written consent of the Joint Sponsors and the Overall
Coordinators, the issue or requirement to issue by our Company of any
supplement or amendment to this Prospectus (or to any other documents issued
or used in connection with the contemplated offer and sale of the H Shares)
pursuant to the Companies Ordinance or the Companies (Winding Up and
Miscellaneous Provisions) Ordinance or the Listing Rules or any requirement
or request of the Stock Exchange and/or the SFC; or
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(xii) any change or development involving a prospective change in, or a
materialization of, any of the risks set out in the section headed “Risk Factors”
of this Prospectus; or
(xiii) a valid demand by any creditor for repayment or payment of any indebtedness
of any member of our Group or in respect of which any member of our Group
is liable prior to its stated maturity or any loss or damage sustained by that
member of our Group (howsoever caused and whether or not the subject of any
insurance or claim against any person); or
(xiv) any member of the senior management of our Company as named in this
Prospectus vacating his or her office; or
(xv) any order or petition for the winding up or liquidation of any member of our
Group (other than our Company) or any composition or arrangement made by
any member of our Group (other than our Company) with its creditors or a
scheme of arrangement entered into by any member of our Group (other than
our Company) or any resolution for the winding-up of any member of our
Group (other than our Company) or the appointment of a provisional
liquidator, receiver or manager over all or part of the material assets or
undertaking of any member of our Group (other than our Company) or
anything analogous thereto occurring in respect of any member of our Group
(other than our Company); or
(xvi) any non-compliance of this Prospectus, the CSRC Filings (as defined in the
Hong Kong Underwriting Agreement) or any other documents used in
connection with the contemplated subscription and sale of the Offer Shares or
any aspect of the Global Offering with any applicable Laws (including, without
limitation, the Listing Rules, the Companies Ordinance, the Companies
(Winding Up and Miscellaneous Provisions) Ordinance, and the CSRC Rules)
(as defined in the Hong Kong Underwriting Agreement)),
which, individually or in the aggregate, in the sole and absolute opinion of the Joint
Sponsors and the Overall Coordinators (for themselves and on behalf of the Hong
Kong Underwriters) (1) has or will have or may have a material adverse effect on
the assets, liabilities, business, general affairs, management, prospects,
shareholders’ equity, profits, losses, results of operations, position or condition,
financial or otherwise, or performance of our Group as a whole; or (2) has or will
have or may have a material adverse effect on the success or marketability of the
Global Offering or the level of applications or the distribution of the Offer Shares
under the Hong Kong Public Offering or the level of interest under the International
Offering; or (3) makes or will make or may make it inadvisable, inexpedient,
impracticable or incapable for any part of the Hong Kong Underwriting Agreement,
or any part of the Hong Kong Public Offering or the Global Offering, or the delivery
of the Offer Shares, to be performed or implemented or to proceed or to market the
UNDERWRITING
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Global Offering in the manner contemplated by this Prospectus; or (4) has, will have
or may have the effect of making any part of the Hong Kong Underwriting
Agreement (including underwriting of the Hong Kong Public Offering and/or the
Global Offering) impracticable or incapable of performance in accordance with its
terms or preventing or delaying the processing of applications and/or payments
pursuant to the Global Offering or pursuant to the underwriting thereof; or
(b) there has come to the notice of the Joint Sponsors and the Overall Coordinators:
(i) that any statement contained in any of the Offering Documents (as defined in
the Hong Kong Underwriting Agreement), the formal notice, the OC
Announcement (as defined in the Hong Kong Underwriting Agreement), the
Final Offering Circular (as defined in the Hong Kong Underwriting
Agreement), and/or in any notices, announcements, advertisements,
communications or other documents issued or used by or on behalf of our
Company in connection with the Hong Kong Public Offering ((including any
supplement or amendment thereto) (collectively, the “ Offer Related
Documents ”) was, when it was issued, or has become, untrue, inaccurate or
incorrect in any material respect or misleading, or that any forecast, estimate,
expression of opinion, intention or expectation contained in any of the Offer
Related Documents is not fair and honest made on reasonable grounds or,
where appropriate, and based on reasonable assumptions with reference to the
facts and circumstances then subsisting; or
(ii) that any matter has arisen or has been discovered which would, had it arisen
or been discovered immediately before the date of this Prospectus, constitute
a material omission from, or misstatement in, any of the Offer Related
Documents (including any supplement or amendment thereto); or
(iii) any breach of any of the obligations imposed upon any party to the Hong Kong
Underwriting Agreement, the International Underwriting Agreement or the
Cornerstone Investment Agreements (other than upon any of the Joint
Sponsors, the Sponsor-Overall Coordinators, the Overall Coordinators, the
Joint Global Coordinators, the Hong Kong Underwriters or the International
Underwriters); or
(iv) any event, act or omission which gives or is likely to give rise to any liability
of any of the Indemnifying Parties (as defined in the Hong Kong Underwriting
Agreement) pursuant to the indemnities given by any of them under the Hong
Kong Underwriting Agreement; or
(v) any Material Adverse Change (as defined in the Hong Kong Underwriting
Agreement); or
UNDERWRITING
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(vi) any breach of, or any event or circumstance rendering untrue, inaccurate,
incorrect, incomplete or misleading in any respect, any of the representations,
warranties and undertakings given by the Warrantors (as defined in the Hong
Kong Underwriting Agreement) in the Hong Kong Underwriting Agreement or
the International Underwriting Agreement, as applicable; or
(vii) the chairwoman of the Board, or any Director vacating his or her office; or
(viii) a prohibition applicable to our Company, any of the Underwriters and/or any
of the foregoing’s respective affiliates for whatever reason from offering,
allotting, issuing or selling any of the H Shares pursuant to the terms of the
Global Offering; or
(ix) that approval by the Listing Committee of the Stock Exchange of the listing of,
and permission to deal in the H Shares to be issued or sold under the Global
Offering is refused or not granted, other than subject to customary conditions,
on or before the Listing Date, or if granted, the approval is subsequently
withdrawn, qualified (other than by customary conditions) or withheld; or
(x) the Company withdraws any of the Offer Related Documents or the Global
Offering; or
(xi) any person (other than the Joint Sponsors) has withdrawn its consent to being
named in this Prospectus or to the issue of any of the Hong Kong Public
Offering Documents; or
(xii) a Director or a Supervisor or a member of our Company’s senior management
as named in this Prospectus being charged with an indictable offense or
prohibited by operation of Law or otherwise disqualified from taking part in
the management or taking directorship of a company; or
(xiii) an Authority or a political body or organisation in any Relevant Jurisdiction
(including, in particular, the CSRC and its local branches and representative
offices) commencing any investigation or other action, or announcing an
intention to investigate or take other action, against any member of our Group
or any Director or Supervisor or a member of our Company’s senior
management as named in this Prospectus; or
(xiv) any order or petition for the winding up or liquidation of our Company or any
composition or arrangement made by our Company with its creditors or a
scheme of arrangement entered into by our Company or any resolution for the
winding-up of our Company or the appointment of a provisional liquidator,
receiver or manager over all or part of the material assets or undertaking of our
Company or anything analogous thereto occurring in respect of our Company;
or
UNDERWRITING
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(xv) that a material portion of the orders placed or confirmed in the bookbuilding
process, or the investment commitments made by any cornerstone investors
under agreements signed with such cornerstone investors, have been
withdrawn, terminated or cancelled.
UNDERTAKINGS TO THE STOCK EXCHANGE PURSUANT TO THE LISTING
RULES
Undertakings by our Controlling Shareholders
Pursuant to Rule 10.07 of the Listing Rules, our Controlling Shareholders have
undertaken to each of the Stock Exchange, the Joint Sponsors and the Overall Coordinators and
to our Company that, save as disclosed in this Prospectus and except pursuant to the Global
Offering, they will not, and will procure that the relevant registered holder(s) (if any) of our
Shares in which they have a beneficial interest will not without the prior written consent of the
Stock Exchange or unless otherwise in compliance with the applicable requirement of the
Listing Rules:
(a) at any time in the period commencing on the date by reference to which disclosure
of their shareholdings in our Company is made in this Prospectus and ending on the
date which is six months from the Listing Date, dispose of, nor enter into any
agreement to dispose of or otherwise create any options, rights, interests or
encumbrances in respect of any Shares in respect of which our Controlling
Shareholders are shown in this Prospectus to be the beneficial owners; and
(b) at any time in the period of six months commencing from the date on which the
period referred to in the above paragraph (a) expires, dispose of, nor enter into any
agreement to dispose of or otherwise create any options, rights, interests or
encumbrances in respect of any Shares to such extent that, immediately following
such disposal or upon the exercise or enforcement of such options, rights, interests
or encumbrances, our Controlling Shareholders will, directly or indirectly cease to
be our Controlling Shareholders, provided that the above shall not prevent them
from using securities of our Company beneficially owned by them as security
(including a charge or a pledge) in favor of an authorized institution (as defined in
the Banking Ordinance (Chapter 155 of the laws of Hong Kong) for a bona fide
commercial loan.
UNDERWRITING
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Pursuant to Note 3 to Rule 10.07(2) of the Listing Rules, our Controlling Shareholders
have further undertaken to the Stock Exchange and our Company respectively that within the
period commencing from the date by reference to which disclosure of their shareholdings in
our Company is made in this Prospectus and ending on the date which is 12 months from the
Listing Date, they will immediately inform our Company and the Stock Exchange in writing
of:
(i) any pledge(s) or charge(s) of any Shares or securities of our Company beneficially
owned by them directly or indirectly in favor of an authorized institution (as defined
in the Banking Ordinance (Chapter 155 of the Laws of Hong Kong)) for a bona fide
commercial loan as permitted under the Listing Rules, and the number of such
Shares or securities of our Company so pledged or charged; and
(ii) any indication(s) received by it, either verbal or written, from any pledgee or
chargee of any Shares or other securities of our Company pledged or charged that
any of such Shares or other share capital will be sold, transferred or disposed of.
We will also inform the Stock Exchange as soon as we have been informed of the above
matters (if any) by our Controlling Shareholders and disclose such matters in accordance with
the publication requirements under Rule 2.07C of the Listing Rules as soon as possible after
being so informed by our Controlling Shareholders.
UNDERTAKINGS PURSUANT TO THE HONG KONG UNDERWRITING
AGREEMENT
Undertaking by our Company
Except for the offer and sale of the Offer Shares pursuant to the Global Offering or
otherwise in compliance with the Listing Rules (including, among others, Rule 10.08 of the
Listing Rules), during the period commencing on the date of the Hong Kong Underwriting
Agreement and ending on, and including, the date that is six months after the Listing Date (the
“First Six-Month Period ”), our Company undertakes to each of the Joint Sponsors, the
Sponsor-OCs, the Overall Coordinators, the Joint Global Coordinators, the Joint Bookrunners,
the Joint Lead Managers, the Capital Market Intermediaries and the Hong Kong Underwriters
not to, and to procure each other member of our Group not to, without the prior written consent
of the Joint Sponsors and the Overall Coordinators (for themselves and on behalf of the Hong
Kong Underwriters):
(a) offer, allot, issue, sell, accept subscription for, offer to allot, issue or sell, contract
or agree to allot, issue or sell, mortgage, charge, pledge, hypothecate, lend, grant or
sell any option, warrant, contract or right to subscribe for or purchase, grant or
purchase any option, warrant, contract or right to allot, issue or sell, or otherwise
transfer or dispose of or create an Encumbrance (as defined in the Hong Kong
Underwriting Agreement) over, or agree to transfer or dispose of or create an
Encumbrance over, either directly or indirectly, conditionally or unconditionally, or
UNDERWRITING
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repurchase, any legal or beneficial interest in any Shares or other securities of our
Company, as applicable, or any interest in any of the foregoing (including any
securities convertible into or exchangeable or exercisable for or that represent the
right to receive, or any warrants or other rights to purchase, any Shares), or deposit
any Shares or other securities of our Company, as applicable, with a depositary in
connection with the issue of depositary receipts; or
(b) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership (legal or beneficial) of any
Shares or other securities of our Company, as applicable, or any interest in any of
the foregoing (including any securities convertible into or exchangeable or
exercisable for or that represent the right to receive, or any warrants or other rights
to purchase, any Shares or any shares or other securities of such other member of
our Group, as applicable); or
(c) enter into any transaction with the same economic effect as any transaction specified
in (a) or (b) above; or
(d) offer to or agree to or announce any intention to effect any transaction specified in
(a), (b) or (c) above,
in each case, whether any of the transactions specified in (a), (b) or (c) above is to be settled
by delivery of Shares or other securities of our Company, as applicable, or in cash or otherwise
(whether or not the issue of such Shares or other securities of our Company will be completed
within the First Six-Month Period).
In the event that, during the period of six months commencing on the date on which the
First Six-Month Period expires (the “ Second Six-Month Period ”), our Company enters into
any of the transactions specified in (a), (b) or (c) above or offers to or agrees to or announces
any intention to effect any such transaction, our Company shall take all reasonable steps to
ensure that it will not create a disorderly or false market in the securities of our Company.
Each of Dr. Xu, Healthy Angel, Qikang International and Hangzhou Haiding (together,
the “ Warranting Shareholders ”) undertakes to each of the Joint Sponsors, the Sponsor-
Overall Coordinators, the Overall Coordinators, the Joint Global Coordinators, the Joint Lead
Managers, the Joint Bookrunners, the Capital Market Intermediaries and the Hong Kong
Underwriters to procure our Company and each other member of our Group to comply with the
undertakings.
UNDERWRITING
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Undertaking by the Warranting Shareholders
Each of the Warranting Shareholders jointly and severally undertakes to each of our
Company, the Joint Sponsors, the Sponsor-Overall Coordinators, the Overall Coordinators, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Capital Market
Intermediaries and the Hong Kong Underwriters that, except pursuant to the Global Offering,
without the prior written consent of the Joint Sponsors and the Overall Coordinators (for
themselves and on behalf of the Hong Kong Underwriters) and unless in compliance with the
requirements of the Listing Rules and applicable Laws:
(a) she/it will not, and will procure that the relevant registered holder(s), any nominee
or trustee holding on trust for her/it and the companies controlled by her/it will not,
at any time during the First Six-Month Period, (i) sell, offer to sell, contract or agree
to sell, mortgage, charge, pledge, hypothecate, lend, grant or sell any option,
warrant, contract or right to purchase, grant or purchase any option, warrant,
contract or right to sell, grant or agree to grant any option, right or warrant to
purchase or subscribe for, lend or otherwise transfer or dispose of or create an
Encumbrance over, or agree to transfer or dispose of or create an Encumbrance over,
either directly or indirectly, conditionally or unconditionally, any Shares or other
securities of our Company or any legal or beneficial interest therein (including any
securities convertible into or exchangeable or exercisable for or that represent the
right to receive, or any warrants or other rights to purchase, any Shares (the
“Locked-up Securities ”)), or deposit any Shares or other securities of our Company
with a depositary in connection with the issue of depositary receipts, or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in part, any
of the economic consequences of ownership of any Locked-up Securities, or (iii)
enter into any transaction with the same economic effect as any transaction specified
in (i) or (ii) above, or (iv) offer to or agree to or announce any intention to effect
any transaction specified in (i), (ii) or (iii) above, in each case, whether any of the
transactions specified in (i), (ii) or (iii) above is to be settled by delivery of Shares
or other securities of our Company or in cash or otherwise (whether or not the
settlement or delivery of such Shares or other securities will be completed within the
First Six-Month Period or the Second Six Month Period);
(b) she/it will not, during the Second Six-Month Period, enter into any of the
transactions specified in (a) above or offer to or agree to or contract or publicly
announce any intention to effect any such transaction if, immediately following any
sale, transfer or disposal or upon the exercise or enforcement of any option, right,
interest or Encumbrance pursuant to such transaction, another shareholder or person
holding the beneficial interests in the Shares or securities of our Company becoming
a “controlling shareholder” (as the term is defined in the Listing Rules) of our
Company;
UNDERWRITING
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(c) until the expiry of the Second Six-Month Period, in the event that she/it enters into
any of the transactions specified in paragraph (a) (i), (ii) or (iii) above or offer to
or agrees to or announces any intention to effect any such transaction, she/it will
take all reasonable steps to ensure that he/she/it will not create a disorderly or false
market in the securities of our Company;
(d) at any time during the First Six-Month Period and the Second Six-Month Period,
she/it will, and will procure that the relevant registered holder, any nominee or
trustee holding on trust for her/it or controlled by her/it will (i) if and when she/it
pledges or charges any Locked-up Securities, immediately inform our Company, the
Joint Sponsors and the Overall Coordinators in writing of such pledge or charge
together with the number of Shares or other securities of our Company so pledged
or charged; and (ii) if and when he/she/it or any relevant registered holder receives
indications, either verbal or written, from any pledgee or chargee that any of the
pledged or charged Shares or other securities (or interest therein) of our Company
will be disposed of, immediately inform our Company, the Joint Sponsors and the
Overall Coordinators in writing of such indications.
Our Company undertakes to the Overall Coordinators, the Joint Sponsors and the Hong
Kong Underwriters that upon receiving such information in writing from any of the Warranting
Shareholders, it will, as soon as practicable and if required pursuant to the Listing Rules, notify
the Stock Exchange and make a public disclosure in relation to such information by way of an
announcement.
For the avoidance of doubt, the lock-up arrangements with the Warranting Shareholders
referred to above shall not prevent any of the Warranting Shareholders from (a) using the
Shares or other securities of our Company (or any interest therein) beneficially owned by them
respectively as security (including a charge or a pledge) in favour of an authorized institution
(as defined in the Banking Ordinance) for a bona fide commercial loan; and (b) purchasing
additional Shares or other securities of our Company or any interest therein or dispose of
Shares or other securities of our Company (or any interest therein) which are purchased in the
First Six-Month Period and the Second Six-Month Period, provided that such purchase does
not contravene the compliance by our Company with the requirement of Rule 8.08 of the
Listing Rules to maintain an open market in the securities and a sufficient public float in the
Shares.
INTERNATIONAL OFFERING
International Underwriting Agreement
In connection with the International Offering, it is expected that we will enter into the
International Underwriting Agreement with, among others, the Overall Coordinators and the
International Underwriters. Under the International Underwriting Agreement, the International
Underwriters, subject to certain conditions set out therein, will agree severally to purchase, or
UNDERWRITING
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procure subscribers or purchasers for, the International Offer Shares being offered pursuant to
the International Offering. Please see the paragraph headed “Structure of the Global
Offering—The International Offering” in this Prospectus.
COMMISSIONS AND EXPENSES
The Underwriters will receive an underwriting commission (the “ Underwriting
Commission ”) of 3.5% of the aggregate Offer Price of all the Offer Shares, out of which they
will pay any sub-underwriting commissions and other fees. The Underwriters may receive a
discretionary incentive fee (the “ Discretionary Fee ”) of up to 1.5% of the aggregate Offer
Price of all the Offer Shares to be issued by the Company under the Global Offering.
As of the date of this Prospectus, the allocation of a portion of the Underwriting
Commission remains subject to the Company’s discretion. Accordingly, the unallocated portion
of the Underwriting Commission will be regarded as discretionary fees for the purpose of the
Listing Rules. The ratio of the fixed fee and discretionary fee (as classified under and for the
purpose of Rule 3A.34 of the Listing Rules) payable by the Company to all syndicate members
is expected to be approximately 61:39 (assuming the Discretionary Fee will be paid in full).
For unsubscribed Hong Kong Offer Shares reallocated to the International Offering, we
will pay an underwriting commission at the rate applicable to the International Offering and
such commission will be paid to the relevant International Underwriters and not the Hong Kong
Underwriters.
Each of the Joint Sponsors is entitled to a sponsor fee in the amount of US$500,000.
The aggregate commissions and fees, together with the listing fees, SFC transaction levy,
the Stock Exchange trading fee, AFRC transaction levy, legal and other professional fees,
printing and other expenses payable by us relating to the Global Offering are estimated to
amount to approximately RMB77.2 million (approximately HK$84.4 million) in total (based on
the Offer Price of HK$29.50 per Offer Share which is the mid-point of the Offer Price range).
HONG KONG UNDERWRITERS’ INTERESTS IN OUR COMPANY
Save for their respective obligations under the Hong Kong Underwriting Agreement and
the International Underwriting Agreement, as of the Latest Practicable Date, none of the Hong
Kong Underwriters has any shareholding interest in any member of our Group or any right or
option (whether legally enforceable or not) to purchase or subscribe for or to nominate persons
to purchase or subscribe for securities in any member of our Group.
Following the completion of the Global Offering, the Hong Kong Underwriters and their
affiliated companies may hold a certain portion of the Shares as a result of fulfilling their
obligations under the Hong Kong Underwriting Agreement and/or the International
Underwriting Agreement.
UNDERWRITING
– 397 –


--- page 407 ---
JOINT SPONSORS’ INDEPENDENCE
Each of the Joint Sponsors satisfies the independence criteria set out in Rule 3A.07 of the
Listing Rules.
ACTIVITIES BY SYNDICATE MEMBERS
The Hong Kong Underwriters and the International Underwriters (together, the
“Syndicate Members ”) and their affiliates may each individually undertake a variety of
activities (as further described below) which do not form part of the underwriting process.
The Syndicate Members and their affiliates are diversified financial institutions with
relationships in countries around the world. These entities engage in a wide range of
commercial and investment banking, brokerage, funds management, trading, hedging,
investing and other activities for their own account and for the account of others. In the
ordinary course of their various business activities, the Syndicate Members and their respective
affiliates may purchase, sell or hold a broad array of investments and actively trade securities,
derivatives, loans, commodities, currencies, credit default swaps and other financial
instruments for their own account and for the accounts of their customers. Such investment and
trading activities may involve or relate to assets, securities and/or instruments our Company
and/or persons and entities with relationships with our Company and may also include swaps
and other financial instruments entered into for hedging purposes in connection with our
Group’s loans and other debt.
In relation to the H Shares, the activities of the Syndicate Members and their affiliates
could include acting as agent for buyers and sellers of the H Shares, entering into transactions
with those buyers and sellers in a principal capacity, including as a lender to initial purchasers
of the H Shares (which financing may be secured by the Shares) in the Global Offering,
proprietary trading in the H Shares, and entering into over the counter or listed derivative
transactions or listed or unlisted securities transactions (including issuing securities such as
derivative warrants listed on a stock exchange) which have as their underlying assets, assets
including the H Shares. Such transactions may be carried out as bilateral agreements or trades
with selected counterparties. Those activities may require hedging activity by those entities
involving, directly or indirectly, the buying and selling of the H Shares, which may have a
negative impact on the trading price of the H Shares. Activities could occur in Hong Kong and
elsewhere in the world and may result in the Syndicate Members and their affiliates holding
long and/or short positions in the H Shares, in baskets of securities or indices including the
Shares, in units of funds that may purchase the Shares, or in derivatives related to any of the
foregoing.
In relation to issues by Syndicate Members or their affiliates of any listed securities
having the H Shares as their underlying securities, whether on the Stock Exchange or on any
other stock exchange, the relevant rules of the exchange may require the issuer of those
securities (or one of its affiliates or agents) to act as a market maker or liquidity provider in
the security, and this will also result in hedging activity in the Shares in most cases.
UNDERWRITING
– 398 –


--- page 408 ---
Such activities may affect the market price or value of the Shares, the liquidity or trading
volume in the Shares and the volatility of the price of the Shares, and the extent to which this
occurs from day to day cannot be estimated.
It should be noted that when engaging in any of these activities, the Syndicate Members
will be subject to certain restrictions, including the following:
(a) the Syndicate Members must not, in connection with the distribution of the Offer
Shares, effect any transactions (including issuing or entering into any option or other
derivative transactions relating to the Offer Shares) whether in the open market or
otherwise, with a view to stabilizing or maintaining the market price of any of the
Offer Shares at levels other than those which might otherwise prevail in the open
market; and
(b) the Syndicate Members must comply with all applicable laws and regulations,
including the market misconduct provisions of the SFO, including the provisions
prohibiting insider dealing, false trading, price rigging and stock market
manipulation.
Certain of the Syndicate Members or their respective affiliates have provided from time
to time, and expect to provide in the future, investment banking, derivative and other services
to our Company and its affiliates for which such Syndicate Members or their respective
affiliates have received or will receive customary fees and commissions.
UNDERWRITING
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--- page 409 ---
THE GLOBAL OFFERING
This Prospectus is published in connection with the Hong Kong Public Offering as part
of the Global Offering. The listing of the H Shares on the Stock Exchange is sponsored by the
Joint Sponsors and the Global Offering is managed by the Overall Coordinators. The Joint
Sponsors have made an application on behalf of our Company to the Stock Exchange for the
listing of, and permission to deal in, the H Shares to be converted from the Unlisted Shares and
to be issued as mentioned in this Prospectus.
The Global Offering consists of (subject to reallocation):
(i) The Hong Kong Public Offering of initially 1,680,000 Offer Shares (subject to
reallocation as mentioned below) in Hong Kong as described in the paragraph
headed “The Hong Kong Public Offering” in this section; and
(ii) the International Offering of initially 15,120,000 Offer Shares (subject to
reallocation as mentioned below) outside the United States in offshore transactions
in reliance on Regulation S.
The Offer Shares will represent approximately 11.8% of the total issued share capital of
our Company immediately after completion of the Global Offering.
Investors may either:
(i) apply for the Hong Kong Offer Shares under the Hong Kong Public Offering; or
(ii) apply for or indicate an interest, if qualified to do so, for the International Offer
Shares under the International Offering,
but may not do both.
The Hong Kong Public Offering is open to members of the public in Hong Kong as well
as to institutional and professional investors in Hong Kong. The International Offering will
involve selective marketing of the International Offer Shares to institutional and professional
investors and other investors expected to have a sizable demand for the International Offer
Shares in Hong Kong and other jurisdictions outside the United States in offshore transactions
in reliance on Regulation S. The International Underwriters and the Joint Bookrunners are
soliciting from prospective investors’ indications of interest in acquiring the International
Offer Shares. Prospective investors will be required to specify the number of International
Offer Shares under the International Offering they would be prepared to acquire either at
different prices or at a particular price.
The number of Hong Kong Offer Shares and International Offer Shares to be offered
under the Hong Kong Public Offering and the International Offering respectively may be
subject to reallocation as described in the paragraph headed “The Hong Kong Public Offering
– Reallocation and Clawback” in this section.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 410 ---
THE HONG KONG PUBLIC OFFERING
Number of Shares Initially Offered
Subject to reallocation as mentioned below, our Company is initially offering 1,680,000
H Shares at the Offer Price under the Hong Kong Public Offering for subscription by the public
in Hong Kong, representing approximately 10.0% of the 16,800,000 H Shares initially
available under the Global Offering. Subject to reallocation as mentioned below, the number
of H Shares initially offered under the Hong Kong Public Offering will represent
approximately 1.2% of our total issued share capital immediately after completion of the
Global Offering.
In Hong Kong, individual retail investors are expected to apply for the Hong Kong Offer
Shares through the Hong Kong Public Offering and individual retail investors, including
individual investors in Hong Kong applying through banks and other institutions, seeking
International Offer Shares will not be allotted International Offer Shares in the International
Offering.
The Overall Coordinators (for themselves and on behalf of the Underwriters) and the Joint
Sponsors may require any investor who has been offered H Shares under the International
Offering, and who has made an application under the Hong Kong Public Offering to provide
sufficient information to the Overall Coordinators and the Joint Sponsors so as to allow them
to identify the relevant applications under the Hong Kong Public Offering and to ensure that
it is excluded from any application for the Hong Kong Offer Shares.
Completion of the Hong Kong Public Offering is subject to the conditions set out in the
paragraph headed “Conditions of the Global Offering” in this section.
Allocation
For allocation purposes only, the 1,680,000 H Shares initially being offered for
subscription under the Hong Kong Public Offering (after taking into account any reallocation
in the number of Offer Shares allocated between the Hong Kong Public Offering and the
International Offering) will be divided equally (with any odd lots being allocated to pool A)
into two pools: Pool A and Pool B, both of which are available on an equitable basis to
successful applicants. All valid applications that have been received for the Hong Kong Offer
Shares with a total subscription amount (excluding brokerage, SFC transaction levy, the Stock
Exchange trading fee and AFRC transaction levy) of HK$5 million or below will fall into Pool
A and all valid applications that have been received for the Hong Kong Offer Shares with a
total subscription amount (excluding brokerage, SFC transaction levy, Stock Exchange trading
fee and AFRC transaction levy) of over HK$5 million and up to the total value of Pool B, will
fall into Pool B.
Applicants should be aware that applications in Pool A and Pool B are likely to receive
different allocation ratios. If the Hong Kong Offer Shares in one pool (but not both pools) are
under-subscribed, the surplus Hong Kong Offer Shares will be transferred to the other pool to
STRUCTURE OF THE GLOBAL OFFERING
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--- page 411 ---
satisfy demand in that other pool and be allocated accordingly. Applicants can only receive an
allocation of Hong Kong Offer Shares from either Pool A or Pool B but not from both pools
and only apply for Hong Kong Offer Shares in either Pool A or Pool B. When there is
over-subscription, allocation of Hong Kong Offer Shares to investors under the Hong Kong
Public Offering, both in relation to Pool A and Pool B, will be based on the level of valid
applications received under the Hong Kong Public Offering. The basis of allocation in each
pool may vary, depending on the number of Hong Kong Offer Shares validly applied for by
each applicant. The allocation of Hong Kong Offer Shares could, where appropriate, consist of
balloting, which would mean that some applicants may receive a higher allocation than others
who have applied for the same number of Hong Kong Offer Shares and those applicants who
are not successful in the ballot may not receive any Hong Kong Offer Shares.
Reallocation and Clawback
The allocation of Offer Shares between the Hong Kong Public Offering and the
International Offering is subject to reallocation. Paragraph 4.2 of Practice Note 18 of the
Listing Rules requires a clawback mechanism to be put in place which would have the effect
of increasing the number of Offer Shares under the Hong Kong Public Offering to a certain
percentage of the total number of Offer Shares offered under the Global Offering if the
International Offer Shares are fully subscribed or oversubscribed and certain prescribed total
demand levels under the Hong Kong Public Offering are reached.
If the number of Shares validly applied for in the Hong Kong Public Offering represents
(i) 15 times or more but less than 50 times, (ii) 50 times or more but less than 100 times, and
(iii) 100 times or more, of the number of Hong Kong Offer Shares available under the Hong
Kong Public Offering, the total number of Hong Kong Offer Shares available under the Hong
Kong Public Offering will be increased to 5,040,000 (in the case of (i)), 6,720,000 (in the case
of (ii)), and 8,400,000 Shares (in the case of (iii)), respectively, representing approximately
30%, 40%, and 50% of the total number of Offer Shares initially available under the Global
Offering, respectively.
In each case, the additional Offer Shares reallocated to the Hong Kong Public Offering
will be allocated between pool A and pool B and the number of Offer Shares allocated to the
International Offering will be correspondingly reduced in such manner as the Overall
Coordinators deem appropriate.
In addition to any mandatory reallocation required as described above, the Offer Shares
to be offered in the Hong Kong Public Offering and the Offer Shares to be offered in the
International Offering may, in certain circumstances, be reallocated between these offerings at
the discretion of the Overall Coordinators. The Overall Coordinators may, at their sole
discretion, reallocate Offer Shares initially allocated for the International Offering to the Hong
Kong Public Offering to satisfy valid applications under the Hong Kong Public Offering. In
particular, if (i) the International Offering is not fully subscribed and the Hong Kong Public
Offering is fully subscribed or oversubscribed (irrespective of the number of times); or (ii) the
International Offering is fully subscribed or oversubscribed and the Hong Kong Public
Offering is fully subscribed or oversubscribed with the number of Offer Shares validly applied
STRUCTURE OF THE GLOBAL OFFERING
– 402 –


--- page 412 ---
for in the Hong Kong Public Offering representing less than 15 times of the number of Shares
initially available for subscription under the Hong Kong Public Offering, the Overall
Coordinators have the authority to reallocate International Offer Shares originally in the
International Offering to the Hong Kong Public Offering in such number as they deem
appropriate, provided that in accordance with Chapter 4.14 of the Guide for New Listing
Applicants issued by the Stock Exchange, (i) the total number of Offer Shares available under
the Hong Kong Public Offering following such reallocation should not be more than 3,360,000
H Shares (representing twice the total number of the Offer Shares initially available under the
Hong Kong Public Offering); and (ii) the final Offer Price should be fixed at the bottom end
of the indicative Offer Price range (i.e., HK$28.40 per Offer Share).
If the Hong Kong Public Offering is not fully subscribed for, the Overall Coordinators
have the authority to reallocate all or any unsubscribed Hong Kong Offer Shares to the
International Offering, in such proportions as the Overall Coordinators deem appropriate.
Details of any reallocation of Offer Shares between the Hong Kong Public Offering and
the International Offering will be disclosed in the results announcement of the Global Offering
expected to be published on June 27, 2025.
Applications
Each applicant under the Hong Kong Public Offering will also be required to give an
undertaking and confirmation in the application submitted by him or her that he or she and any
person(s) for whose benefit he or she is making the application have not applied for or taken
up, or indicated an interest for, and will not apply for or take up, or indicate an interest for, any
Offer Shares under the International Offering, and such applicant’s application will be rejected
if the said undertaking and/or confirmation is breached and/or untrue (as the case may be) or
it has been or will be placed or allocated Offer Shares under the International Offering.
Multiple or suspected multiple applications and any application for more than 50% of the
1,680,000 H Shares initially comprised in the Hong Kong Public Offering (that is 840,000
Hong Kong Offer Shares) will be rejected.
The listing of the Offer Shares on the Stock Exchange is sponsored by the Joint Sponsors.
Applicants under the Hong Kong Public Offering may be required to pay, on application
(subject to application channels), the maximum Offer Price of HK$30.60 per H Share in
addition to any brokerage, SFC transaction levy, Stock Exchange trading fee and AFRC
transaction levy payable on each Offer Share. If the Offer Price, as finally determined in the
manner described in the paragraph headed “Pricing of the Global Offering” in this section, is
less than the maximum Offer Price of HK$30.60 per Offer Share, appropriate refund payments
(including the brokerage, SFC transaction levy, Stock Exchange trading fee and AFRC
transaction levy attributable to the surplus application monies) will be made to successful
applications, without interest. Further details are set out in the section headed “How to Apply
for Hong Kong Offer Shares” in this Prospectus.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 413 ---
References in this Prospectus to applications, application monies or the procedure for
application relate solely to the Hong Kong Public Offering.
THE INTERNATIONAL OFFERING
Number of International Offer Shares Offered
The number of International Offer Shares to be initially offered by us for subscription
under the International Offering will consist of an initial offering of 15,120,000 Offer Shares,
representing approximately 90% of the Offer Shares under the Global Offering. Subject to any
reallocation of Offer Shares between the International Offering and the Hong Kong Public
Offering, the International Offer Shares will represent approximately 10.7% of our total issued
share capital immediately after completion of the Global Offering.
Allocation
Pursuant to the International Offering, the International Underwriters will conditionally
place the International Offer Shares to institutional and professional investors and other
investors expected to have a sizable demand for the H Shares in Hong Kong and other
jurisdictions outside the United States in offshore transactions in reliance on Regulation S. The
International Offering is subject to the Hong Kong Public Offering being unconditional.
Allocation of the International Offer Shares pursuant to the International Offering will be
determined by the Overall Coordinators and will be based on a number of factors including the
level and timing of demand, total size of the relevant investor’s invested assets or equity assets
in the relevant sector and whether or not it is expected that the relevant investor is likely to buy
further, and/or hold or sell Offer Shares after the Listing. Such allocation may be made to
professional, institutional and corporate investors and is intended to result in a distribution of
our Offer Shares on a basis which would lead to the establishment of a solid shareholder base
to the benefit of our Company and our Shareholders as a whole.
The Overall Coordinators (on behalf of the Underwriters) may require any investor who
has been offered Offer Shares under the International Offering and who has made an
application under the Hong Kong Public Offering to provide sufficient information to the
Overall Coordinators so as to allow it to identify the relevant applications under the Hong
Kong Public Offering and to ensure that they are excluded from any allocation of Offer Shares
under the Hong Kong Public Offering.
Reallocation and Clawback
The total number of International Offer Shares to be transferred pursuant to the
International Offering may change as a result of the clawback arrangement described in the
paragraph headed “– The Hong Kong Public Offering – Reallocation and Clawback” in this
section and/or reallocation of all or any unsubscribed Hong Kong Offer Shares to the
International Offering.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 414 ---
PRICING OF THE GLOBAL OFFERING
The Offer Price is expected to be fixed by agreement between the Overall Coordinators
(for themselves and on behalf of the Underwriters) and our Company on the Price
Determination Date, when market demand for the Offer Shares will be determined. The Price
Determination Date is expected to be on or before Thursday, June 26, 2025 and in no event later
than 12:00 noon on Thursday, June 26, 2025.
The Offer Price will be not more than HK$30.60 per Offer Share and is currently expected
not to be less than HK$28.40 per Offer Share unless otherwise announced, as further explained
below. Applicants under the Hong Kong Public Offering may be required to pay, on application
(subject to application channels), the maximum Offer Price of HK$30.60 for each Hong Kong
Offer Share together with brokerage of 1%, a Stock Exchange trading fee of 0.00565%, a SFC
transaction levy of 0.0027% and an AFRC transaction levy of 0.00015%.
Prospective investors should be aware that the Offer Price to be determined on the
Price Determination Date may be, but is not expected to be, lower than the indicative
price range stated in this Prospectus.
The International Underwriters will be soliciting from prospective investors indications
of interest in acquiring Offer Shares in the International Offering. Prospective professional and
institutional investors will be required to specify the number of H Shares under the
International Offering they would be prepared to acquire either at different prices or at a
particular price. This process, known as “book-building”, is expected to continue up to, and to
cease on or about, the last day for lodging applications under the Hong Kong Public Offering.
If, based on the level of interest expressed by prospective institutional, professional and
other investors during the book-building process, the Overall Coordinators (for themselves and
on behalf of the Underwriters) and the Joint Sponsors consider it appropriate, with our consent
the number of Offer Shares being offered under the Global Offering and/or the indicative Offer
Price range stated in this Prospectus may be reduced at any time on or prior to the morning of
the last day for lodging applications under the Hong Kong Public Offering. In such a case, we
will, as soon as practicable following the decision to make such reduction, and in any event not
later than the morning of Wednesday, June 25, 2025, being the last day for lodging applications
under the Hong Kong Public Offering, cause to be published on the Stock Exchange’s website
at www.hkexnews.hk , and on our Company’s website at medtideinc.com notice of such
reduction in the number of Offer Shares being offered under the Global Offering and/or the
indicative Offer Price range. Such notice will also include confirmation or revision, as
appropriate, of the working capital statement and the offering statistics as currently set out in
this Prospectus and any other financial information which may change as a result of such
reduction. Upon issue of such notice, the number of Offer Shares in the Global Offering and/or
the revised Offer Price range will be final and conclusive and the Offer Price, if agreed upon
between the Overall Coordinators (for themselves and on behalf of the Underwriters) and our
Company, will be fixed within such revised Offer Price range.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 415 ---
As soon as practicable after such reduction of the number of Offer Shares and/or the
indicative Offer Price range, we will also issue a supplemental Prospectus updating investors
of such reduction together with an update of all financial and other information in connection
with such change. The Global Offering must first be canceled and subsequently relaunched on
FINI pursuant to the supplemental Prospectus.
In the absence of any such notice and supplemental Prospectus so published, the number
of Offer Shares will not be reduced and/or the Offer Price, if agreed upon between our
Company and the Overall Coordinators (for themselves and on behalf of the Underwriters),
will under no circumstances be set outside the Offer Price range stated in this Prospectus.
Before submitting applications for the Hong Kong Offer Shares, applicants should have
regard to the possibility that any announcement of a reduction in the number of Offer Shares
being offered under the Global Offering and/or the indicative Offer Price range may not be
made until the day which is the last day for lodging applications under the Hong Kong Public
Offering.
The Hong Kong Offer Shares and the International Offer Shares may, in certain
circumstances, be reallocated as between the Hong Kong Public Offering and International
Offering at the discretion of the Overall Coordinators and the Joint Sponsors.
The final Offer Price, the level of applications in the Hong Kong Public Offering, the
level of indications of interest in the International Offering, the basis of allocations of the Hong
Kong Offer Shares and the results of applications in the Hong Kong Public Offering are
expected to be announced on Friday, June 27, 2025 through a variety of channels described in
the paragraph headed “How to Apply for Hong Kong Offer Shares – B. Publication of Results”
in this Prospectus.
UNDERWRITING ARRANGEMENTS
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters
under the terms of the Hong Kong Underwriting Agreement, subject to agreement on the Offer
Price between the Overall Coordinators (for themselves and on behalf of the Underwriters) and
us on the Price Determination Date.
We expect that our Company will, on or about Wednesday, June 25, 2025, enter into the
International Underwriting Agreement relating to the International Offering. Underwriting
arrangements, the Hong Kong Underwriting Agreement and the International Underwriting
Agreement are summarized in the section headed “Underwriting” in this Prospectus.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 416 ---
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for the Offer Shares will be conditional on, inter alia :
 the Stock Exchange granting approval for the listing of, and permission to deal in,
the Shares to be converted from the Unlisted Shares and to be issued pursuant to the
Global Offering as mentioned in this Prospectus on the Main Board of the Stock
Exchange and such listing and permission not subsequently having been revoked
prior to the commencement of dealings in the Shares on the Stock Exchange;
 the Offer Price having been agreed between the Overall Coordinators (for
themselves and on behalf of the Underwriters) and our Company;
 the execution and delivery of the International Underwriting Agreement on or
around the Price Determination Date;
 our Company having submitted to HKSCC all requisite documents to enable the
Offer Shares to be admitted to trade on the Stock Exchange; and
 the obligations of the Underwriters under the respective Underwriting Agreements
becoming and remaining unconditional (unless and to the extent such conditions are
validly waived on or before such dates and times) and not having been terminated
in accordance with the terms of the respective agreements,
in each case on or before the dates and times specified in the respective Underwriting
Agreements (unless and to the extent such conditions are validly waived on or before such
dates and times) and in any event not later than the date which is 30 days after the date of this
Prospectus.
If for any reason, the Offer Price is not agreed by 12:00 noon on Thursday, June 26, 2025
between us and the Overall Coordinators (for themselves and on behalf of the Underwriters),
the Global Offering will not proceed and will lapse.
If the above conditions are not fulfilled or waived prior to the times and dates specified,
the Global Offering will lapse and the Stock Exchange will be notified immediately. We will
cause a notice of the lapse of the Hong Kong Public Offering to be published by us on the
websites of our Company at medtideinc.com , and the Stock Exchange at www.hkexnews.hk ,
respectively on the next day following such lapse. In such event, all application monies will
be returned, without interest, on the terms set out in the section headed “How to Apply for
Hong Kong Offer Shares” in this Prospectus. In the meantime, the application monies will be
held in separate bank account(s) with our Company’s receiving banker(s) or other bank(s) in
Hong Kong licensed under the Banking Ordinance (Chapter 155 of the Laws of Hong Kong)
(as amended).
STRUCTURE OF THE GLOBAL OFFERING
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--- page 417 ---
The consummation of each of the Hong Kong Public Offering and the International
Offering is conditional upon, amongst other things, the other becoming unconditional and not
having been terminated in accordance with its terms.
Share certificates for the Offer Shares are expected to be issued on Friday, June 27, 2025
but will only become valid evidence of title at 8:00 a.m. on the date of commencement of the
dealings in our H Shares, which is expected to be on Monday, June 30, 2025, provided that (i)
the Global Offering has become unconditional in all respects at or before that time and (ii)
neither of the Underwriting Agreements has been terminated in accordance with its terms.
Investors who trade H Shares prior to the receipt of Share certificates or prior to the Share
certificates bearing valid evidence of title do so entirely at their own risk.
DEALING ARRANGEMENTS
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00
a.m. in Hong Kong on Monday, June 30, 2025, it is expected that dealings in the H Shares on
the Stock Exchange will commence on Monday, June 30, 2025. The H Shares will be traded
in board lots of 100 each and the stock code will be 3880.
STRUCTURE OF THE GLOBAL OFFERING
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--- page 418 ---
IMPORTANT NOTICE TO INVESTORS
OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong Public
Offering and below are the procedures for application. We will not provide any printed
copies of this Prospectus for use by the public.
This Prospectus is available at the website of the Stock Exchange at
www.hkexnews.hk under the “HKEXnews > New Listings > New Listing Information”
section, and our website at medtideinc.com . If you require a printed copy of this
Prospectus, you may download and print from the website addresses above.
The contents of the electronic version of the Prospectus are identical to the printed
Prospectus as registered with the Registrar of Companies in Hong Kong pursuant to
Section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
Set out below are procedures through which you can apply for the Hong Kong Offer
Shares electronically. We will not provide any physical channels to accept any
application for the Hong Kong Offer Shares by the public.
If you are an intermediary, broker or agent, please remind your customers, clients
or principals, as applicable, that this Prospectus is available online at the website
addresses above.
A. APPLICATION FOR HONG KONG OFFER SHARES
1. Who Can Apply
Y ou can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit you
are applying for:
 are 18 years of age or older;
 are outside the United States; and
 have a Hong Kong address (for the White Form eIPO service only) .
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 419 ---
Unless permitted by the Listing Rules and the Guide for New Listing Applicants issued
by the Stock Exchange, or any relevant waivers that have been granted by the Stock Exchange,
you cannot apply for any Hong Kong Offer Shares if you or the person(s) for whose benefit
you are applying for:
 are an existing beneficial owner of Shares in our Company and/or any of its
subsidiaries;
 are a Director, Supervisor or chief executive of our Company and/or any of its
subsidiaries;
 are a close associates (as defined in the Listing Rules) of any of the above; or
 have been allocated or have applied for any International Offer Shares or otherwise
participate in the International Offering.
2. Application Channels
The Hong Kong Public Offering period will begin at 9:00 a.m. on June 20, 2025 and
end at 12:00 noon on June 25, 2025 (Hong Kong time).
To apply for Hong Kong Offer Shares, you may use one of the following application
channels:
Application Channel Platform Target Investors Application Time
White Form eIPO service www.eipo.com.hk Applicant who would
like to receive a
physical H Share
certificate. Hong Kong
Offer Shares
successfully applied
for will be allotted and
issued in your own
name.
From 9:00 a.m. on
June 20, 2025
to 11:30 a.m. on
June 25, 2025. The
latest time for
completing full
payment of application
monies will be
12:00 noon on
June 25, 2025.
HKSCC EIPO channel Y our broker or
custodian who is a
HKSCC Participant
will submit
electronic
application
instructions on your
behalf through
HKSCC’s FINI
system in
accordance with
your instruction
Applicant who would not
like to receive a
physical H Share
certificate. Hong Kong
Offer Shares
successfully applied
for will be allotted and
issued in the name of
HKSCC Nominees,
deposited directly into
CCASS and credited to
your designated
HKSCC Participant’s
stock account.
Contact your broker or
custodian for the
earliest and latest time
for giving such
instructions, as this
may vary by broker or
custodian.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 420 ---
The White Form eIPO service and the HKSCC EIPO channel are facilities subject to
capacity limitations and potential service interruptions and you are advised not to wait until the
last day of the application period to apply for Hong Kong Offer Shares.
For those applying through the White Form eIPO service, once you complete payment
in respect of any application instructions given by you or for your benefit through the White
Form eIPO service to make an application for Hong Kong Offer Shares, an actual application
shall be deemed to have been made. If you are a person for whose benefit the electronic
application instructions are given, you shall be deemed to have declared that only one set of
electronic application instructions has been given for your benefit. If you are an agent for
another person, you shall be deemed to have declared that you have only given one set of
electronic application instructions for the benefit of the person for whom you are an agent and
that you are duly authorized to give those instructions as an agent.
For the avoidance of doubt, giving an application instruction under the White Form eIPO
service more than once and obtaining different application reference numbers without effecting
full payment in respect of a particular reference number will not constitute an actual
application.
If you apply through the White Form eIPO service, you are deemed to have authorized
the White Form eIPO service provider to apply on the terms and conditions in this Prospectus,
as supplemented and amended by the terms and conditions of the White Form eIPO service.
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on your
behalf through the HKSCC EIPO channel, you (and, if you are joint applicants, each of you
jointly and severally) are deemed to have instructed and authorized HKSCC to cause HKSCC
Nominees (acting as nominee for the relevant HKSCC Participants) to apply for Hong Kong
Offer Shares on your behalf and to do on your behalf all the things stated in this Prospectus
and any supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be deemed
to have been made for any application instructions given by you or for your benefit to HKSCC
(in which case an application will be made by HKSCC Nominees on your behalf) provided such
application instruction has not been withdrawn or otherwise invalidated before the closing time
of the Hong Kong Public Offering.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor
HKSCC Nominees shall be liable to you or any other person in respect of any actions taken by
HKSCC or HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or for any
breach of the terms and conditions of this Prospectus.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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3. Information Required to Apply
Y ou must provide the following information with your application:
For Individual or Joint Applicants For Corporate Applicants
 Full name(s) 2 as shown on your
identity document
 Identity document’s issuing country
or jurisdiction
 Identity document type, with order
of priority:
i. HKID card; or
ii. National identification
document; or
iii. Passport; and
 Identity document number
 Full name(s)
2 as shown on your
identity document
 Identity document’s issuing country
or jurisdiction
 Identity document type, with order
of priority:
i. LEI registration document; or
ii. Certificate of incorporation; or
iii. Business registration
certificate; or
iv. Other equivalent document; and
 Identity document number
Notes:
1. If you are applying through the White Form eIPO service, you are required to provide a valid e-mail
address, a contact telephone number and a Hong Kong address. Y ou are also required to declare that the
identity information provided by you follows the requirements as described in Note 2 below. In
particular, where you cannot provide a HKID number, you must confirm that you do not hold a HKID
card. The number of joint applicants may not exceed four. If you are a firm, the applicant must be in
the individual members’ names.
2. The applicant’s full name as shown on their identity document must be used and the surname, given
name, middle and other names (if any) must be input in the same order as shown on the identity
document. If an applicant’s identity document contains both an English and Chinese name, both English
and Chinese names must be used. Otherwise, either English or Chinese names will be accepted. The
order of priority of the applicant’s identity document type must be strictly followed and where an
individual applicant has a valid HKID card (including both Hong Kong Residents and Hong Kong
Permanent Residents), the HKID number must be used when making an application to subscribe for
Hong Kong Offer Shares. Similarly for corporate applicants, a LEI number must be used if an entity has
a LEI certificate.
3. If the applicant is a trustee, the client identification data (“ CID”) of the trustee, as set out above, will
be required. If the applicant is an investment fund (i.e. a collective investment scheme, or CIS), the CID
of the asset management company or the individual fund, as appropriate, which has opened a trading
account with the broker will be required, as above.
4. The maximum number of joint applicants on FINI is capped at 4 in accordance with market practice.
Such is subject to change, if the Company’s Articles of Association and applicable company law
prescribe for a lower cap.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity
document), the identity document’s issuing country or jurisdiction, the identity document type; and (ii)
the identity document number, for each of the beneficial owners or, in the case(s) of joint beneficial
owners, for each joint beneficial owner. If you do not include this information, the application will be
treated as being made for your benefit.
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing in
securities; and (ii) you exercise statutory control over that company, then the application will be treated
as being for your benefit and you should provide the required information in your application as stated
above.
“Unlisted company” means a company with no equity securities listed on the Stock Exchange or any
other stock exchange.
“Statutory control” means you:
 control the composition of the board of directors of the company;
 control more than half of the voting power of the company; or
 hold more than half of the issued share capital of the company (not counting any part of it which
carries no right to participate beyond a specified amount in a distribution of either profits or
capital).
For those applying through HKSCC EIPO channel, and making an application under a
power of attorney, we and the Overall Coordinators, as our agent, have discretion to consider
whether to accept it on any conditions we think fit, including evidence of the attorney’s
authority.
Failing to provide any required information may result in your application being rejected.
4. Permitted Number of Hong Kong Offer Shares for Application
Board lot size : 100 H Shares
Permitted number of Hong
Kong Offer Shares for
application and amount
payable on
application/successful
allotment
: Hong Kong Offer Shares are available for
application in specified board lot sizes only.
Please refer to the amount payable associated
with each specified board lot size in the table
below.
The maximum Offer Price is HK$30.60 per H
Share.
If you are applying through the HKSCC EIPO
channel, you are required to pre-fund your
application based on the amount specified by
your broker or custodian, as determined based
on the applicable laws and regulations in
Hong Kong.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 423 ---
By instructing your broker or custodian to apply
for the Hong Kong Offer Shares on your behalf
through the HKSCC EIPO channel, you (and, if
you are joint applicants, each of you jointly and
severally) are deemed to have instructed and
authorized HKSCC to cause HKSCC Nominees
(acting as nominee for the relevant HKSCC
Participants) to arrange payment of the final
Offer Price, brokerage, SFC transaction levy, the
Stock Exchange trading fee and the AFRC
transaction levy by debiting the relevant nominee
bank account at the Designated Bank for your
broker or custodian .
If you are applying through the White Form eIPO
service, you may refer to the table below for the
amount payable for the number of Shares you
have selected. Y ou must pay the respective
amount payable on application in full upon
application for Hong Kong Offer Shares.
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
No. of
Hong Kong
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
100 3,090.85 2,000 61,817.20 10,000 309,086.01 200,000 6,181,720.20
200 6,181.73 2,500 77,271.50 20,000 618,172.02 250,000 7,727,150.26
300 9,272.58 3,000 92,725.81 30,000 927,258.04 300,000 9,272,580.30
400 12,363.44 3,500 108,180.10 40,000 1,236,344.05 350,000 10,818,010.36
500 15,454.29 4,000 123,634.40 50,000 1,545,430.06 400,000 12,363,440.40
600 18,545.17 4,500 139,088.71 60,000 1,854,516.05 450,000 13,908,870.46
700 21,636.02 5,000 154,543.00 70,000 2,163,602.06 500,000 15,454,300.50
800 24,726.88 6,000 185,451.61 80,000 2,472,688.08 600,000 18,545,160.60
900 27,817.74 7,000 216,360.20 90,000 2,781,774.09 700,000 21,636,020.70
1,000 30,908.61 8,000 247,268.81 100,000 3,090,860.10 840,000
(1) 25,963,224.85
1,500 46,362.90 9,000 278,177.41 150,000 4,636,290.16
(1) Maximum number of Hong Kong Offer Shares you may apply for.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and
Accounting and Financial Reporting Council (“ AFRC ”) transaction levy. If your application is successful,
brokerage will be paid to the Exchange Participants (as defined in the Listing Rules) and the SFC transaction
levy, the Stock Exchange trading fee and AFRC transaction levy are paid to the Stock Exchange (in the case
of the SFC transaction levy and in the case of the AFRC transaction levy, collected by the Stock Exchange on
behalf of the SFC and the AFRC respectively).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 424 ---
5. Multiple Applications Prohibited
Y ou or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying investor
in your application as required under the paragraph headed “—A. Application for Hong Kong
Offer Shares—3. Information Required to Apply” in this section. If you are suspected of
submitting or cause to submit more than one application, all of your applications will be
rejected.
Multiple applications made either through (i) the White Form eIPO service, (ii) HKSCC
EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected. If you
have made an application through the White Form eIPO service or HKSCC EIPO channel,
you or the person(s) for whose benefit you have made the application shall not apply further
for any Offer Shares in the Global Offering.
6. Terms and Conditions of An Application
By applying for Hong Kong Offer Shares through the White Form eIPO service or
HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the following
things on your behalf):
(i) undertake to execute all relevant documents and instruct and authorise us and/or the
Overall Coordinators, as our agents, to execute any documents for you and to do on
your behalf all things necessary to register any Hong Kong Offer Shares allocated
to you in your name or in the name of HKSCC Nominees as required by the Articles
of Association, and (if you are applying through the HKSCC EIPO channel) to
deposit the allotted Hong Kong Offer Shares directly into CCASS for the credit of
your designated HKSCC Participant’s stock account on your behalf;
(ii) confirm that you have read and understand the terms and conditions and application
procedures set out in this Prospectus and the designated website of the White Form
eIPO service (or as the case may be, the agreement you entered into with your
broker or custodian), and agree to be bound by them;
(iii) (if you are applying through the HKSCC EIPO channel) agree to the arrangements,
undertakings and warranties under the participant agreement between your broker or
custodian and HKSCC and observe the General Rules of HKSCC and the HKSCC
Operational Procedures for giving application instructions to apply for Hong Kong
Offer Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of shares set out
in this Prospectus and they do not apply to you, or the person(s) for whose benefit
you have made the application;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 425 ---
(v) confirm that you have read this Prospectus and any supplement to it and have relied
only on the information and representations contained therein in making your
application (or as the case may be, causing your application to be made) and will not
rely on any other information or representations;
(vi) agree that the Company, the Joint Sponsors, the Overall Coordinators, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, the Capital Market Intermediaries, any of their or the Company’s
respective directors, officers, employees, partners, agents, advisers and any other
parties involved in the Global Offering (the “ Relevant Persons ”), the H Share
Registrar and HKSCC will not be liable for any information and representations not
in this Prospectus and any supplement to it;
(vii) agree to disclose the details of your application and your personal data and any other
personal data which may be required about you and the person(s) for whose benefit
you have made the application to us, the Relevant Persons, the H Share Registrar,
HKSCC, HKSCC Nominees, the Stock Exchange, the SFC and any other statutory
regulatory or governmental bodies or otherwise as required by laws, rules or
regulations, for the purposes under the paragraph headed “—G. Personal Data—3.
Purposes and 4. Transfer of personal data” in this section;
(viii) agree (without prejudice to any other rights which you may have once your
application (or as the case may be, HKSCC Nominees’ application) has been
accepted) that you will not rescind it because of an innocent misrepresentation;
(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, any application made by you or HKSCC
Nominees on your behalf cannot be revoked once it is accepted, which will be
evidenced by the notification of the result of the ballot by the H Share Registrar by
way of publication of the results at the time and in the manner as specified in the
paragraph headed “—B. Publication of Results” in this section;
(x) confirm that you are aware of the situations specified in the paragraph headed “—C.
Circumstances In Which Y ou Will Not Be Allocated Hong Kong Offer Shares” in
this section;
(xi) agree that your application or HKSCC Nominees’ application, any acceptance of it
and the resulting contract will be governed by and construed in accordance with the
laws of Hong Kong;
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association and laws of any
place outside Hong Kong that apply to your application and that neither we nor the
Relevant Persons will breach any law inside and/or outside Hong Kong as a result
of the acceptance of your offer to purchase, or any action arising from your rights
and obligations under the terms and conditions contained in this Prospectus;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 426 ---
(xiii) confirm that (a) your application or HKSCC Nominees’ application on your behalf
is not financed directly or indirectly by the Company, any of the directors, chief
executives, substantial Shareholder(s) or existing shareholder(s) of the Company or
any of its subsidiaries or any of their respective close associates; and (b) you are not
accustomed or will not be accustomed to taking instructions from the Company, any
of the directors, chief executives, substantial shareholder(s) or existing
shareholder(s) of the Company or any of its subsidiaries or any of their respective
close associates in relation to the acquisition, disposal, voting or other disposition
of the Shares registered in your name or otherwise held by you;
(xiv) warrant that the information you have provided is true and accurate;
(xv) confirm that you understand that we and the Overall Coordinators will rely on your
declarations and representations in deciding whether or not to allocate any Hong
Kong Offer Shares to you and that you may be prosecuted for making a false
declaration;
(xvi) agree to accept Hong Kong Offer Shares applied for or any lesser number allocated
to you under the application;
(xvii) declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
(xviii) (if the application is made for your own benefit) warrant that no other application
has been or will be made for your benefit by giving electronic application
instructions to HKSCC directly or indirectly or through the application channel of
the White Form eIPO Service Provider or by any one as your agent or by any other
person; and
(xix) (if you are making the application as an agent for the benefit of another person)
warrant that (1) no other application has been or will be made by you as agent for
or for the benefit of that person or by that person or by any other person as agent
for that person by giving electronic application instructions to HKSCC or to the
White Form eIPO Service Provider and (2) you have due authority to give
electronic application instructions on behalf of that other person as its agent.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 427 ---
B. PUBLICATION OF RESULTS
Results of Allocation
Y ou can check whether you are successfully allocated any Hong Kong Offer Shares
through:
Platform Date/Time
Applying through White Form eIPO service or HKSCC EIPO channel :
Website The designated results of allocation at
www.iporesults.com.hk (alternatively:
www.eipo.com.hk/eIPOAllotment ) with
a “search by ID” function.
24 hours, from
11:00 p.m. on Friday,
June 27, 2025 to 12:00
midnight on Thursday,
July 3, 2025
The full list of (i) wholly or partially
successful applicants using the White
Form eIPO service and HKSCC EIPO
channel, and (ii) the number of Hong
Kong Offer Shares conditionally allotted
to them, among other things, will be
displayed on the “Allotment Results”
page of the White Form eIPO service at
www.iporesults.com.hk (alternatively:
www.eipo.com.hk/eIPOAllotment ).
Date/Time The Stock Exchange’s website at
www.hkexnews.hk and our website at
medtideinc.com which will provide links
to the above mentioned websites of the H
Share Registrar.
No later than 11:00 p.m.
on Friday, June 27,
2025
Telephone +852 2862 8555 – the allocation results
telephone enquiry line provided by the
H Share Registrar
between 9:00 a.m. and
6:00 p.m., from
Monday, June 30, 2025
to Friday, July 4, 2025
on a Business Day
For those applying through HKSCC EIPO channel, you may also check with your
broker or custodian from 6:00 p.m. on Thursday, June 26, 2025
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m. on
Thursday, June 26, 2025 on a 24-hour basis and should report any discrepancies on allotments
to HKSCC as soon as practicable.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 428 ---
Allocation Announcement
We expect to announce the results of the final Offer Price, the level of indications of
interest in the International Offering, the level of applications in the Hong Kong Public
Offering and the basis of allocations of Hong Kong Offer Shares on the Stock Exchange’s
website at www.hkexnews.hk and our website at medtideinc.com by no later than 11:00 p.m.
on Friday, June 27, 2025.
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG
OFFER SHARES
Y ou should note the following situations in which Hong Kong Offer Shares will not be
allocated to you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Y our application or the application made by HKSCC Nominees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance.
2. If we or our agents exercise our discretion to reject your application:
We, the Overall Coordinators, the H Share Registrar and their respective agents and
nominees have full discretion to reject or accept any application, or to accept only part of any
application, without giving any reasons.
3. If the allocation of Hong Kong Offer Shares is void:
The allocation of Hong Kong Offer Shares will be void if the Stock Exchange does not
grant permission to list the Shares either:
 within three weeks from the closing date of the application lists; or
 within a longer period of up to six weeks if the Stock Exchange notifies us of that
longer period within three weeks of the closing date of the application lists.
4. If:
 you make multiple applications or suspected multiple applications. Y ou may refer to
the paragraph headed “—A. Applications for Hong Kong Offer Shares—5. Multiple
Applications Prohibited” in this section on what constitutes multiple applications;
 your application instruction is incomplete;
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 429 ---
 your payment (or confirmation of funds, as the case may be) is not made correctly;
 the Underwriting Agreements do not become unconditional or are terminated;
 we or the Overall Coordinators believe that by accepting your application, it or we
would violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC
Participants will be required to hold sufficient application funds on deposit with their
Designated Bank before balloting. After balloting of Hong Kong Offer Shares, the Receiving
Banks will collect the portion of these funds required to settle each HKSCC Participant’s actual
Hong Kong Offer Share allotment from their Designated Bank.
There is a risk of money settlement failure. In the extreme event of money settlement
failure by a HKSCC Participant (or its Designated Bank), who is acting on your behalf in
settling payment for your allotted shares, HKSCC will contact the defaulting HKSCC
Participant and its Designated Bank to determine the cause of failure and request such
defaulting HKSCC Participant to rectify or procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected
Hong Kong Offer Shares will be reallocated to the International Offering. Hong Kong Offer
Shares applied for by you through the broker or custodian may be affected to the extent of the
settlement failure. In the extreme case, you will not be allocated any Hong Kong Offer Shares
due to the money settlement failure by such HKSCC Participant. None of us, the Relevant
Persons, the H Share Registrar and HKSCC is or will be liable if Hong Kong Offer Shares are
not allocated to you due to the money settlement failure.
D. DESPATCH/COLLECTION OF H SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
Y ou will receive one H Share certificate for all Hong Kong Offer Shares allotted to you
under the Hong Kong Public Offering (except pursuant to applications made through the
HKSCC EIPO channel where the H Share certificates will be deposited into CCASS as
described below).
No temporary document of title will be issued in respect of the H Shares. No receipt will
be issued for sums paid on application.
H Share certificates will only become valid evidence of title at 8:00 a.m. on Monday, June
30, 2025, provided that the Global Offering has become unconditional and the right of
termination described in the section headed “Underwriting” has not been exercised. Investors
who trade H Shares prior to the receipt of H Share certificates or the H Share certificates
becoming valid do so entirely at their own risk.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 430 ---
The right is reserved to retain any Share certificate(s) and (if applicable) any surplus
application monies pending clearance of application monies.
The following sets out the relevant procedures and time:
White Form eIPO service
HKSCC EIPO
channel
Despatch/collection of Share certificate 1
For physical share
certificates of 500,000
or more Hong Kong
Offer Shares issued
under your own name
Collection in person from the H
Share Registrar, Computershare
Hong Kong Investor Services
Limited at Shops 1712-1716,
17th Floor, Hopewell Centre,
183 Queen’s Road East,
Wanchai, Hong Kong
Time : from 9:00 a.m. to
1:00 p.m. on Monday, June 30,
2025
If you are an individual, you
must not authorise any other
person to collect for you. If
you are a corporate applicant,
your authorised representative
must bear a letter of
authorization from your
corporation stamped with your
corporation’s chop
Both individuals and authorised
representatives must produce,
at the time of collection,
evidence of identity acceptable
to the H Share Registrar.
Note : If you do not collect your
H Share certificate(s)
personally within the time
above, it/they will be sent to
the address specified in your
application instructions by
ordinary post at your own risk.
H Share certificate(s)
will be issued in the
name of HKSCC
Nominees, deposited
into CCASS and
credited to your
designated HKSCC
Participant’s stock
account
No action by you is
required
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 431 ---
White Form eIPO service
HKSCC EIPO
channel
For physical share
certificates of less than
500,000 Offer Shares
issued under your own
name
Y our H Share certificate(s) will
be sent to the address specified
in your application instructions
by ordinary post on Friday,
June 27, 2025 at your own
risk.
Refund mechanism for surplus application monies paid by you
Date Monday, June 30, 2025 Subject to the
arrangement between
you and your broker
or custodian
Responsible party H Share Registrar Y our broker or
custodian
Application monies paid
through single bank
account
White form e-Refund payment
instructions to your designated
bank account.
Y our broker or
custodian will
arrange refund to
your designated
bank account subject
to the arrangement
between you and it
Application monies paid
through multiple bank
accounts
Refund cheque(s) will be
despatched to the address as
specified in your application
instructions by ordinary post at
your own risk.
1 Except in the event of any Severe Weather Signals (defined below) in force in Hong Kong in the
morning on the Friday, June 27, 2025 rendering it impossible for the relevant Share certificates to be
dispatched to HKSCC in a timely manner, the Company shall procure the H Share Registrar to arrange
for delivery of the supporting documents and Share certificates in accordance with the contingency
arrangements as agreed between them. Y ou may see “—E. Severe Weather Arrangements” in this
section.
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--- page 432 ---
E. SEVERE WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Wednesday, June 25, 2025 if, there is/are:
 a tropical cyclone warning signal number 8 or above;
 a “black” rainstorm warning; and/or
 an “extreme conditions” announcement issued after a super typhoon (“ Extreme
Conditions ”),
(collectively, “ Severe Weather Signals ”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Wednesday, June 25,
2025.
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon on
the next Business Day which does not have Severe Weather Signals in force at any time
between 9:00 a.m. and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of the
application lists may result in a delay in the listing date. Should there be any changes to the
dates mentioned in the section headed “Expected Timetable” in this Prospectus, an
announcement will be made and published on the Stock Exchange’s website at
www.hkexnews.hk and our website at medtideinc.com of the revised timetable.
If a Severe Weather Signal is hoisted on Friday, June 27, 2025, the H Share Registrar will
make appropriate arrangements for the delivery of the H Share certificates to the CCASS
Depository’s service counter so that they would be available for trading on Monday, June 30,
2025.
If a Severe Weather Signal is hoisted on Friday, June 27, 2025, the dispatch of physical
H Share certificates of less than 500,000 Offer Shares issued under your own name will be
made by ordinary post when the post office re-opens after the Severe Weather Signal is lowered
or cancelled (e.g. in the afternoon of Friday, June 27, 2025 or on Monday, June 30, 2025).
If a Severe Weather Signal is hoisted on Monday, June 30, 2025, physical H Share
certificates of 500,000 Offer Shares or more issued under your own name are available for
collection in person at the H Share Registrar’s office after the Severe Weather Signal is
lowered or cancelled (e.g. in the afternoon of Monday, June 30, 2025 or on Wednesday, July 2,
2025).
Prospective investors should be aware that if they choose to receive physical H Share
certificates issued in their own name, there may be a delay in receiving the H Share
certificates.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 423 –


--- page 433 ---
F. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, and permission to deal in, the H Shares on the
Stock Exchange and we comply with the stock admission requirements of HKSCC, the H
Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement
in CCASS with effect from the date of commencement of dealings in the H Shares or any other
date HKSCC chooses. Settlement of transactions between Exchange Participants is required to
take place in CCASS on the second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC
Operational Procedures in effect from time to time.
All necessary arrangements have been made enabling the Shares to be admitted into
CCASS.
Y ou should seek the advice of your broker or other professional adviser for details of the
settlement arrangement as such arrangements may affect your rights and interests.
G. PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data
collected and held by the Company, the H Share Registrar, the receiving banks and the
Relevant Persons about you in the same way as it applies to personal data about applicants
other than HKSCC Nominees. This personal data may include client identifier(s) and your
identification information. By giving application instructions to HKSCC, you acknowledge
that you have read, understood and agree to all of the terms of the Personal Information
Collection Statement below.
1. Personal Information Collection Statement
This Personal Information Collection Statement informs the applicant for, and holder of,
Hong Kong Offer Shares, of the policies and practices of the Company and the H Share
Registrar in relation to personal data and the Personal Data (Privacy) Ordinance (Chapter 486
of the Laws of Hong Kong).
2. Reasons for the collection of your personal data
It is necessary for applicants and registered holders of Hong Kong Offer Shares to ensure
that personal data supplied to the Company or its agents and the H Share Registrar is accurate
and up-to-date when applying for Hong Kong Offer Shares or transferring Hong Kong Offer
Shares into or out of their names or in procuring the services of the H Share Registrar.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 424 –


--- page 434 ---
Failure to supply the requested data or supplying inaccurate data may result in your
application for Hong Kong Offer Shares being rejected, or in the delay or the inability of the
Company or the H Share Registrar to effect transfers or otherwise render their services. It may
also prevent or delay registration or transfers of Hong Kong Offer Shares which you have
successfully applied for and/or the despatch of H Share certificate(s) to which you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform the
Company and the H Share Registrar immediately of any inaccuracies in the personal data
supplied.
3. Purposes
Y our personal data may be used, held, processed, and/or stored (by whatever means) for
the following purposes:
 processing your application and refund cheque and White Form e-Refund payment
instruction(s), where applicable, verification of compliance with the terms and
application procedures set out in this Prospectus and announcing results of
allocation of Hong Kong Offer Shares;
 compliance with applicable laws and regulations in Hong Kong and elsewhere;
 registering new issues or transfers into or out of the names of the holders of the
Shares including, where applicable, HKSCC Nominees;
 maintaining or updating the register of members of the Company;
 verifying identities of applicants for and holders of the Shares and identifying any
duplicate applications for the Shares;
 facilitating Hong Kong Offer Shares balloting;
 establishing benefit entitlements of holders of the Shares, such as dividends, rights
issues, bonus issues, etc.;
 distributing communications from the Company and its subsidiaries;
 compiling statistical information and profiles of the holder of the Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable the
Company and the H Share Registrar to discharge their obligations to applicants and
holders of the Shares and/or regulators and/or any other purposes to which
applicants and holders of the Shares may from time to time agree.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 425 –


--- page 435 ---
4. Transfer of personal data
Personal data held by the Company and the H Share Registrar relating to the applicants
for and holders of Hong Kong Offer Shares will be kept confidential but the Company and the
H Share Registrar may, to the extent necessary for achieving any of the above purposes,
disclose, obtain or transfer (whether within or outside Hong Kong) the personal data to, from
or with any of the following:
 the Company’s appointed agents such as financial advisers, receiving banks and
overseas principal share registrar;
 HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the H Share Registrar, in each case for the purposes of providing its
services or facilities or performing its functions in accordance with its rules or
procedures and operating FINI and CCASS (including where applicants for the
Hong Kong Offer Shares request a deposit into CCASS);
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to the Company or the H
Share Registrar in connection with their respective business operation;
 the Stock Exchange, the SFC and any other statutory regulatory or governmental
bodies or otherwise as required by laws, rules or regulations, including for the
purpose of the Stock Exchange’s administration of the Listing Rules and the SFC’s
performance of its statutory functions; and
 any persons or institutions with which the holders of Hong Kong Offer Shares have
or propose to have dealings, such as their bankers, solicitors, accountants or brokers
etc.
5. Retention of personal data
The Company and the H Share Registrar will keep the personal data of the applicants and
holders of Hong Kong Offer Shares for as long as necessary to fulfill the purposes for which
the personal data were collected. Personal data which is no longer required will be destroyed
or dealt with in accordance with the Personal Data (Privacy) Ordinance (Chapter 486 of the
Laws of Hong Kong).
6. Access to and correction of personal data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain whether
the Company or the H Share Registrar hold their personal data, to obtain a copy of that data,
and to correct any data that is inaccurate. The Company and the H Share Registrar have the
right to charge a reasonable fee for the processing of such requests. All requests for access to
data or correction of data should be addressed to the Company and the H Share Registrar, at
their registered address disclosed in the section headed “Corporate Information” in this
Prospectus or as notified from time to time, for the attention of the company secretary, or the
H Share Registrar for the attention of the privacy compliance officer.
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 426 –


--- page 436 ---
The following is the text of a report received from the reporting accountants of the
Company, Ernst & Young, Certified Public Accountants, Hong Kong, for the purpose of
incorporation in this Prospectus.
⭰㰟㛪姯⸒Ṳ⋀㈧
榀㸖毩歁㵳勘䙮怺 979噆
⤑⏋✱ᷧ⺎27㧺
Tel 曢婘: +852 2846 9888
Fax ₚ䜆: +852 2868 4432
ey.com
Ernst & Young
27/F, One Taikoo Place
979 King’s Road
Quarry Bay, Hon
g Kong
ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF MEDTIDE INC., MORGAN STANLEY ASIA LIMITED AND CITIC
SECURITIES (HONG KONG) LIMITED
Introduction
We report on the historical financial information of Medtide Inc. (the “Company”) and its
subsidiaries (together, the “Group”) set out on pages I-4 to I-81, which comprises the
consolidated statements of profit or loss, the consolidated statements of comprehensive
income, statements of changes in equity and statements of cash flows of the Group for each of
the years ended December 31, 2022, 2023 and 2024 (the “Relevant Periods”), and the
consolidated statements of financial position of the Group and the statements of financial
position of the Company as at December 31, 2022, 2023 and 2024, and material accounting
policy information and other explanatory information (together, the “Historical Financial
Information”). The Historical Financial Information set out on pages I-4 to I-81 forms an
integral part of this report, which has been prepared for inclusion in the Prospectus of the
Company dated June 20, 2025 (the “Prospectus”) in connection with the initial listing of the
shares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited (the
“Stock Exchange”).
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of the Historical
Financial Information that gives a true and fair view in accordance with the basis of preparation
set out in note 2.1 to the Historical Financial Information, and for such internal control as the
directors determine is necessary to enable the preparation of the Historical Financial
Information that is free from material misstatement, whether due to fraud or error.
Reporting accountants’ responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted our work in accordance with Hong Kong Standard on
Investment Circular Reporting Engagements 200 Accountants’ Reports on Historical Financial
Information in Investment Circulars issued by the Hong Kong Institute of Certified Public
APPENDIX I ACCOUNTANTS’ REPORT
– I-1 –


--- page 437 ---
Accountants (“HKICPA”). This standard requires that we comply with ethical standards and
plan and perform our work to obtain reasonable assurance about whether the Historical
Financial Information is free from material misstatement.
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountants’ judgement, including the assessment of risks of material misstatement
of the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountants consider internal control relevant to the entity’s
preparation of the Historical Financial Information that gives a true and fair view in accordance
with the basis of preparation set out in note 2.1 to the Historical Financial Information, in order
to design procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. Our work also
included evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the directors, as well as evaluating the overall presentation of
the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountants’ report, a true and fair view of the financial position of the Group and the Company
as at December 31, 2022, 2023 and 2024 and of the financial performance and cash flows of
the Group for each of the Relevant Periods in accordance with the basis of preparation set out
in note 2.1 to the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-2 –


--- page 438 ---
Report on matters under the Rules Governing the Listing of Securities on the Stock
Exchange and the Companies (Winding Up and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-4 have been made.
Dividends
We refer to note 13 to the Historical Financial Information which states that no dividends
have been paid by the Company in respect of the Relevant Periods.
Ernst & Y oung
Certified Public Accountants
Hong Kong
June 20, 2025
APPENDIX I ACCOUNTANTS’ REPORT
– I-3 –


--- page 439 ---
I HISTORICAL FINANCIAL INFORMATION
Preparation of Historical Financial Information
Set out below is the Historical Financial Information which forms an integral part of this
accountants’ report.
The financial statements of the Group for the Relevant Periods, on which the Historical
Financial Information is based, were audited by Ernst & Y oung in accordance with Hong Kong
Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants
(“HKICPA”) (the “Underlying Financial Statements”).
The Historical Financial Information is presented in Renminbi (“RMB”) and all values
are rounded to the nearest thousand (RMB’000) except when otherwise indicated.
APPENDIX I ACCOUNTANTS’ REPORT
– I-4 –


--- page 440 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
Notes Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
REVENUE 5 350,840 336,774 442,226
Cost of sales (149,771) (156,603) (192,452)
Gross profit 201,069 180,171 249,774
Other income and gains 6 22,725 23,144 59,057
Selling and marketing expenses (22,245) (28,071) (42,494)
Administrative expenses (43,475) (43,771) (73,406)
Research and development expenses (21,020) (23,144) (28,748)
Impairment losses on financial assets,
net (1,125) (600) (916)
Other expenses 9 (27) (156) (285)
Finance costs 8 (1,281) (224) (1,141)
Profit before fair value losses on
financial liabilities at fair value
through profit or loss 134,621 107,349 161,841
Fair value losses on financial
liabilities at fair value through
profit or loss 30/31 (67,065) (45,371) (83,392)
PROFIT BEFORE TAX 67,556 61,978 78,449
Income tax expense 12 (13,576) (13,073) (19,276)
PROFIT FOR THE YEAR 53,980 48,905 59,173
Attributable to:
Owners of the parent 53,980 48,905 59,173
EARNINGS PER SHARE
A TTRIBUTABLE TO ORDINARY
EQUITY HOLDERS OF THE
PARENT 14
Basic RMB0.54 RMB0.39 RMB0.47
Diluted RMB0.54 RMB0.39 RMB0.38
APPENDIX I ACCOUNTANTS’ REPORT
– I-5 –


--- page 441 ---
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
PROFIT FOR THE YEAR 53,980 48,905 59,173
OTHER COMPREHENSIVE INCOME
Items that may be reclassified to profit or
loss in subsequent periods:
Exchange differences on translation of
foreign operations 5,209 600 1,252
OTHER COMPREHENSIVE INCOME FOR
THE YEAR 5,209 600 1,252
TOTAL COMPREHENSIVE INCOME FOR
THE YEAR 59,189 49,505 60,425
Attributable to:
Owners of the parent 59,189 49,505 60,425
APPENDIX I ACCOUNTANTS’ REPORT
– I-6 –


--- page 442 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
Notes As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
NON-CURRENT ASSETS
Property and equipment 15 258,153 296,418 300,484
Goodwill 18 95,406 95,406 95,406
Other intangible assets 16 47,014 41,090 36,016
Right-of-use assets 17 42,864 39,691 38,082
Financial assets at fair value through
profit or loss 19 1,728 1,530 1,634
Time deposits 24 51,634 53,409 –
Prepayments, other receivables and
other assets 23 7,157 9,330 7,183
Deferred tax assets 29 139 62 23
Total non-current assets 504,095 536,936 478,828
CURRENT ASSETS
Inventories 21 79,305 73,005 84,777
Amounts due from related parties 39 2,955 1,659 –
Trade and notes receivables 22 19,800 36,418 57,720
Prepayments, other receivables and
other assets 23 7,175 11,621 16,098
Financial assets at fair value through
profit or loss 19 332,126 110,082 –
Restricted cash 24 430 435 439
Time deposits 24 10,000 – 143,032
Prepaid income tax 4,218 7,578 4,551
Cash and cash equivalents 24 279,048 531,012 387,183
Total current assets 735,057 771,810 693,800
CURRENT LIABILITIES
Trade payables 25 12,711 6,731 23,469
Convertible bonds 31 321,000 321,000 –
Other payables and accruals 26 100,391 120,534 53,460
Interest-bearing bank borrowings 27 – – 40,000
Contract liabilities 28 59,099 49,435 37,444
Lease liabilities 17 2,474 1,846 379
Amounts due to related parties 39 2,333 1,855 1,811
Deferred government grants 32 – – 6,438
Income tax payable 7,808 118 9,042
Total current liabilities 505,816 501,519 172,043
NET CURRENT ASSETS 229,241 270,291 521,757
TOTAL ASSETS LESS CURRENT
LIABILITIES 733,336 807,227 1,000,585
APPENDIX I ACCOUNTANTS’ REPORT
– I-7 –


--- page 443 ---
Notes As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
NON-CURRENT LIABILITIES
Redemption liabilities on equity shares 30 517,667 542,038 639,805
Deferred government grants 32 – – 29,072
Lease liabilities 17 1,815 – 764
Deferred tax liabilities 29 11,387 11,305 12,194
Total non-current liabilities 530,869 553,343 681,835
Net Assets 202,467 253,884 318,750
EQUITY
Equity attributable to owners of the
parent
Paid-in capital 33 121,673 – –
Share capital 33 – 125,000 125,000
Reserves 34 80,794 128,884 193,750
Total equity 202,467 253,884 318,750
APPENDIX I ACCOUNTANTS’ REPORT
– I-8 –


--- page 444 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to owners of the parent
Notes
Paid-in
capital
Capital
reserve
Other
reserve
Share-based
payment
reserve
Foreign
currency
translation
reserve
Surplus
reserve
Retained
profits Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2022 85,423 449,929 (471,602) 246 (5,198) 32,556 13,784 105,138
Profit for the year – – – – – – 53,980 53,980
Other comprehensive
income for the year:
Exchange differences on
translation of foreign
operations – – – – 5,209 – – 5,209
Total comprehensive income
for the year – – – – 5,209 – 53,980 59,189
Capital injection by
shareholders 33 36,250 – – – – – – 36,250
Share-based payment
compensation 35 – – – 1,890 – – – 1,890
At December 31, 2022 121,673 449,929* (471,602)* 2,136* 11* 32,556* 67,764* 202,467
Attributable to owners of the parent
Notes
Paid-in
capital
Share
capital
Capital
reserve Other reserve
Share-based
payment
reserve
Foreign
currency
translation
reserve
Surplus
reserve
Retained
profits/
(accumulated
losses) Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2023 121,673 – 449,929 (471,602) 2,136 11 32,556 67,764 202,467
Profit for the year – – –––– – 48,905 48,905
Other comprehensive
income for the year:
Exchange
differences on
translation of
foreign operations – – – – – 600 – – 600
Total comprehensive
income for the year – – – – – 600 – 48,905 49,505
Share-based payment
compensation 35 – – – – 1,912 – – – 1,912
Conversion into a joint
stock company 33 (121,673) 125,000 269,050 – – – (32,556) (239,821) –
At December 31, 2023 – 125,000 718,979* (471,602)* 4,048* 611* –* (123,152)* 253,884
APPENDIX I ACCOUNTANTS’ REPORT
– I-9 –


--- page 445 ---
Attributable to owners of the parent
Note
Share
capital
Capital
reserve
Other
reserve
Share-based
payment
reserve
Foreign
currency
translation
reserve
Accumulated
losses Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2024 125,000 718,979 (471,602) 4,048 611 (123,152) 253,884
Profit for the year – – – – – 59,173 59,173
Other comprehensive income
for the year:
Exchange differences on
translation of foreign
operations – – – – 1,252 – 1,252
Total comprehensive income
for the year – – – – 1,252 59,173 60,425
Share-based payment
compensation 35 – – – 4,441 – – 4,441
At December 31, 2024 125,000 718,979* (471,602)* 8,489* 1,863* (63,979)* 318,750
* These reserve accounts represent total reserves of RMB80,794,000, RMB128,884,000 and RMB193,750,000
in the consolidated statements of financial position as at December 31, 2022, 2023 and 2024, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-10 –


--- page 446 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Notes Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
CASH FLOWS FROM OPERA TING
ACTIVITIES
Profit before tax 67,556 61,978 78,449
Adjustments for:
Finance costs 8 1,281 224 1,141
Bank interest income 6 (914) (6,920) (13,560)
Depreciation of property
and equipment 15 16,443 20,164 20,743
Depreciation of right-of-use assets 17 3,128 3,224 2,843
Amortization of other intangible
assets 16 6,362 6,393 6,503
Provision for inventories 2,508 3,940 2,456
Share-based payment compensation 35 1,890 1,912 4,441
Impairment loss recognized on
financial assets under the
expected credit losses model, net 1,125 600 916
(Gain)/loss on disposal of property
and equipment, net 6/9 (384) 156 228
Fair value change of financial assets
at fair value through profit or loss 6 (7,920) (7,585) (3,086)
Loss on fair value changes of
financial liabilities measured at
fair value through profit or loss 30/31 67,065 45,371 83,392
Net exchange differences (11,944) (5,065) (7,316)
APPENDIX I ACCOUNTANTS’ REPORT
– I-11 –


--- page 447 ---
Notes Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
(Increase)/decrease in inventories (14,323) 2,360 (14,228)
Increase in trade and notes
receivables (5,306) (17,150) (22,203)
Increase in prepayments, other
receivables and other assets (3,662) (4,625) (553)
Increase in pledged bank deposits (23) (5) –
Increase/(decrease) in trade payables 5,385 (5,980) 16,738
Increase/(decrease) in other payables
and accruals 6,332 15,389 (65,467)
Increase in deferred government
grants – – 35,510
Increase/(decrease) in contract
liabilities 8,932 (9,664) (11,991)
Decrease in amounts due from
related parties-trade 122 1,296 –
Increase/(decrease) in amounts due
to related parties-trade 2,195 (478) (44)
Cash generated from operations 145,848 105,535 114,912
Income tax paid (11,964) (24,128) (6,397)
Interest received 914 6,920 11,992
Net cash flows generated from
operating activities 134,798 88,327 120,507
APPENDIX I ACCOUNTANTS’ REPORT
– I-12 –


--- page 448 ---
Notes Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchases of property and equipment (92,149) (55,175) (21,022)
Proceeds from disposal of property
and equipment 4,377 18 121
Purchases of other intangible assets (45) (469) (1,429)
Purchases of financial assets at fair
value through profit or loss (420,228) (110,000) (100,000)
Placement of time deposits (50,000) – (142,434)
Withdrawal of time deposits – 10,000 56,974
Withdrawal of financial assets at fair
value through profit or loss 201,418 332,126 210,000
Receipt of the related party’s
repayment of loan – – 1,659
Proceeds from withdrawal of financial
assets at fair value through profit or
loss 5,695 5,926 1,284
Net cash flows (used in)/generated
from investing activities (350,932) 182,426 5,153
APPENDIX I ACCOUNTANTS’ REPORT
– I-13 –


--- page 449 ---
Notes Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
CASH FLOWS FROM FINANCING
ACTIVITIES
Capital injection from shareholders 36,250 – –
New bank borrowings – – 40,000
Repayment of bank borrowings (87,632) – –
Repayment for principal of convertible
bonds – – (300,000)
Payment for interests of convertible
bonds – (21,000) (6,625)
Repayment of borrowings
from related party (5,312) – –
Repayment of lease liabilities (2,477) (2,726) (2,014)
Payments of listing expense – – (6,767)
Interest paid (914) – (1,065)
Net cash flows used in financing
activities (60,085) (23,726) (276,471)
NET (DECREASE)/INCREASE IN
CASH AND CASH EQUIV ALENTS (276,219) 247,027 (150,811)
Cash and cash equivalents at
beginning of year 538,264 279,048 531,012
Effect of foreign exchange rate
changes, net 17,003 4,937 6,982
CASH AND CASH EQUIV ALENTS
A T END OF YEAR 279,048 531,012 387,183
ANAL YSIS OF BALANCES OF
CASH AND CASH EQUIV ALENTS
Cash and bank balances 24 279,048 531,012 387,183
Cash and cash equivalents as stated in
the statement of financial position 279,048 531,012 387,183
Cash and cash equivalents as stated in
the statement of cash flows 279,048 531,012 387,183
APPENDIX I ACCOUNTANTS’ REPORT
– I-14 –


--- page 450 ---
STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
Notes As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
NON-CURRENT ASSETS
Other intangible assets – – 1,044
Time deposits 24 51,634 53,409 –
Financial assets at fair value through
profit or loss 19 1,728 1,530 1,634
Prepayments, other receivables and
other assets 23 – – 1,619
Investments in subsidiaries 20 730,340 732,239 736,484
Total non-current assets 783,702 787,178 740,781
CURRENT ASSETS
Prepayments, other receivables and
other assets 23 52,108 104,212 56,606
Financial assets at fair value through
profit or loss 19 292,557 100,000 –
Time deposits 24 10,000 – 55,189
Cash and cash equivalents 24 38,871 191,010 25,940
Total current assets 393,536 395,222 137,735
CURRENT LIABILITIES
Convertible bonds 31 321,000 321,000 –
Other payables and accruals 26 22,899 43,332 36,596
Income tax payable 382 11 8
Total current liabilities 344,281 364,343 36,604
NET CURRENT ASSETS 49,255 30,879 101,131
TOTAL ASSETS LESS CURRENT
LIABILITIES 832,957 818,057 841,912
NON-CURRENT LIABILITIES
Redemption liabilities on equity shares 30 517,667 542,038 639,805
Total non-current liabilities 517,667 542,038 639,805
NET ASSETS 315,290 276,019 202,107
APPENDIX I ACCOUNTANTS’ REPORT
– I-15 –


--- page 451 ---
Notes As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
EQUITY
Paid-in capital 33 121,673 – –
Share capital 33 – 125,000 125,000
Reserves 34 193,617 151,019 77,107
Total equity 315,290 276,019 202,107
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 452 ---
II NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1. CORPORATE INFORMATION
Medtide Inc. (the “Company”) was established in the People’s Republic of China (“PRC”) on June 11, 2020,
as a limited liability company. On February 10, 2023, the Company was converted into a joint stock company with
limited liability under the Company Law of the PRC. The registered office of the Company is located at Room
501-11, Building 6, Yinhai Kechuang Center, Xiasha Street, Qiantang District, Hangzhou City, Zhejiang Province,
PRC.
During the Relevant Periods, the principal activity of the Company and its subsidiaries (together, the “Group”)
is to provide prominent contract research and development manufacturing organization (CRDMO) services that
specializes in synthetic peptide production.
As at the date of this report, the Company had direct and indirect interests in its subsidiaries, all of which are
private limited liability companies, particulars of the principal subsidiaries are set out below:
Name Notes
Place and date of
incorporation/
registration and
place of
operations
Issued ordinary
share/registered
capital
Percentage
of equity
attributable to
the Company
Direct Indirect
Principal
activities
Chinese Peptide
Company ( ʕ㹻͛
ʮ̡)
(“Chinese
Peptide”)*
(a) PRC/Mainland
China
August 27, 2001
RMB57,859,591 100% – CRDMO
Services
Hangzhou Y uanxi
Pharmaceutical
Technology
Co., Ltd. (ψ๕
ࠢ
ʮ̡) (“Y uanxi
Pharmaceutical”)*
(b) PRC/Mainland
China
December 25,
2020
RMB10,000,000 100% – CRDMO
Services
CPC Scientific, Inc.
(“CPC
Scientific”)
(b) United States of
America
(“USA”)
April 27, 2005
USD10,000 – 100% CRDMO
Services
The above table lists the subsidiaries of the Company that the directors of the Company believe principally
affect the results or assets of the Group. In the opinion of the directors of the Company, to give details of other
subsidiaries would result in particulars of excessive length.
* The English names of these subsidiaries registered in the PRC represent the best efforts made by the
management of the Company to translate their Chinese names as these subsidiaries do not have official
English names.
Notes:
(a) The statutory financial statements of Chinese Peptide for the years ended December 31, 2022 and 2023
prepared under PRC GAAP were audited by Hangzhou Junzheng Certified Public Accountants GP (؄
ה(౷ஷΥྫ)). The statutory financial statements of Chinese Peptide for the year
ended December 31, 2024 have not yet been issued as of the date of this report.
(b) No audited financial statements have been prepared for these companies since their
incorporation/registration.
2.1 BASIS OF PREPARATION
The Historical Financial Information has been prepared in accordance with International Financial Reporting
Standards (“IFRSs”) (which include all International Financial Reporting Standards, International Accounting
Standards (“IASs”) and Interpretations) issued by the International Accounting Standards Board (“IASB”), and
accounting principles generally accepted in Hong Kong. All IFRSs effective for the accounting period commencing
from January 1, 2024, together with the relevant transitional provisions, have been early adopted on a consistent basis
by the Group in the preparation of the Historical Financial Information throughout the Relevant Periods.
APPENDIX I ACCOUNTANTS’ REPORT
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The Historical Financial Information has been prepared under the historical cost convention except for certain
financial instruments which have been measured at fair value at the end of each of the Relevant Periods.
Basis of consolidation
The Historical Financial Information includes the financial statements of the Company and its subsidiaries for
the Relevant Periods. A subsidiary is an entity (including a structured entity), directly or indirectly, controlled by the
Company. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to affect those returns through its power over the investee (i.e., existing rights that
give the Group the current ability to direct the relevant activities of the investee).
Generally, there is a presumption that a majority of voting rights results in control. When the Company has,
less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
(a) the contractual arrangement with the other vote holders of the investee;
(b) rights arising from other contractual arrangements; and
(c) the Group’s voting rights and potential voting rights.
The financial statements of the subsidiaries are prepared for the same reporting period as the Company, using
consistent accounting policies. The results of subsidiaries are consolidated from the date on which the Group obtains
control and continue to be consolidated until the date that such control ceases.
Profit or loss and each component of other comprehensive income are attributed to the owners of the parent
of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit
balance. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on consolidation.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control described above. A change in the ownership interest of a
subsidiary, without a loss of control, is accounted for as an equity transaction.
If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities,
any non-controlling interest and the foreign currency translation reserve; and recognizes the fair value of any
investment retained and any resulting surplus or deficit in profit or loss. The Group’s share of components previously
recognized in other comprehensive income is reclassified to profit or loss or retained profits, as appropriate, on the
same basis as would be required if the Group had directly disposed of the related assets or liabilities.
2.2 ISSUED BUT NOT YET EFFECTIVE INTERNATIONAL FINANCIAL REPORTING STANDARDS
The Group has not applied the following new and revised IFRSs, that have been issued but are not yet effective,
in the Historical Financial Information.
Amendments to IAS 21 Lack of Exchangeability
1
Amendments to IAS 28 and IFRS 10 Sale or Contribution of Assets between an Investor and its
Associate or Joint V enture 2
Amendments to IFRS 9 and IFRS 7 Amendments to the Classification and Measurement of
Financial Instruments 3
IFRS 18 Presentation and Disclosure in Financial Statements 4
IFRS 19 Subsidiaries without Public Accountability: Disclosures 4
Annual Improvements to IFRS Accounting
Standards -V olume 11
Amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10 and IAS 7 3
Amendments to IFRS 9 and IFRS 7 Contracts Referencing Nature-dependent Electricity 3
1 Effective for annual periods beginning on or after 1 January 2025
2 No mandatory effective date yet determined but available for adoption
3 Effective for annual periods beginning on or after 1 January 2026
4 Effective for annual periods beginning on or after 1 January 2027
APPENDIX I ACCOUNTANTS’ REPORT
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The Group is in the process of making an assessment of the impact of these new and revised IFRSs upon initial
application. So far, the Group considers the application of IFRS 18 is not expected to have material impact on the
financial position of the Group but is expected to affect the presentation of the statement of profit or loss and
additional disclosure will be included in the financial statements. Except for IFRS 18, the Group considers that these
new and revised IFRSs may result in changes in accounting policies and are not expected to have a material impact
on the Group’s results of operations and financial position.
2.3 MATERIAL ACCOUNTING POLICIES
Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The consideration transferred is
measured at the acquisition date fair value which is the sum of the acquisition date fair values of assets transferred
by the Group, liabilities assumed by the Group to the former owners of the acquiree and the equity interests issued
by the Group in exchange for control of the acquiree. For each business combination, the Group elects whether to
measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s
identifiable net assets. All other components of non-controlling interests are measured at fair value. Acquisition-
related costs are expensed as incurred.
The Group determines that it has acquired a business when the acquired set of activities and assets includes
an input and a substantive process that together significantly contribute to the ability to create outputs.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent
conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts of the
acquiree.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its
acquisition date fair value and any resulting gain or loss is recognized in profit or loss.
Any contingent consideration to be transferred by the acquirer is recognized at fair value at the acquisition
date. Contingent consideration classified as an asset or liability is measured at fair value with changes in fair value
recognized in profit or loss. Contingent consideration that is classified as equity is not remeasured and subsequent
settlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred, the
amount recognized for non-controlling interests and any fair value of the Group’s previously held equity interests in
the acquiree over the identifiable net assets acquired and liabilities assumed. If the sum of this consideration and
other items is lower than the fair value of the net assets acquired, the difference is, after reassessment, recognized
in profit or loss as a gain on bargain purchase.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is
tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying
value may be impaired. The Group performs its annual impairment test of goodwill as at December 31. For the
purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated
to each of the Group’s cash-generating units, or groups of cash-generating units, that are expected to benefit from
the synergies of the combination, irrespective of whether other assets or liabilities of the Group are assigned to those
units or groups of units.
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of
cash-generating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit
(group of cash-generating units) is less than the carrying amount, an impairment loss is recognized. An impairment
loss recognized for goodwill is not reversed in a subsequent period.
Where goodwill has been allocated to a cash-generating unit (or group of cash-generating units) and part of
the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in
the carrying amount of the operation when determining the gain or loss on the disposal. Goodwill disposed of in these
circumstances is measured based on the relative value of the operation disposed of and the portion of the
cash-generating unit retained.
APPENDIX I ACCOUNTANTS’ REPORT
– I-19 –


--- page 455 ---
Fair value measurement
The Group measures its certain financial instruments at fair value at the end of each reporting period. Fair
value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The fair value measurement is based on the presumption that the
transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability,
or in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or
the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured
using the assumptions that market participants would use when pricing the asset or liability, assuming that market
participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the Historical Financial Information
are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant
to the fair value measurement as a whole:
Level 1 – based on quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2 – based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is observable, either directly or indirectly
Level 3 – based on valuation techniques for which the lowest level input that is significant to the fair value
measurement is unobservable
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group
determines whether transfers have occurred between levels in the hierarchy by reassessing categorization (based on
the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
Impairment of non-financial assets
Where an indication of impairment exists, or when annual impairment testing for an asset is required (other
than inventories, financial assets and other non-current assets), the asset’s recoverable amount is estimated. An asset’s
recoverable amount is the higher of the asset’s or cash-generating unit’s value in use and its fair value less costs of
disposal, and is determined for an individual asset, unless the asset does not generate cash inflows that are largely
independent of those from other assets or groups of assets, in which case the recoverable amount is determined for
the cash-generating unit to which the asset belongs. In testing a cash-generating unit for impairment, a portion of the
carrying amount of a corporate asset (e.g., a headquarters building) is allocated to an individual cash-generating unit
if it can be allocated on a reasonable and consistent basis or, otherwise, to the smallest group of cash-generating units.
An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the asset. An
impairment loss is charged to profit or loss in the period in which it arises in those expense categories consistent with
the function of the impaired asset.
An assessment is made at the end of each reporting period as to whether there is an indication that previously
recognized impairment losses may no longer exist or may have decreased. If such an indication exists, the recoverable
amount is estimated. A previously recognized impairment loss of an asset other than goodwill is reversed only if there
has been a change in the estimates used to determine the recoverable amount of that asset, but not to an amount higher
than the carrying amount that would have been determined (net of any depreciation/amortization) had no impairment
loss been recognized for the asset in prior years. A reversal of such an impairment loss is credited to profit or loss
in the period in which it arises.
APPENDIX I ACCOUNTANTS’ REPORT
– I-20 –


--- page 456 ---
Related parties
(a) A party is considered to be related to the Group if the party is a person or a close member of that person’s
family and that person
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or of a parent of the Group;
or
(b) the party is an entity where any of the following conditions applies
(i) the entity and the Group are members of the same group;
(ii) one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or fellow
subsidiary of the other entity);
(iii) the entity and the Group are joint ventures of the same third party;
(iv) one entity is a joint venture of a third entity and the other entity is an associate of the third entity;
(v) the entity is a post-employment benefit plan for the benefit of employees of either the Group or
an entity related to the Group;
(vi) the entity is controlled or jointly controlled by a person identified in (a);
(vii) person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity); and
(viii) the entity, or any member of a group of which it is a part, provides key management personnel
services to the Group or to the parent of the Group.
Property and equipment and depreciation
Property and equipment, other than construction in progress, are stated at cost less accumulated depreciation
and any impairment losses. The cost of an item of property and equipment comprises its purchase price and any
directly attributable costs of bringing the asset to its working condition and location for its intended use.
Expenditure incurred after items of property and equipment have been put into operation, such as repairs and
maintenance, is normally charged to profit or loss in the period in which it is incurred. In situations where the
recognition criteria are satisfied, the expenditure for a major inspection is capitalized in the carrying amount of the
asset as a replacement. Where significant parts of property and equipment are required to be replaced at intervals,
the Group recognizes such parts as individual assets with specific useful lives and depreciates them accordingly.
Depreciation is calculated on the straight-line basis to write off the cost of each item of property and equipment
to its residual value over its estimated useful life. The principal annual depreciation rates used for this purpose are
as follows:
Buildings 3.23%
Machinery and equipment 9.7% to 48.5%
Motor vehicles 6.06% to 9.7%
Computer and office equipment 9.7% to 48.5%
Where parts of an item of property and equipment have different useful lives, the cost of that item is allocated
on a reasonable basis among the parts and each part is depreciated separately. Residual values, useful lives and the
depreciation methods are reviewed, and adjusted if appropriate, at least at each financial year end.
APPENDIX I ACCOUNTANTS’ REPORT
– I-21 –


--- page 457 ---
An item of property and equipment including any significant part initially recognized is derecognized upon
disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on disposal or
retirement recognized in profit or loss in the year the asset is derecognized is the difference between the net sales
proceeds and the carrying amount of the relevant asset.
Construction in progress represents buildings and leasehold improvements under construction, which is stated
at cost less any impairment losses, and is not depreciated. Cost comprises the direct costs of construction during the
period of construction. Construction in progress is reclassified to the appropriate category of property and equipment
when completed and ready for use.
Intangible assets (other than goodwill)
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets
acquired in a business combination is the fair value at the date of acquisition. The useful lives of intangible assets
are assessed to be either finite or indefinite. Intangible assets with finite lives are subsequently amortized over the
useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be
impaired. The amortization period and the amortization method for an intangible asset with a finite useful life are
reviewed at least at each financial year end.
Software
Purchased software is stated at cost less any impairment losses and is amortized on the straight-line basis over
its estimated useful life of 3 to 10 years. The estimated useful life of 3 to 10 years for software is determined by
considering the period of the economic benefits to the Group as well as by referring to the industry practice.
Knowhows
Knowhows with finite useful lives are measured initially at cost less any impairment losses and are amortized
on the straight-line basis over the estimated useful lives of 10 years. The estimated useful life of 10 years for
knowhows are estimated based on the lifecycle of the products and current market competition.
Research and development costs
All research costs are charged to the profit or loss as incurred.
Expenditure incurred on projects to develop new products is capitalized and deferred only when the Group can
demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its
intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the
availability of resources to complete the project and the ability to measure reliably the expenditure during the
development. Product development expenditure which does not meet these criteria is expensed when incurred.
Leases
The Group assesses at contract inception whether a contract is, or contains, a 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.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases
and leases of low-value assets. The Group recognizes lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
At inception or on reassessment of a contract that contains a lease component and non-lease components, the
Group adopts the practical expedient not to separate non-lease components and to account for the lease component
and the associated non-lease components (e.g., property management services for leases of properties) as a single
lease component.
APPENDIX I ACCOUNTANTS’ REPORT
– I-22 –


--- page 458 ---
(a) Right-of-use assets
Right-of-use assets are recognized at the commencement date of the lease (that is the date the underlying
asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any
impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at
or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a
straight-line basis over the shorter of the lease terms and the estimated useful lives of the assets as follows:
Office premises 3 to 5 years
Leasehold land 48 to 50 years
If ownership of the leased asset transfers to the Group by the end of the lease term or the cost reflects
the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset.
(b) Lease liabilities
Lease liabilities are recognized at the commencement date of the lease at the present value of lease
payments to be made over the lease term. The lease payments include fixed payments (including in-substance
fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate,
and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for
termination of a lease, if the lease term reflects the Group exercising the option to terminate the lease. The
variable lease payments that do not depend on an index or a rate are recognized as an expense in the period
in which the event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the
lease commencement date because the interest rate implicit in the lease is not readily determinable. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a
modification, a change in the lease term, a change in lease payments (e.g., a change to future lease payments
resulting from a change in an index or rate) or a change in assessment of an option to purchase the underlying
asset.
(c) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term leases of office premises
(that is those leases that have a lease term of 12 months or less from the commencement date and do not contain
a purchase option). It also applies the recognition exemption for leases of low-value assets to leases of
equipment that is considered to be of low value. Lease payments on short-term leases and leases of low-value
assets are recognized as an expense on a straight-line basis over the lease term.
Investments and other financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at amortized cost and fair value
through profit or loss (“FVTPL”).
The classification of financial assets at initial recognition depends on the financial asset’s contractual cash
flow characteristics and the Group’s business model for managing them. With the exception of trade receivables that
do not contain a significant financing component or for which the Group has applied the practical expedient of not
adjusting the effect of a significant financing component, the Group initially measures a financial asset at its fair
value, plus in the case of a financial asset not at fair value through profit or loss, transaction costs. Trade receivables
that do not contain a significant financing component or for which the Group has applied the practical expedient are
measured at the transaction price determined under IFRS 15 in accordance with the policies set out for “Revenue
recognition” below.
APPENDIX I ACCOUNTANTS’ REPORT
– I-23 –


--- page 459 ---
In order for a financial asset to be classified and measured at amortized cost or fair value through other
comprehensive income, it needs to give rise to cash flows that are solely payments of principal and interest (“SPPI”)
on the principal amount outstanding. Financial assets with cash flows that are not SPPI are classified and measured
at fair value through profit or loss, irrespective of the business model.
The Group’s business model for managing financial assets refers to how it manages its financial assets in order
to generate cash flows. The business model determines whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both. Financial assets classified and measured at amortized cost are held
within a business model with the objective to hold financial assets in order to collect contractual cash flows, while
financial assets classified and measured at fair value through other comprehensive income are held within a business
model with the objective of both holding to collect contractual cash flows and selling. Financial assets which are not
held within the aforementioned business models are classified and measured at fair value through profit or loss.
All regular way purchases and sales of financial assets are recognized on the trade date, that is, the date that
the Group commits to purchase or sell the asset. Regular way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the period generally established by regulation or convention in the
marketplace.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as follows:
Financial assets at amortized cost (debt instruments)
Financial assets at amortized cost are subsequently measured using the effective interest method and are
subject to impairment. Gains and losses are recognized in profit or loss when the asset is derecognized, modified or
impaired.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the consolidated statements of financial
position at fair value with net changes in fair value recognized in profit or loss.
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets)
is primarily derecognized (i.e., removed from the Group’s consolidated statements of financial position) when:
 the rights to receive cash flows from the asset have expired; or
 the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation
to pay the received cash flows in full without material delay to a third party under a “pass-through”
arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset,
or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has retained the risk and rewards of ownership of the asset. When
it has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of
the asset, the Group continues to recognize the transferred asset to the extent of the Group’s continuing involvement.
In that case, the Group also recognizes an associated liability. The transferred asset and the associated liability are
measured on a basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration that the Group could be
required to repay.
APPENDIX I ACCOUNTANTS’ REPORT
– I-24 –


--- page 460 ---
Impairment of financial assets
The Group recognizes an allowance for expected credit losses (“ECLs”) for all debt instruments not held at
fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation
of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held
or other credit enhancements that are integral to the contractual terms.
General approach
ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase
in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are
possible within the next 12 months (a 12-month ECL). For those credit exposures for which there has been a
significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over
the remaining life of the exposure, irrespective of the timing of the default (a lifetime ECL).
At the end of each reporting period, the Group assesses whether the credit risk on a financial instrument has
increased significantly since initial recognition. When making the assessment, the Group compares the risk of a
default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the
financial instrument as at the date of initial recognition and considers reasonable and supportable information that
is available without undue cost or effort, including historical and forward-looking information. The Group considers
that there has been a significant increase in credit risk when contractual payments are more than 30 days past due.
The Group considers a financial asset in default when contractual payments are 60 days past due. However,
in certain cases, the Group may also consider a financial asset to be in default when internal or external information
indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account
any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation
of recovering the contractual cash flows.
Financial assets at amortized cost are subject to impairment under the general approach and they are classified
within the following stages for measurement of ECLs except for trade receivables which apply the simplified
approach as detailed below.
Stage 1 – Financial instruments for which credit risk has not increased significantly since initial recognition
and for which the loss allowance is measured at an amount equal to 12-month ECLs.
Stage 2 – Financial instruments for which credit risk has increased significantly since initial recognition but
that are not credit-impaired financial assets and for which the loss allowance is measured at an
amount equal to lifetime ECLs.
Stage 3 – Financial assets that are credit-impaired at the reporting date (but that are not purchased or
originated credit-impaired) and for which the loss allowance is measured at an amount equal to
lifetime ECLs.
Simplified approach
For trade receivables that do not contain a significant financing component or when the Group applies the
practical expedient of not adjusting the effect of a significant financing component, the Group applies the simplified
approach in calculating ECLs. Under the simplified approach, the Group does not track changes in credit risk, but
instead recognizes a loss allowance based on lifetime ECLs at each reporting date. The Group has established a
general matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to
the debtors and the economic environment.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or
loss, loans and borrowings or payables, as appropriate.
APPENDIX I ACCOUNTANTS’ REPORT
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All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade payables, other payables, interest-bearing bank borrowings,
lease liabilities, amounts due to related parties, convertible bonds and redemption liabilities on equity shares.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include financial liabilities designated upon initial
recognition as at fair value through profit or loss.
Financial liabilities designated upon initial recognition as at FVTPL are designated at the initial date of
recognition, and only if the criteria in IFRS 9 are satisfied. Gains or losses on liabilities designated at FVTPL are
recognized in profit or loss, except for the gains or losses arising from the Group’s own credit risk which are
presented in other comprehensive income with no subsequent reclassification to profit or loss. The net fair value gain
or loss recognized in profit or loss does not include any interest charged on these financial liabilities. The Group has
designated its redemption liabilities on equity shares and convertible bonds as financial liabilities at fair value
through profit or loss, details of which are included in note 30 and 31 to the financial statements.
Financial liabilities at amortized cost
After initial recognition, trade payables, other payables, interest-bearing bank borrowings and lease liabilities
are subsequently measured at amortized cost, using the effective interest rate method unless the effect of discounting
would be immaterial, in which case they are stated at cost. Gains and losses are recognized in profit or loss when
the liabilities are derecognized as well as through the effective interest rate amortization process.
Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs
that are an integral part of the effective interest rate. The effective interest rate amortization is included in finance
costs in profit or loss.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged or canceled, or
expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as
a derecognition of the original liability and a recognition of a new liability, and the difference between the respective
carrying amounts is recognized in profit or loss.
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined on the first-in, first-out
basis or on a weighted average method and, in the case of work in progress and finished goods, comprises direct
materials, direct labor and an appropriate proportion of overheads. Net realizable value is based on estimated selling
prices less any estimated costs to be incurred to completion and disposal.
Cash and cash equivalents
For the purpose of the consolidated statements of cash flows, cash and cash equivalents comprise cash on hand
and at banks.
For the purpose of the consolidated statements of financial position, cash and cash equivalents comprise cash
on hand and at banks, which are not restricted as to use.
APPENDIX I ACCOUNTANTS’ REPORT
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Income tax
Income tax comprises current and deferred tax. Income tax relating to items recognized outside profit or loss
is recognized outside profit or loss, either in other comprehensive income or directly in equity.
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of
each of the Relevant Periods, taking into consideration interpretations and practices prevailing in the country in
which the Group operates.
Deferred tax is provided, using the liability method, on all temporary differences at the end of each of the
Relevant Periods between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
 when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and does not give rise to equal taxable and deductible
temporary differences; and
 in respect of taxable temporary differences associated with investments in subsidiaries and associates
when the timing of the reversal of the temporary differences can be controlled and it is probable that
the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, and the carry-forward of unused
tax credits and any unused tax losses. Deferred tax assets are recognized to the extent that it is probable that taxable
profit will be available against which the deductible temporary differences and the carry forward of unused tax credits
and unused tax losses can be utilized, except:
 when the deferred tax asset relating to the deductible temporary differences arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit or loss and does not give rise
to equal taxable and deductible temporary differences; and
 in respect of deductible temporary differences associated with investments in subsidiaries and
associates, deferred tax assets are only recognized to the extent that it is probable that the temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the
temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
tax asset to be utilized. Unrecognized deferred tax assets are reassessed at the end of each reporting period and are
recognized to the extent that it has become probable that sufficient taxable profit will be available to allow all or part
of the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted by the end of each reporting period.
Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a legally enforceable right
to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to
income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which
intend either to settle current tax liabilities and assets on a net basis, or to realize the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected
to be settled or recovered.
APPENDIX I ACCOUNTANTS’ REPORT
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Government grants
Government grants are recognized at their fair value where there is reasonable assurance that the grant will be
received and all attaching conditions will be complied with. When the grant relates to an expense item, it is
recognized as income on a systematic basis over the periods that the costs, for which it is intended to compensate,
are expensed.
Where the grant relates to an asset, the fair value is credited to a deferred income account and is released to
the statement of profit or loss over the expected useful life of the relevant asset by equal annual instalments or
deducted from the carrying amount of the asset and released to the statement of profit or loss by way of a reduced
depreciation charge.
Revenue recognition
Revenue from contracts with customers
Revenue from contracts with customers is recognized when control of goods or services is transferred to the
customers at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those
goods or services.
When the consideration in a contract includes a variable amount, the amount of consideration is estimated to
which the Group will be entitled in exchange for transferring the goods or services to the customer. The variable
consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue
reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the
variable consideration is subsequently resolved.
The Group generate revenue primarily from peptide CRDMO services (Contract Research, Development,
Manufacturing Organization) for biotechnology and pharmaceutical companies provided by fee model of fee-for-
service (“FFS”) or full-time-equivalent (“FTE”).
(a) CRDMO services
The majority of revenue are generated through contracts under FFS model. The CRDMO services
promised in the FFS contracts usually contain multiple deliverables, which are generally in the form of
technical laboratory reports and/or manufactured peptide or oligonucleotides products at different scales,
including laboratory scale, pilot scale and cGMP-compliant commercial scale. The Group allocate the
transaction price to each performance obligation on a relative stand-alone selling price basis, except for the
allocation of discounts and variable consideration. Revenue is recognized at a point in time when the Group
transfer control of the distinct services to its customer upon receipt or delivery of reports or products in
accordance with applicable delivery terms in the FFS contracts.
For the research services provided on a FTE basis, the Group provides its customer with a project team
of scientists and technical staff dedicated to the customer’s studies for a specific period of time and charges
the customer at a fixed rate per employee. For the services under FTE model, the Group has assessed that the
customers simultaneously receive and consume benefit provided by the Group’s performances. Therefore, the
performance obligation of FTE services is satisfied over time and FTE revenue is recognized over the service
period.
(b) Other revenue
Sales of diagnostics products
Prometheus Bio Inc. and UCP Biosciences Inc., subsidiaries of the Group, were primarily engaged in
the sales of diagnostics products. Revenue is recognized at a point in time when these subsidiaries transfer
control of the goods to its customer, generally upon delivery of such diagnostics products. Prometheus Bio Inc.
and UCP Biosciences Inc. were disposed in March 2021.
Revenue from other sources
Rental income is recognized on a time proportion basis over the lease terms.
APPENDIX I ACCOUNTANTS’ REPORT
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Other income
Interest income is recognized on an accrual basis using the effective interest method by applying the rate that
exactly discounts the estimated future cash receipts over the expected life of the financial instrument or a shorter
period, when appropriate, to the net carrying amount of the financial asset.
Contract liabilities
A contract liability is recognized when a payment is received or a payment is due (whichever is earlier) from
a customer before the Group transfers the related goods or services. Contract liabilities are recognized as revenue
when the Group performs under the contract (i.e., transfers control of the related goods or services to the customer).
Share-based payments
The Company operates a share award scheme for the purpose of providing incentives and rewards to eligible
participants who contribute to the success of the Group’s operations. Employees (including directors) of the Group
receive remuneration and rewards in the form of share-based payments, whereby employees render services in
exchange for equity instruments (“equity-settled transactions”).
The cost of equity-settled transactions with employees is measured by reference to the fair value at the date
at which they are granted. Further details are given in note 35 to the Historical Financial Information. The cost of
equity-settled transactions is recognized in employee benefit expense, together with a corresponding increase in
equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense
recognized for equity-settled transactions at the end of each reporting period until the vesting date reflects the extent
to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will
ultimately vest. The charge or credit to profit or loss for a period represents the movement in the cumulative expense
recognized as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date
fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate
of the number of equity instruments that will ultimately vest.
For awards that do not ultimately vest because non-market performance and/or service conditions have not
been met, no expense is recognized. Where awards include a market or non-vesting condition, the transactions are
treated as vesting irrespective of whether the market or non-vesting condition is satisfied, provided that all other
performance and/or service conditions are satisfied.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognized as if the
terms had not been modified, if the original terms of the award are met. In addition, an expense is recognized for any
modification that increases the total fair value of the share-based payments, or is otherwise beneficial to the employee
as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any
expense not yet recognized for the award is recognized immediately. This includes any award where non-vesting
conditions within the control of either the Group or the employee are not met. However, if a new award is substituted
for the cancelled award, and is designated as a replacement award on the date that it is granted, the cancelled and
new awards are treated as if they were a modification of the original award, as described in the previous paragraph.
Other employee benefits
Pension scheme
The employees of the Group’s subsidiaries which operate in Mainland China are required to participate in a
central pension scheme operated by the local municipal government. The subsidiaries operating in Mainland China
is required to contribute a certain percentage of its payroll costs to the central pension scheme. The contributions are
charged to profit or loss as they become payable in accordance with the rules of the central pension scheme.
APPENDIX I ACCOUNTANTS’ REPORT
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The subsidiary in the US maintains multiple qualified contributory savings plans as allowed under Section
401(k) of the Internal Revenue Code in the US. These plans are defined contribution plans covering substantially all
its qualifying employees and provide for voluntary contributions by employees, subject to certain limits. The
contributions are made by both the employees and the employer. The employees’ contributions are primarily based
on specified dollar amounts or percentages of employee compensation. The only obligation of the subsidiaries in the
US with respect to the retirement benefit plans is to make the specified contributions under the plans.
Borrowing costs
All borrowing costs are recognized in profit or loss in the period in which they are incurred.
Dividends
Final dividends are recognized as a liability when they are approved by the shareholders in a general meeting.
Proposed final dividends are disclosed in the notes to the financial statements. Interim dividends are simultaneously
proposed and declared, because the Company’s memorandum and articles of association grant the directors the
authority to declare interim dividends. Consequently, interim dividends are recognized immediately as a liability
when they are proposed and declared.
Foreign currencies
The Historical Financial Information is presented in RMB, which is the Company’s functional currency. Each
entity in the Group determines its own functional currency and items included in the financial statements of each
entity are measured using that functional currency. Foreign currency transactions recorded by the entities in the
Group are initially recorded using their respective functional currency rates prevailing at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency rates of
exchange ruling at the end of each reporting period. Differences arising on settlement or translation of monetary items
are recognized in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair value was measured. The gain or loss arising on
translation of a non-monetary item measured at fair value is treated in line with the recognition of the gain or loss
on change in fair value of the item (i.e., translation difference on the item whose fair value gain or loss is recognized
in other comprehensive income or profit or loss is also recognized in other comprehensive income or profit or loss,
respectively).
In determining the exchange rate on initial recognition of the related asset, expense or income on the
derecognition of a non-monetary asset or non-monetary liability relating to an advance consideration, the date of
initial transaction is the date on which the Group initially recognizes the non-monetary asset or non-monetary
liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group
determines the transaction date for each payment or receipt of the advance consideration.
The functional currencies of certain overseas subsidiaries are currencies other than RMB. As at the end of each
reporting period, the assets and liabilities of these entities are translated into RMB at the exchange rates prevailing
at the end of each reporting period and their statements of profit or loss are translated into RMB at the exchange rates
prevailing at the dates of the transactions.
The resulting exchange differences are recognized in other comprehensive income and accumulated in the
foreign currency translation reserve. On disposal of a foreign operation, the component of other comprehensive
income relating to that particular foreign operation is recognized in the profit or loss.
For the purpose of the consolidated statements of cash flows, the cash flows of overseas subsidiaries are
translated into RMB at the exchange rates ruling at the dates of the cash flows. Frequently recurring cash flows of
overseas subsidiaries which arise throughout the year are translated into RMB at the weighted average exchange rates
for the year.
APPENDIX I ACCOUNTANTS’ REPORT
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3. SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
The preparation of the Group’s Historical Financial Information requires management to make estimates and
assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and their accompanying
disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could
result in outcomes that could require a material adjustment to the carrying amounts of the assets or liabilities affected
in the future.
Estimation uncertainty
The key assumptions concerning the future and other key sources of estimation uncertainty at the end of each
reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year, are described below.
Provision for expected credit losses on trade receivables
The loss allowances for trade receivables are based on assumptions about risk of default and expected credit
loss rates. The Group uses judgement in making these assumptions and selecting the inputs to the impairment
calculation, based on the Group’s past history, existing market conditions as well as forward-looking estimates at the
end of each reporting period. The provision for ECLs is sensitive to changes in estimates. The information about the
ECLs and the Group’s trade receivables is disclosed in note 22 to the Historical Financial Information.
Net realizable value of inventories
The Group assesses periodically if cost of inventories may not be recoverable based on an assessment of the
net realizable value of inventories. Allowances are applied to inventories where events or changes in circumstances
indicate that the net realizable value is lower than the cost of inventories. The identification of obsolete inventories
requires the use of judgement and estimates on the conditions and usefulness of the inventories, the net realizable
value has been determined based on the contracted selling price to be recognized less all estimated remaining costs
to completion and costs necessary to provide the service. Where the expectation is different from the original
estimate, such difference will impact the carrying value of the inventories in the year in which such estimate changes.
Useful lives of other intangible assets
The Group’s management determines the useful lives and related amortization charges for its other intangible
assets. This estimate is based on the historical experience of the actual useful lives of other intangible assets of
similar nature and functions and may vary significantly as a result of policy changes and keen competitions from
competitors, resulting in higher amortization charge and/or write-off or write-down of technically obsolete assets
when useful lives are less than previously estimated. The Group will increase the amortization charges where useful
lives are less than previously estimated lives, or will write off or write down obsolete assets that have been abandoned
or sold.
Recognition of deferred tax assets
Deferred tax assets are recognized in respect of deductible temporary differences and unused tax losses. As
those deferred tax assets can only be recognized to the extent that it is probable that future taxable profits will be
available against which the deductible temporary differences and the losses can be utilized, management’s judgement
is required to assess the probability of future taxable profits. Management’s assessment is revised as necessary and
additional deferred tax assets are recognized if it becomes probable that future taxable profits will allow the deferred
tax asset to be recovered.
Fair value of financial instruments
The redemption liabilities on equity shares issued by the Group are not traded in an active market and the
respective fair values are determined by using valuation techniques, including discounted cash flow model.
The fair values of redemption liabilities on equity shares of the Group as at December 31, 2022, 2023 and 2024
were RMB517,667,000, RMB542,038,000 and RMB639,805,000 respectively. Further details are set out in note 30
to the Historical Financial Information. Such valuation is based on key parameters about risk-free rate, discounts for
lack of marketability (“DLOM”) and volatility, which are subject to uncertainty and might materially differ from the
actual results.
APPENDIX I ACCOUNTANTS’ REPORT
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Impairment of non-financial assets (other than goodwill)
The Group assesses whether there are any indicators of impairment for all non-financial assets (including the
right-of-use assets) at the end of each of the reporting periods. Non-financial assets are tested for impairment when
there are indicators that the carrying amounts may not be recoverable. An impairment exists when the carrying value
of an asset or a cash-generating unit exceeds its recoverable amount, which is the higher of its fair value less costs
of disposal and its value in use. The calculation of the fair value less costs of disposal is based on available data from
binding sales transactions in an arm’s length transaction of similar assets or observable market prices less incremental
costs for disposing of the asset. When value-in-use calculations are undertaken, management must estimate the
expected future cash flows from the asset or cash-generating unit and choose a suitable discount rate in order to
calculate the present value of those cash flows.
Impairment of goodwill
The Group determines whether goodwill is impaired at least on an annual basis. This requires an estimation
of the value in use of the cash-generating units to which the goodwill is allocated. Estimating the value in use requires
the Group to make an estimate of the expected future cash flows from the cash-generating units and also to choose
a suitable discount rate in order to calculate the present value of those cash flows. The carrying amounts of goodwill
as at December 31, 2022, 2023 and 2024 were RMB95,406,000, RMB95,406,000 and RMB95,406,000 respectively
and no impairment losses were recognized during the Relevant Periods. Details of the impairment testing are set out
in note 18.
4. SEGMENT INFORMATION
For the purpose of resource allocation and performance assessment, the Group’s chief executive officer, being
the chief operating decision maker, reviews the consolidated results when making decisions about allocating
resources and assessing performance of the Group as a whole and hence, the Group has only one reportable segment
and no further analysis of this single segment is presented.
Geographical information
(a) Revenue from external customers
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Mainland China 101,431 74,124 94,576
United States of America 132,309 114,794 243,207
Japan 55,157 73,572 31,187
Europe 45,016 62,591 48,615
Others 16,927 11,693 24,641
Total 350,840 336,774 442,226
The revenue information above is based on the locations of the contract entities of our customers.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 468 ---
(b) Non-current assets
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Mainland China 403,009 425,451 418,599
Overseas 48,287 57,041 58,326
Total 451,296 482,492 476,925
The non-current asset information above is based on the locations of the assets and excludes financial
instruments and deferred tax assets.
Information about major customers
Revenue from four customers, including sales to a group of entities which are known to be under common
control with those customers, which accounted for 10% or more of the Group’s revenue during the Relevant Periods,
is set out below:
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Customer A 53,998 70,408 30,337
Customer B 36,359 39,864 24,672
Customer C 17,347 18,277 118,595
5. REVENUE
An analysis of revenue is as follows:
Revenue from contracts with customers
(a) Disaggregated revenue information
Y ear ended December 31,
Types of goods and services 2022 2023 2024
RMB’000 RMB’000 RMB’000
CRDMO Services 349,557 336,353 441,873
Others 1,283 421 353
Total 350,840 336,774 442,226
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 469 ---
Y ear ended December 31,
Types of fee models 2022 2023 2024
RMB’000 RMB’000 RMB’000
FFS 331,576 326,803 425,322
FTE 17,981 9,550 16,551
Others 1,283 421 353
Total 350,840 336,774 442,226
Y ear ended December 31,
Timing of revenue recognition 2022 2023 2024
RMB’000 RMB’000 RMB’000
Services and goods transferred at a point
of time 332,461 326,803 425,322
Services transferred over time 18,379 9,971 16,904
Total 350,840 336,774 442,226
The following table shows the amounts of revenue recognized in the Relevant Periods that were included in
the contract liabilities at the beginning of each of the respective periods:
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Revenue recognized that was included in contract
liabilities at the beginning of the reporting
period: 40,238 44,726 40,541
(b) Performance obligations
Information about the Group’s performance obligation is summarized and detailed in note 2.3 Material
Accounting Policies above.
The aggregate amount of the transaction price allocated to performance obligations that are unsatisfied (or
partially unsatisfied) are RMB173,028,000, RMB152,909,000 and RMB408,521,000 as at December 31, 2022, 2023
and 2024, respectively. The management of the Group expects the majority of the transaction price allocated to the
unsatisfied contracts as of the end of each of the Relevant Periods will be recognized within 2 years from the end
of the respective periods.
APPENDIX I ACCOUNTANTS’ REPORT
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6. OTHER INCOME AND GAINS
An analysis of other income and gains is as follows:
Note Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Other income
Government grants
– income* 1,018 3,461 31,477
– assets** – – 3,490
Bank interest income 914 6,920 13,560
Total other income 1,932 10,381 48,527
Gains
Foreign exchange differences, net 11,944 5,065 7,312
Fair value gains on financial assets at
FVTPL 7,920 7,585 3,086
Gains on disposal of items of property and
equipment 384 – –
Others 545 113 132
Total gains 20,793 12,763 10,530
Other income and gains 22,725 23,144 59,057
* This represents government grants related to income that is received as compensation for expenses or
for the purpose of giving immediate financial support to the Group. There are no unfulfilled conditions
or contingencies relating to these grants. Government grants received for which related expenditure has
not yet been undertaken are included in deferred government grants under other payables and accruals
in the statement of financial position.
** The Group had complied with all conditions attaching to the government grants related to assets which
were recognized in profit or loss over the useful lives of the relevant assets.
APPENDIX I ACCOUNTANTS’ REPORT
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7. PROFIT BEFORE TAX
The Group’s profit before tax is arrived at after charging/(crediting):
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Cost of inventories sold 58,257 51,923 69,769
Depreciation of property and equipment
(note 15) * 16,443 20,164 20,743
Depreciation of right-of-use assets (note 17(1)) * 3,128 3,224 2,843
Amortization of other intangible assets
(note 16) * 6,362 6,393 6,503
Provision for inventories 2,508 3,940 2,456
Government grants (1,018) (3,461) (34,967)
Bank interest income (914) (6,920) (13,560)
Foreign exchange differences, net (11,944) (5,065) (7,312)
Impairment loss recognized on financial assets
under ECL model, net of reversal 1,125 600 916
(Gains)/Losses on disposal of items of property
and equipment (384) 156 228
Fair value gains on financial assets at FVTPL (7,920) (7,585) (3,086)
Lease payments not included in the measurement
of lease liabilities (note 17(3)) 1,493 1,567 1,515
Listing expense – – 25,019
Employee benefit expense (excluding directors’,
supervisors’ and chief executive’s
remuneration):
Wages and salaries 86,306 96,299 110,270
Pension scheme contributions 9,176 11,009 13,780
Staff welfare expense 4,668 5,136 4,800
Share-based payment compensation 1,889 1,909 2,311
Total employee benefits expenses 102,039 114,353 131,161
* Depreciation of property and equipment, depreciation of right-of-use assets and amortization of other
intangible assets for each reporting period are set out in “Administrative expenses”, “Selling and
marketing expenses”, “Research and development expenses” and “Cost of sales” in the consolidated
statement of profit or loss.
APPENDIX I ACCOUNTANTS’ REPORT
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8. FINANCE COSTS
An analysis of finance costs is as follows:
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Interests on bank loans 914 – 1,065
Interest on lease liabilities (note 17(3)) 367 224 76
Total 1,281 224 1,141
9. OTHER EXPENSES
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Losses on disposal of property and equipment – 156 228
Others 27 – 57
Total 27 156 285
10. DIRECTORS’, SUPERVISORS’ AND CHIEF EXECUTIVE’S REMUNERATION
Directors’, supervisors’ and chief executive’s remuneration for the Relevant Periods, disclosed pursuant to the
Listing Rules, section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part 2 of the Companies
(Disclosure of Information about Benefits of Directors) Regulation, is as follows:
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Salaries, allowances and benefits in kind 4,061 5,212 8,649
Performance related bonuses 850 1,500 7,053
Pension scheme contributions 145 144 270
Share-based payment compensation 1 3 2,130
Total 5,057 6,859 18,102
Restricted shares were granted to four supervisors of the Company during the years ended December 31, 2022
and 2023 in respect of their services to the Group. Two directors were appointed and granted restricted shares during
the year ended December 31, 2024. The fair value of such restricted shares, which has been recognized in profit or
loss immediately upon the date of grant or over the vesting period, was determined as at the date of grant and the
amount included in the Historical Financial Information for the Relevant Periods is included in the above directors’,
supervisors’ and chief executive’s remuneration disclosures.
APPENDIX I ACCOUNTANTS’ REPORT
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(a) Independent non-executive directors
There were no independent non-executive directors for the Company during the years ended December 31,
2022 and 2023. In May 2024, Dr. Y u Cheung Hoi, Dr. Zhu Xun and Mr. Xia Xinsheng were appointed as independent
non-executive directors of the Company. No fees were paid or payable to the independent non-executive directors
during the Relevant Periods.
(b) Directors, supervisors and the chief executive
Notes
Salaries,
allowances
and benefits
in kind
Performance
related
bonuses
Pension
scheme
contributions
Share-based
payment
compensation
Total
remuneration
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended
December 31, 2022
Chief executive and
director:
D r .X uQ i (a) 905 300 15 – 1,220
Directors:
Dr. Li Xiang (b) 1,808 300 107 – 2,215
Ms. Li Xiangli (c) 708 144 17 – 869
Mr. Zhang
Qiangming (d) – ––––
Mr. Wu Yihui (e) – ––––
Supervisor
Mr. Li Congyan (f) 640 106 6 1 753
4,061 850 145 1 5,057
Y ear ended
December 31, 2023
Chief executive and
director:
D r .X uQ i (a) 863 186 8 – 1,057
Directors:
Dr. Li Xiang (b) 1,664 186 94 – 1,944
Ms. Li Xiangli (c) 730 109 17 – 856
Mr. Zhang
Qiangming (d) – ––––
Mr. Wu Yihui (e) – ––––
Supervisors:
Mr. Li Congyan (f) 60 – 1 – 61
Ms. Y an Xiya (g) 668 579 – 1 1,248
Mr. Wu Haigang (h) 789 340 15 1 1,145
Ms. Fu Hongying (i) 438 100 9 1 548
5,212 1,500 144 3 6,859
APPENDIX I ACCOUNTANTS’ REPORT
– I-38 –


--- page 474 ---
Notes
Salaries,
allowances
and benefits
in kind
Performance
related
bonuses
Pension
scheme
contributions
Share-based
payment
compensation
Total
remuneration
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Y ear ended
December 31, 2024
Chief executive and
director:
D r .X uQ i (a) 725 300 – – 1,025
Directors:
Dr. Li Xiang (b) 1,516 558 74 – 2,148
Ms. Li Xiangli (c) 715 218 18 – 951
Mr. Zhang
Qiangming (d) – ––––
Ms. Cheng Tao (j) 2,309 4,249 74 730 7,362
Ms. Li Lingmei (k) 923 210 43 673 1,849
Mr. Wu Yihui (e) – ––––
Supervisors:
Ms. Y an Xiya (g) 925 644 – 465 2,034
Mr. Wu Haigang (h) 1,051 762 43 194 2,050
Ms. Fu Hongying (i) 485 112 18 68 683
8,649 7,053 270 2,130 18,102
Notes:
(a) Dr. Xu Qi was appointed as chief executive officer of the Company since June 2020.
(b) Dr. Li Xiang was appointed as a director of the Company with effect from January 2022.
(c) Ms. Li Xiangli was appointed as a director of the Company with effect from January 2022.
(d) Mr. Zhang Qiangming was appointed as a director of the Company with effect from January 2022 and
has resigned as the director of the Company with effect from May 2024.
(e) Mr. Wu Yihui was appointed as a director of the Company with effect from January 2022 and was
re-designated as a non-executive Director in May 2024.
(f) Mr. Li Congyan was appointed as a supervisor of the Company with effect from January 2022 and has
resigned in February 2023.
(g) Ms. Y an Xiya was appointed as a shareholders’ representative supervisor with effect from February
2023.
(h) Mr. Wu Haigang was appointed as a shareholders’ representative supervisor with effect from February
2023.
(i) Ms. Fu Hongying was appointed as an employee representative supervisor with effect from February
2023.
(j) Ms. Cheng Tao was appointed as a director of the Company with effect from May 2024 and the amounts
listed above represent her total remuneration from January 2024 to December 2024.
(k) Ms. Li Lingmei was appointed as a director of the Company with effect from May 2024 and the amounts
listed above represent her total remuneration from January 2024 to December 2024.
There was no arrangement under which a director waived or agreed to waive any remuneration during the
Relevant Periods.
APPENDIX I ACCOUNTANTS’ REPORT
– I-39 –


--- page 475 ---
11. FIVE HIGHEST PAID EMPLOYEES
The five highest paid employees during the years ended December 31, 2022, 2023 and 2024 included one, one
and three directors and supervisors of the Company, respectively, details of whose remuneration are set out in note
10 to the Historical Financial Information above. Details of the remuneration for the remaining highest paid
employees who are neither directors, supervisors nor the chief executive of the Company during the Relevant Periods
are as follows:
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Salaries, allowances and benefits in kind 9,829 8,848 2,842
Performance related bonuses 955 736 2,786
Pension scheme contributions 95 80 149
Share-based payment compensation 761 701 –
Total 11,640 10,365 5,777
The number of the five highest paid individuals (excluding one director, one director and three directors and
supervisors of the Company) whose remuneration fell within the following bands is as follows:
Number of employees
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
HKD1,500,000 to HKD2,000,000 – 1 –
HKD2,000,001 to HKD2,500,000 3 2 1
HKD3,000,001 to HKD3,500,000 – – 1
HKD4,500,001 to HKD5,000,000 – 1 –
HKD5,000,001 to HKD5,500,000 1 – –
During the Relevant Periods, restricted shares were granted to certain highest paid employees in respect of
their services and contributions to the Group, further details of which are set out in note 35 to the Historical Financial
Information. The fair value of such restricted shares, which has been recognized in profit or loss immediately upon
the date of grant or over the vesting period, was determined as at the date of grant and the amount included in the
Historical Financial Information for the Relevant Periods is included in the above highest paid employees’
remuneration disclosures.
APPENDIX I ACCOUNTANTS’ REPORT
– I-40 –


--- page 476 ---
12. INCOME TAX
The Group is subject to income tax on an entity basis on profits arising in or derived from the jurisdictions
in which members of the Group are domiciled and operate.
Mainland China
Under the Law of the PRC on Enterprise Income Tax (the “EIT Law”) and Implementation Regulation of the
EIT Law, the EIT rate of the Company and PRC subsidiaries was 25% during the Relevant Periods.
Chinese Peptide was accredited as a “High and New Technology Enterprise” in 2021 and is entitled to the
preferential CIT tax rate of 15% from 2021 to 2023. This qualification is subject to review by the relevant tax
authority in the PRC for every three years. Chinese Peptide renewed its “High and New Technology Enterprise”
qualification in 2023 and is entitled to the preferential tax rate of 15% from 2024 to 2026.
Hong Kong
The first HK$2,000,000 of assessable profits of the subsidiary are taxed at 8.25% and the remaining assessable
profits are taxed at 16.5%. No provision for Hong Kong income tax has been provided as the Group’s Hong Kong
entity had no estimated assessable profits during the Relevant Periods.
USA
The Company’s subsidiaries incorporated and operated in USA were subject to the federal corporate income
tax rate at 21% during the Relevant Periods. These subsidiaries were also subject to the state income tax in California
at a rate of 8.84% during the Relevant Periods.
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Current – Mainland China 11,944 13,072 18,342
Current – USA 666 6 6
Deferred (note 29) 966 (5) 928
Total 13,576 13,073 19,276
APPENDIX I ACCOUNTANTS’ REPORT
– I-41 –


--- page 477 ---
A reconciliation of the tax expense applicable to profit before tax at the statutory tax rate for the jurisdiction
in which the Company is domiciled to the tax expense at the effective tax rate is as follows:
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Profit before tax 67,556 61,978 78,449
Tax at the applicable tax rate of 25% 16,889 15,495 19,612
Tax effect of income not subject to tax (540) (107) (1,059)
Tax effect of expenses not deductible for
tax purpose 12,281 6,594 26,072
Different tax rates enacted by local authority (92) (12) (4)
Income tax at concessionary rate (8,459) (8,510) (12,719)
Effect of concessions (research and development
and other allowances) (10,892) (6,291) (7,052)
Effect of unused tax losses and deductible
temporary differences not recognized as
deferred tax assets 4,389 7,313 5,145
Utilization of deductible temporary differences
and tax losses not recognized as deferred
tax assets – (1,409) (10,719)
Tax charge at the Group’s effective tax rate for
the year 13,576 13,073 19,276
13. DIVIDEND
No dividend has been declared by the Company during the Relevant Periods.
APPENDIX I ACCOUNTANTS’ REPORT
– I-42 –


--- page 478 ---
14. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY EQUITY HOLDERS OF THE PARENT
The calculation of the basic earnings per share amounts is based on the profits for the year attributable to
ordinary equity holders of the parent and the weighted average numbers of shares for the purpose of basic earnings
per share for the Relevant Periods are calculated based on the assumption that the Company’s conversion into joint
stock limited company as set out in note 33 to the Historical Financial Information have been adjusted retrospectively.
The calculation of the diluted earnings per share amounts for the year ended December 31, 2024 is based on
the profit for the year attributable to ordinary equity holders of the parent, adjusted to reflect fair value loss/(gains)
on convertible bonds. The weighted average number of ordinary shares used in the calculation is the number of
ordinary shares in issue during the year, as used in the basic earnings per share calculation, and the weighted average
number of ordinary shares assumed to have been issued at no consideration on the deemed conversion of all dilutive
potential ordinary shares into ordinary shares.
The calculations of basic and diluted earnings per share are based on:
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Earnings
Profit attributable to ordinary equity holders of
the parent, used in the basic earnings per share
calculation 53,980 48,905 59,173
Add: Fair value loss/(gains) on convertible bonds 15,750 15,750 (10,781)
Profit attributable to ordinary equity holders of
the parent before fair value loss/(gains) on
convertible bonds 69,730* 64,655* 48,392
Number of shares (’000)
Y ear ended December 31,
2022 2023 2024
Ordinary shares
Weighted average number of ordinary shares
outstanding during the year used in the basic
earnings per share calculation 100,477 125,000 125,000
Effect of dilution – weighted average number of
ordinary shares:
Convertible bonds 13,698 13,698 3,424
Total 114,175* 138,698* 128,424
* Because the diluted earnings per share amounts are increased when taking convertible bonds into
account, the convertible bonds had an anti-dilutive effect on the basic earnings per share amounts
presented and were ignored in the calculation of diluted earnings per share for each of the years ended
December 31, 2022 and 2023. Therefore, no adjustment has been made on the basic earnings per share
amounts presented for each of the years ended December 31, 2022 and 2023 for the purpose of
computation of diluted earnings per share.
APPENDIX I ACCOUNTANTS’ REPORT
– I-43 –


--- page 479 ---
15. PROPERTY AND EQUIPMENT
Buildings
Machinery and
equipment
Computer
and office
equipment
Motor
vehicles
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
December 31, 2022
At January 1, 2022:
Cost 134,426 101,135 5,226 5,553 16,541 262,881
Accumulated depreciation (26,026) (47,151) (3,078) (3,272) – (79,527)
Net carrying amount 108,400 53,984 2,148 2,281 16,541 183,354
At January 1, 2022, net of
accumulated depreciation 108,400 53,984 2,148 2,281 16,541 183,354
Additions 154 19,469 870 – 74,720 95,213
Disposals – (3,901) (29) (63) – (3,993)
Transfer 3,036 2,558 160 – (5,754) –
Depreciation provided during
the year (6,566) (8,503) (798) (576) – (16,443)
Exchange realignment – – 22 – – 22
At December 31, 2022,
net of accumulated
depreciation 105,024 63,607 2,373 1,642 85,507 258,153
At December 31, 2022:
Cost 137,614 113,615 6,149 5,008 85,507 347,893
Accumulated depreciation (32,590) (50,008) (3,776) (3,366) – (89,740)
Net carrying amount 105,024 63,607 2,373 1,642 85,507 258,153
Buildings
Machinery and
equipment
Computer
and office
equipment
Motor
vehicles
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
December 31, 2023
At January 1, 2023:
Cost 137,614 113,615 6,149 5,008 85,507 347,893
Accumulated depreciation (32,590) (50,008) (3,776) (3,366) – (89,740)
Net carrying amount 105,024 63,607 2,373 1,642 85,507 258,153
At January 1, 2023, net of
accumulated depreciation 105,024 63,607 2,373 1,642 85,507 258,153
Additions 4,395 19,355 1,304 – 32,816 57,870
Disposals – (159) (15) – – (174)
Transfer 1,484 3,463 181 – (5,128) –
Depreciation provided during
the year (8,862) (9,909) (891) (502) – (20,164)
Exchange realignment – – 3 – 730 733
At December 31, 2023,
net of accumulated
depreciation 102,041 76,357 2,955 1,140 113,925 296,418
At December 31, 2023:
Cost 143,494 134,183 7,463 5,007 113,925 404,072
Accumulated depreciation (41,453) (57,826) (4,508) (3,867) – (107,654)
Net carrying amount 102,041 76,357 2,955 1,140 113,925 296,418
APPENDIX I ACCOUNTANTS’ REPORT
– I-44 –


--- page 480 ---
Buildings
Machinery and
equipment
Computer
and office
equipment
Motor
vehicles
Construction
in progress Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
December 31, 2024
At January 1, 2024:
Cost 143,494 134,183 7,463 5,007 113,925 404,072
Accumulated depreciation (41,453) (57,826) (4,508) (3,867) – (107,654)
Net carrying amount 102,041 76,357 2,955 1,140 113,925 296,418
At January 1, 2024, net of
accumulated depreciation 102,041 76,357 2,955 1,140 113,925 296,418
Additions 98 18,260 188 – 5,836 24,382
Disposals – (209) (138) (2) – (349)
Transfer 5,090 1,523 – – (6,613) –
Depreciation provided during
the year (7,669) (11,788) (817) (469) – (20,743)
Exchange realignment – – 6 – 770 776
At December 31, 2024, net
of accumulated
depreciation 99,560 84,143 2,194 669 113,918 300,484
At December 31, 2024:
Cost 148,557 150,070 7,243 4,942 113,918 424,730
Accumulated depreciation (48,997) (65,927) (5,049) (4,273) – (124,246)
Net carrying amount 99,560 84,143 2,194 669 113,918 300,484
16. OTHER INTANGIBLE ASSETS
Knowhows Software Total
RMB’000 RMB’000 RMB’000
December 31, 2022
At January 1, 2022:
Cost 59,100 4,537 63,637
Accumulated amortization (8,865) (1,441) (10,306)
Net carrying amount 50,235 3,096 53,331
Cost at January 1, 2022, net of
accumulated amortization 50,235 3,096 53,331
Additions – 45 45
Amortization provided during the year (5,910) (452) (6,362)
At December 31, 2022 44,325 2,689 47,014
At December 31, 2022:
Cost 59,100 4,582 63,682
Accumulated amortization (14,775) (1,893) (16,668)
Net carrying amount 44,325 2,689 47,014
APPENDIX I ACCOUNTANTS’ REPORT
– I-45 –


--- page 481 ---
Knowhows Software Total
RMB’000 RMB’000 RMB’000
December 31, 2023
At January 1, 2023:
Cost 59,100 4,582 63,682
Accumulated amortization (14,775) (1,893) (16,668)
Net carrying amount 44,325 2,689 47,014
Cost at January 1, 2023, net of
accumulated amortization 44,325 2,689 47,014
Additions – 469 469
Amortization provided during the year (5,910) (483) (6,393)
At December 31, 2023 38,415 2,675 41,090
At December 31, 2023:
Cost 59,100 5,051 64,151
Accumulated amortization (20,685) (2,376) (23,061)
Net carrying amount 38,415 2,675 41,090
December 31, 2024
At January 1, 2024:
Cost 59,100 5,051 64,151
Accumulated amortization (20,685) (2,376) (23,061)
Net carrying amount 38,415 2,675 41,090
Cost at January 1, 2024, net of
accumulated amortization 38,415 2,675 41,090
Additions – 1,429 1,429
Amortization provided during the year (5,910) (593) (6,503)
At December 31, 2024 32,505 3,511 36,016
At December 31, 2024:
Cost 59,100 6,480 65,580
Accumulated amortization (26,595) (2,969) (29,564)
Net carrying amount 32,505 3,511 36,016
APPENDIX I ACCOUNTANTS’ REPORT
– I-46 –


--- page 482 ---
17. LEASES
The Group as a lessee
During the Relevant Periods, the Group entered into certain long-term lease contracts for office premises and
leasehold land. Office premises generally have lease terms between 3 and 5 years, and leasehold land generally have
lease terms between 48 and 50 years. Generally, the Group is restricted from assigning and subleasing the leased
assets outside the Group.
(1) Right-of-use assets
The carrying amounts of the Group’s right-of-use assets and the movements during the Relevant Periods are
as follows:
Leasehold land
Office
premises Total
RMB’000 RMB’000 RMB’000
As at January 1, 2022 40,304 5,273 45,577
Depreciation charge (1,105) (2,023) (3,128)
Exchange realignment – 415 415
As at December 31, 2022 39,199 3,665 42,864
As at January 1, 2023 39,199 3,665 42,864
Depreciation charge (1,105) (2,119) (3,224)
Exchange realignment – 51 51
As at December 31, 2023 38,094 1,597 39,691
As at January 1, 2024 38,094 1,597 39,691
Additions – 1,226 1,226
Depreciation charge (1,105) (1,738) (2,843)
Exchange realignment – 8 8
As at December 31, 2024 36,989 1,093 38,082
APPENDIX I ACCOUNTANTS’ REPORT
– I-47 –


--- page 483 ---
(2) Lease liabilities
The carrying amounts of lease liabilities and the movements during the Relevant Periods are as follows:
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Carrying amount at the beginning of the year 5,926 4,289 1,846
Additions – – 1,226
Accretion of interest recognized during the year 367 224 76
Payments (2,477) (2,726) (2,014)
Exchange adjustment 473 59 9
Carrying amount at the end of the year 4,289 1,846 1,143
Analyzed into:
Current portion 2,474 1,846 379
Non-current portion 1,815 – 764
The maturity analysis of lease liabilities is disclosed in note 41 to the Historical Financial information.
(3) The amounts recognized in profit or loss in relation to leases are as follows:
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Interest on lease liabilities 367 224 76
Depreciation of right-of-use assets 3,128 3,224 2,843
Expenses relating to short-term leases and
low-value assets* 1,493 1,567 1,515
Total amount recognized in profit or loss 4,988 5,015 4,434
* Included in “Administrative expenses”, “Selling and marketing expenses” and “Research and
development expenses” in the consolidated statements of profit or loss.
The total cash outflow for leases is set out in note 36 to the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-48 –


--- page 484 ---
18. GOODWILL
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Cost and net carrying amount at the beginning
and end of year 95,406 95,406 95,406
The Group’s goodwill acquired through business combination is related to the acquisition of Chinese Peptide
and its subsidiaries (the “Chinese Peptide Group”) in June 2020 and the goodwill has been allocated to Chinese
Peptide Group cash-generating unit (the “Chinese Peptide Group CGU”) for impairment testing at the end of each
of the Relevant Periods.
The carrying amount of goodwill allocated to Chinese Peptide Group CGU is as follows:
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Chinese Peptide Group CGU 95,406 95,406 95,406
Goodwill is tested by management for impairment annually or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired. As at December 31, 2022, 2023 and 2024, the
impairment test is performed for Chinese Peptide Group CGU by engaging an independent valuation firm to estimate
its recoverable amount. The recoverable amount has been determined based on a value in use (“VIU”) calculation.
The calculation uses cash flow projections based on financial budgets approved by management covering a five-year
period. Cash flows beyond the projected period are extrapolated using the estimated terminal growth rates.
Management leveraged their experience in the industries and provided forecast based on past performance and their
expectation of future business plans and external sources of information.
The following describes each key assumption on which management has based its cash flow projections to
undertake impairment testing of goodwill:
As at December 31,
2022 2023 2024
Pre-tax discount rate 15.30% 15.31% 15.37%
Revenue (% compound growth rate) 14.97% 14.65% 13.16%
Terminal growth rate 2.30% 2.20% 2.00%
Pre-tax discount rate – The discount rate used is before tax and reflects specific risks relating to Chinese
Peptide Group CGU.
Revenue growth rate – The basis used to determine the budgeted revenue is based on management’s
expectation and expectation of the future market.
Terminal growth rate – The forecasted terminal growth rate is based on management’s expectations and does
not exceed the long-term average growth rate for the industry relevant to Chinese Peptide Group CGU.
APPENDIX I ACCOUNTANTS’ REPORT
– I-49 –


--- page 485 ---
Management of the Company has performed sensitivity test by decreasing 1% of revenue growth rate,
decreasing 1% of terminal growth rate or increasing 1% of pre-tax discount rate, with all other assumptions held
constant. The impacts on the amount by which Chinese Peptide Group CGU recoverable amount above its carrying
amount (headroom) are as below:
As at December 31,
2022 2023 2024
Headroom 1,356,424 1,414,047 1,846,704
Impact by decreasing revenue growth rate (61,374) (63,779) (81,731)
Impact by decreasing terminal growth rate (101,673) (105,370) (127,085)
Impact by increasing pre-tax discount rate (127,969) (132,972) (164,713)
No impairment loss in relation to goodwill is recognized for Chinese Peptide Group CGU during the Relevant
Periods. Considering there was still sufficient headroom based on the assessment, the management of the Company
believes that a reasonably possible change in the key parameters would not cause the carrying amount of the Chinese
Peptide Group CGU to exceed its recoverable amount as at December 31, 2022, 2023 and 2024.
19. FINANCIAL ASSETS AT FAIR V ALUE THROUGH PROFIT OR LOSS
The Group
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Current
Structured deposits and wealth management
products 332,126 110,082 –
Non-current
Unlisted equity investment 1,728 1,530 1,634
Total 333,854 111,612 1,634
The Company
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Current
Structured deposits and wealth management
products 292,557 100,000 –
Non-current
Unlisted equity investment 1,728 1,530 1,634
Total 294,285 101,530 1,634
APPENDIX I ACCOUNTANTS’ REPORT
– I-50 –


--- page 486 ---
As at December 31, 2022 and 2023, the financial assets at fair value through profit or loss in current portion
represented floating return structured deposits and wealth management products issued by certain banks, with
expected return rates ranging from 1.5% to 4.0% per annum.
The fair value of the unlisted equity investment which is not quoted in an active market is valued by using cost
to investment and market approach method, which is mainly based on the price of recent investment and comparable
company’s market multiple.
20. INVESTMENTS IN SUBSIDIARIES
The Company
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Investments in subsidiaries 730,340 732,239 736,484
The investment cost in subsidiaries includes capital contribution by the Company to the subsidiaries and the
share-based payments in respect of the restricted shares granted by the Company to certain employees of the
subsidiaries for employees’ service rendered to the subsidiaries under the Company’s Share Incentive Plan as set out
in note 35 to the Historical Financial Information. Since the Company grants restricted share awards directly to the
employees of subsidiaries and settles them in its own equity, the share-based payment compensations related to those
employees of subsidiaries are treated as deemed capital contribution by the Company to the subsidiaries and included
in the Company’s cost of investments in subsidiaries.
21. INVENTORIES
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Raw material 28,174 26,249 33,308
Work in progress 10,888 7,046 22,234
Finished goods 40,243 39,710 29,235
Total 79,305 73,005 84,777
APPENDIX I ACCOUNTANTS’ REPORT
– I-51 –


--- page 487 ---
22. TRADE AND NOTES RECEIV ABLES
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Trade receivables 20,744 40,902 62,645
Notes receivable 3,008 – –
Less: Allowance for credit losses (3,952) (4,484) (4,925)
Net carrying amount 19,800 36,418 57,720
The Group’s trading terms with its customers are payment in advance or on credit. The credit period is
generally from one month to two months. The Group seeks to maintain strict control over its outstanding receivables
to minimize credit risk. Overdue balances are reviewed regularly by senior management. The Group does not hold
any collateral or other credit enhancements over its trade receivable balances. The balances of trade receivables are
non-interest-bearing.
An aging analysis of the trade receivables as at the end of each of the Relevant Periods, based on the invoice
date and net of allowance for expected credit losses, is as follows:
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within 1 year 15,771 35,483 57,460
1 to 2 years 1,017 869 240
2 to 3 years 4 66 20
Total 16,792 36,418 57,720
The movements in the allowance for expected credit losses on trade receivables are as follows:
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
At the beginning of the year 2,793 3,952 4,484
Exchange realignment – – 8
Impairment losses, net of reversal 1,159 532 433
At the end of the year 3,952 4,484 4,925
For trade receivables, the Group has applied the simplified approach in IFRS 9 to measure the loss allowance
at an amount equal to lifetime ECLs. To measure the expected credit losses, trade receivables have been assessed on
individual basis for debtors in severe financial difficulty, or collectively basis by using a provision matrix, estimated
based on the financial quality of debtors and historical credit loss experience based on the aging of the trade
receivables, adjusted as appropriate to reflect current and forward-looking information on macroeconomic factors
affecting the ability of the customers to settle the receivables.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 488 ---
Set out below is the information about the credit risk exposure on Group’s trade receivables on December 31,
2022, 2023 and 2024:
As at December 31, 2022
Expected
credit loss rate
Total gross
carrying
amount
Expected
credit losses
% RMB’000 RMB’000
Individually assessed: 100.0 2,201 2,201
Collectively assessed:
Within 1 year 2.3 16,136 365
1 to 2 years 42.2 1,760 743
2 to 3 years 98.8 342 338
Over 3 years 100.0 305 305
Total 20,744 3,952
As at December 31, 2023
Expected
credit loss rate
Total gross
carrying
amount
Expected
credit losses
% RMB’000 RMB’000
Individually assessed: 100.0 2,201 2,201
Collectively assessed:
Within 1 year 2.1 36,237 754
1 to 2 years 35.9 1,356 487
2 to 3 years 89.4 623 557
Over 3 years 100.0 485 485
Total 40,902 4,484
As at December 31, 2024
Expected
credit loss rate
Total gross
carrying
amount
Expected
credit losses
% RMB’000 RMB’000
Individually assessed: 100.0 2,201 2,201
Collectively assessed:
Within 1 year 0.9 58,001 541
1 to 2 years 44.8 435 195
2 to 3 years 98.1 1,056 1,036
Over 3 years 100.0 952 952
Total 62,645 4,925
APPENDIX I ACCOUNTANTS’ REPORT
– I-53 –


--- page 489 ---
23. PREPAYMENTS, OTHER RECEIV ABLES AND OTHER ASSETS
The Group
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Non-current:
V alue-added tax recoverable – – 5,228
Prepayments for purchase of items of property
and equipment 6,754 8,816 1,709
Deposits 403 514 246
Total 7,157 9,330 7,183
Current:
V alue-added tax recoverable 3,273 4,415 1,948
Prepayments 3,052 6,971 4,761
Advances to employees 504 334 618
Other receivables 391 14 –
Deferred listing expense – – 8,907
Impairment (45) (113) (136)
Total 7,175 11,621 16,098
The Company
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Non-current:
V alue-added tax recoverable – – 1,619
Current:
Amounts due from subsidiaries
(non-trade) 51,600 102,600 47,400
V alue-added tax recoverable 210 1,193 –
Prepayments 285 407 299
Deferred listing expense – – 8,907
Advances to employees 13 12 –
Total 52,108 104,212 56,606
APPENDIX I ACCOUNTANTS’ REPORT
– I-54 –


--- page 490 ---
24. TIME DEPOSITS AND CASH AND CASH EQUIV ALENTS
The Group
Time deposits
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Time deposits – current* 10,000 – 143,032
Time deposits over one year* 51,634 53,409 –
Denominated in:
RMB 61,634 53,409 55,189
USD – – 87,843
Total time deposits 61,634 53,409 143,032
* Time deposits are made for over three months depending on the immediate cash requirements of the
Group and earn interest at the respective time deposit rates. The time deposits are deposited with
creditworthy banks with no recent history of default.
Cash and cash equivalents
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Cash at banks 279,478 531,447 387,622
Less: pledged deposits (430) (435) (439)
Cash and cash equivalents 279,048 531,012 387,183
Denominated in:
RMB 58,699 262,361 72,292
USD 220,283 268,371 314,018
HKD – 211 65
EUR 66 69 808
Total cash and bank balances 279,048 531,012 387,183
APPENDIX I ACCOUNTANTS’ REPORT
– I-55 –


--- page 491 ---
The Company
Time deposits
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Time deposits – current 10,000 – 55,189
Time deposits over one year 51,634 53,409 –
Denominated in:
RMB 61,634 53,409 55,189
Total time deposits 61,634 53,409 55,189
Cash and cash equivalents
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Cash at banks 38,871 191,010 25,940
Cash and cash equivalents 38,871 191,010 25,940
Denominated in:
RMB 38,871 191,010 25,940
Total cash and bank balances 38,871 191,010 25,940
The RMB is not freely convertible into other currencies, however, under Mainland China’s Foreign Exchange
Control Regulations and Administration of Settlement, and Sale and Payment of Foreign Exchange, the Group is
permitted to exchange RMB for other currencies through banks authorized to conduct foreign exchange business.
Cash at banks earns interest at floating rates based on daily bank deposit rates. The bank balances are deposited
with creditworthy banks with no recent history of default.
25. TRADE PAYABLES
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Trade payables 12,711 6,731 23,469
APPENDIX I ACCOUNTANTS’ REPORT
– I-56 –


--- page 492 ---
An aging analysis of the trade payables as at the end of each of the Relevant Periods, based on the invoice date,
is as follows:
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within 1 year 12,474 6,546 23,328
1 to 2 years 88 16 22
Over 2 years 149 169 119
Total 12,711 6,731 23,469
Trade payables are non-interest-bearing and are normally settled within one months.
26. OTHER PAYABLES AND ACCRUALS
The Group
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Deferred government grants (note a)
– income 21,875 42,875 –
– assets 39,000 39,000 –
Payroll and welfare payable 16,914 14,657 23,289
Payables for acquisition of property and
equipment 13,201 17,955 14,208
Other payables (note b) 5,458 4,370 6,933
Other taxes payable 3,163 1,578 1,385
Accrued listing expenses – – 7,645
Others 780 99 –
Total 100,391 120,534 53,460
The Company
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Deferred government grants (note a)
– income 21,875 42,875 –
Amounts due to subsidiaries (non-trade) – – 28,815
Payroll and welfare payable 241 357 136
Accrued listing expenses – – 7,645
Others 783 100 –
Total 22,899 43,332 36,596
APPENDIX I ACCOUNTANTS’ REPORT
– I-57 –


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Notes:
(a) The Group has received certain government grants related to assets or income.
The grants related to income are in relation to compensation received for interest payments arising from
convertible bonds as detailed in note 31 to the Historical Financial Information. RMB21,875,000 and
RMB21,000,000 of such compensation had been received by the Group in 2021 and 2023 respectively
and recorded as deferred government grant as certain conditions attaching to the compensation have yet
to be achieved. Pursuant to the supplementary agreements entered with the governments in March 2024,
the grants were subsequently recognized in profit or loss in 2024 with the achievement of the revised
conditions attaching to the compensation.
The remaining government grants related to assets have been recorded as other payables and accruals
as relevant conditions have yet to be met and were reclassified to deferred government grants as detailed
in note 32 to the Historical Financial Information in June 2024 after such conditions are met.
(b) Other payables are unsecured, non-interest-bearing and repayable on demand.
27. INTEREST-BEARING BANK BORROWINGS
As at December 31, 2024
Effective interest
rate per annum Maturity
% RMB’000
Current
Bank loans – unsecured 2.95 2025/1/24 40,000
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Bank loans repayable:
Within one year – – 40,000
28. CONTRACT LIABILITIES
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Contract liabilities 59,099 49,435 37,444
Contract liabilities represented the obligations to transfer peptide CRDMO services to customers from which
the Group has received consideration. The change of contractual liabilities is mainly due to whether the Group
delivers services at the end of the year.
APPENDIX I ACCOUNTANTS’ REPORT
– I-58 –


--- page 494 ---
29. DEFERRED TAX
The Group
The movements in deferred tax liabilities and assets during the Relevant Periods are as follows:
Deferred tax assets
Impairment
of financial
assets Provision
Deferred
government
grants
Loss available
for offsetting
against future
taxable profits
Leases
liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2022 431 578 5,850 113 1,245 8,217
Deferred tax credited/
(charged) to profit or
loss during the year
(note 12) 168 367 – 1,417 (344) 1,608
Gross deferred tax assets
at December 31, 2022 599 945 5,850 1,530 901 9,825
At January 1, 2023 599 945 5,850 1,530 901 9,825
Deferred tax credited/
(charged) to profit or
loss during the year
(note 12) 23 591 – (348) (513) (247)
Gross deferred tax assets
at December 31, 2023 622 1,536 5,850 1,182 388 9,578
At January 1, 2024 622 1,536 5,850 1,182 388 9,578
Deferred tax credited/
(charged) to profit or
loss during the year
(note 12) 107 182 (523) (1,079) (148) (1,461)
Gross deferred tax assets
at December 31, 2024 729 1,718 5,327 103 240 8,117
APPENDIX I ACCOUNTANTS’ REPORT
– I-59 –


--- page 495 ---
Deferred tax liabilities
Depreciation
allowance in
excess of
related
depreciation
Fair value
adjustments
arising from
acquisition
for
subsidiary
Right-of-use
assets
Fair value
change of
financial
assets at
FVTPL Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2022 2,228 15,050 1,107 113 18,498
Deferred tax (credited)/
charged to profit or loss
during the year (note 12) 2,748 (1,275) (337) 1,439 2,575
Gross deferred tax
liabilities at
December 31, 2022 4,976 13,775 770 1,552 21,073
At January 1, 2023 4,976 13,775 770 1,552 21,073
Deferred tax (credited)/
charged to profit or loss
during the year (note 12) 1,607 (1,171) (434) (254) (252)
Gross deferred tax
liabilities at
December 31, 2023 6,583 12,604 336 1,298 20,821
At January 1, 2024 6,583 12,604 336 1,298 20,821
Deferred tax (credited)/
charged to profit or loss
during the year
(note 12) 3,380 (2,600) (106) (1,207) (533)
Gross deferred tax
liabilities at
December 31, 2024 9,963 10,004 230 91 20,288
For the purpose of presentation in the consolidated statements of financial position, certain deferred tax assets
and liabilities have been offset. The following is a summary of the deferred tax balances for financial reporting
purpose:
As at December 31
2022 2023 2024
RMB’000 RMB’000 RMB’000
Reflected in the consolidated statements of
financial position:
– Net deferred tax assets 139 62 23
– Net deferred tax liabilities 11,387 11,305 12,194
APPENDIX I ACCOUNTANTS’ REPORT
– I-60 –


--- page 496 ---
Deferred tax assets have not been recognized in respect of the following items:
As at December 31
2022 2023 2024
RMB’000 RMB’000 RMB’000
Deductible temporary differences 21,875 42,875 –
Tax losses 20,542 23,156 43,755
Total 42,417 66,031 43,755
The Group has accumulated tax losses arising in Mainland China of RMB20,542,000, RMB23,156,000 and
RMB43,755,000 as at the end of each of the Relevant Periods, respectively. The tax losses in the PRC can be carried
forward for five years to offset future taxable profits. The tax losses of those companies in the PRC will expire in
one to five years for offsetting against taxable profits.
Deferred tax assets have not been recognized in respect of these losses as it is not considered probable that
taxable profits will be available against which the tax losses can be utilized.
30. REDEMPTION LIABILITIES ON EQUITY SHARES
In December 2020, the Company issued one-year zero-coupon convertible bonds to a third-party investor,
Hangzhou Heda New Pharmaceutical V enture Capital Partnership (Limited Partnership) ((“Hangzhou Heda
Xinyiyao”)ψձ༺อᔼᖹ௴ุҳ༟ΥྫΆุ(Υྫ)), for an aggregate principal amount of RMB100,000,000.
According to the convertible bond agreement, the conversion period will be within one year after the day the
Company received the convertible bonds investment. If the Company complete any new equity financing of over
RMB100,000,000 within the conversion period, the conversion price of the convertible bonds will be equal to 85%
of the price per share in the latest new equity financing. If the Company fails to complete any new equity financing
over RMB100,000,000 within the conversion period, the conversion price of the convertible bonds will be RMB1.0
per share.
In December 2021, the Company entered into an investment agreement with several independent investors
(“Series A Shares”). According to the investment agreement, convertible bonds with a nominal values of
RMB100,000,000 was converted to 5,228,758 paid-in capital with Series A Shares preference rights of the Company
by Hangzhou Heda Xinyiyao. The Company also issued 16,444,444 paid-in capital with Series A Shares preference
rights of the Company to certain independent investors including Lanxi Puhua Shuoyang Xiaxing V enture Investment
Partnership (Limited Partnership) (௴ุҳ༟ΥྫΆุ(Υྫ)) (“Puhua Xiaxing”), Hangzhou
Haibang Boyuan V enture Capital, Partnership (Limited Partnership) (ψऎԞ௹๕௴ุҳ༟ΥྫΆุ(Υྫ))
(“Haibang Boyuan”), Shenzhen Minhe Investment Co., Ltd.* (ʮ̡), (“Shenzhen Minhe
Investment”), Nanjing Outao Information Technology Co., Ltd.* (ʮ̡) (“Nanjing Outao”),
Hainan Jingsheng Yiqi Private Equity Investment Fund Partnership (Limited Partnership) (ᛆҳ
ΥྫΆุ(Υྫ)) (“Hainan Jingsheng Yiqi”) for a total cash consideration of RMB370,000,000 or
RMB22.50 per share. Hangzhou Heda Xinyiyao, Puhua Xiaxing, Haibang Boyuan, Shenzhen Minhe Investment,
Nanjing Outao and Hainan Jingsheng Yiqi were collectively referred as “Series A Investors”. The numbers of paid-in
capital presented in this paragraph didn’t consider the impact of conversion of paid-in capital to share capital due to
conversion to a joint stock limited liability company as detailed in note 33.
The key terms of the Series A Shares are summarized as follows:
(a) Redemption features
The investment from the Series A Investors shall be redeemed by the Company and/or management
shareholders, at the option of the investors if a qualified IPO or qualified mergers and acquisitions has not been
consummated by December 31, 2026 and/or upon the occurrence of the change of controlling shareholder before
completion of a qualified IPO without consent of the Series A Investors. The Series A Investors shall be entitled to
receive the redemption amount equal to the original investment amount plus interest of 8% per annum calculated on
a simple basis.
APPENDIX I ACCOUNTANTS’ REPORT
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(b) Liquidation preferences
In the event of any liquidation, dissolution, winding up of the Company or deemed liquidation event, holders
of the Series A Shares shall be entitled to be paid out of the funds and assets available for distribution to the members
of the Company, an amount per share equal to the original issue price for each series equity share at 8% interest rate
per annum, excluding any dividends received form the Company.
(c) Anti-dilution right
If the Company increases its paid-in capital at a price lower than the price paid by the Series A Investors on
a per paid-in capital basis, the Series A Investors have a right to require the management shareholders to transfer a
portion of their company equity or require the Company to issue additional paid-in capital for nil consideration to
the investors, so that the total amount paid by the Series A Investors divided by the total amount of paid-in capital
obtained is equal to the price per paid-in capital in the new issuance.
Presentation and classification
The Group and the Company have designated the redemption liabilities on equity shares as whole as financial
liabilities carried at FVTPL and presented as “redemption liabilities on equity shares” in the consolidated statements
of financial position. The change in fair value of the redemption liabilities on equity shares is charged to profit or
loss except for the portion attributable to credit risk change that shall be charged to other comprehensive income.
Management considered that the fair value change in the redemption liabilities on equity shares attributable to
changes of own credit risk is not significant. The discounted cash flow was used to determine the fair value of
convertible bonds.
Pursuant to the special rights termination agreement dated May 15, 2024 entered into among all current
shareholders, all shareholders’ special rights granted had be automatically terminated upon listing, except redemption
features which had be automatically terminated upon the first submission of the listing application on May 31, 2024,
provided that redemption rights shall be automatically and immediately reinstated and restored upon the earlier of
(i) the date when the Company’s listing application is rejected, returned, or voluntarily withdrawn by the Company;
or (ii) the listing has not taken place by December 31, 2026. Considering the contingency relating to the reinstatement
and restoration of the redemption features is outside the control of the Company, the redemption liabilities on equity
shares is assessed to be continuously measured as financial liabilities carried at FVTPL after entering the termination
agreement.
The movements in redemption liabilities on equity shares during the Relevant Periods are set out below:
The Group and the Company
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
At the beginning of the year 471,602 517,667 542,038
Changes in fair value 46,065 24,371 97,767
At the end of the year 517,667 542,038 639,805
The Company used the discounted cash flow and back-solve method to determine the underlying share value
of the Company and performed an equity allocation based on the Option Pricing model (“OPM model”) to arrive the
fair value of the redemption liabilities on equity shares as at the end of each reporting period with reference to
valuation report carried out by an independent valuer.
APPENDIX I ACCOUNTANTS’ REPORT
– I-62 –


--- page 498 ---
In addition to the underlying share value of the Company determined by the discounted cash flow and
back-solve method, other key valuation assumptions used in the OPM model to determine the fair value are as
follows:
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Risk-free interest rate 2.55% 2.29% 1.08%
DLOM 21.84% 16.58% 10.54%
V olatility 54.32% 56.91% 54.84%
The Group estimated the risk-free interest rate based on the yield of China government bond with maturity
close to the expected exit timing as of the valuation date. The DLOM was estimated based on the option-pricing
method. Under the option-pricing method, the cost of put option, which can hedge the price change before the
privately held share can be sold, was considered as a basis to determine DLOM. V olatility was estimated based on
annualized standard deviation of daily shares price return of comparable companies for a period from the valuation
date and with a similar span as time to expiration.
31. CONVERTIBLE BONDS
Three-year 7.0% RMB300 million convertible bonds
In December 2020, the Company issued three-year 7.0% convertible bonds in an aggregate principal amount
of RMB300,000,000 to a third-party investor, Hangzhou Heda Kontide V enture Capital Partnership (Limited
partnership) (“Heda Kontide”,ψձ༺ੰ㹻௴ุҳ༟ΥྫΆุ(Υྫ)). According to the convertible bond
agreement, the conversion period will be 3 years starting from the day the Company received the convertible bonds
investment and the conversion period would be subject to 2-year extension if the Company and Heda Kontide reach
a consensus. If the subsidiary of the Company, Chinese Peptide, achieved net profits of more than one billion for the
year ended December 31, 2023, the conversion price of the convertible bonds will be equal to the price per share in
the latest new equity financing. If Chinese Peptide failed to achieve more than one billion net profits for the year
ended December 31, 2023 and Heda Kontide will have right to request the Company to redeem all of the convertible
bonds. The Company needs to repay interest of the convertible bonds at 7.0% to Heda Kontide not later than
December 30 each year. On March 29, 2024, the Company had repaid the principal amount of RMB300,000,000 of
convertible bonds to Heda Kontide in full. Pursuant to provisions of the supplemental agreement with the relevant
government authority in March 2024, the interest rate of the convertible bonds was reduced to 5.5% due to the
decrease in market financing cost in China and the Company fully repaid the outstanding interest amount in June
2024.
Presentation and classification
The Group and the Company have designated the three-year zero-coupon convertible bonds as whole as
financial liabilities carried at FVTPL. The change in fair value of the convertible bonds at FVTPL is charged to profit
or loss except for the portion attributable to credit risk change that shall be charged to other comprehensive income.
Management considered that the fair value change in the convertible bonds at FVTPL attributable to changes in credit
risk is not significant. The discounted cash flow method was used to determine the fair value of convertible bonds.
APPENDIX I ACCOUNTANTS’ REPORT
– I-63 –


--- page 499 ---
The movements in convertible bonds during the Relevant Periods are set out below:
The Group and the Company
300 million
convertible bonds
RMB’000
At January 1, 2022 300,000
Changes in fair value 21,000
At December 31, 2022 321,000
Changes in fair value 21,000
Interest paid (21,000)
At December 31, 2023 321,000
Repayment of convertible bonds (300,000)
Changes in fair value (14,375)
Interest paid (6,625)
At December 31, 2024 –
32. DEFERRED GOVERNMENT GRANTS
As at December 31,
2024
RMB’000
Government grants:
Current 6,438
Non-current 29,072
Total 35,510
The movement in government grants during the Relevant Periods are as follows:
As at December 31,
2024
RMB’000
At beginning of January 1, 2024 –
Addition (note) 39,000
Amount recognised in profit or loss (3,490)
At end of December 31, 2024 35,510
Note: The Group had complied with all conditions attaching to the government grants related to assets and the
grants were reclassified to deferred government grants which will be recognized in profit or loss over
the useful lives of the relevant assets.
APPENDIX I ACCOUNTANTS’ REPORT
– I-64 –


--- page 500 ---
33. PAID-IN CAPITAL/SHARE CAPITAL
Pursuant to the shareholders’ resolutions dated October 30, 2022, the then existing shareholders of the
Company approved the conversion of the Company into a joint stock company with limited liabilities with
125,000,000 shares in a nominal value of RMB1.0 each. The net assets of the Company as of the conversion base
date under PRC GAAP audited by an independent auditor were converted at a rate of 1:0.143, into 125,000,000
ordinary shares at RMB1.0 each and issued to the then shareholders of the Company in proportion to their capital
contribution to the Company. The remaining amount was converted into capital reserve. Upon the completion of
registration with the Administration for Market Regulation of the Hangzhou (ψ̹̹ఙ္ຖ၍ଣ҅) on February
10, 2023, the Company was converted into a joint stock company with limited liability, and renamed as Medtide Inc.
(इᅃᔼᖹ(एϪ)ʮ̡).
A summary of movements in the Company’s paid-in capital/share capital is as follows:
Number of
Ordinary shares
Paid-in
capital/Share
capital
RMB’000
As at January 1, 2022 N/A 85,423
Capital contribution by shareholders (note a) N/A 36,250
As at December 31, 2022 and January 1, 2023 N/A 121,673
Issue of ordinary shares upon conversion into a joint stock
company (note b) 125,000,000 3,327
As at December 31, 2023, January 1, 2024 and
December 31, 2024 125,000,000 125,000
Notes:
(a) On November 2, 2021, the Company passed shareholders’ resolutions and approved, among other things,
the increase of the registered capital of the Company from RMB63,750,000 to RMB100,000,000, the
capital contribution by shareholders related to the increase of the registered capital was completed in
August 2022.
(b) On February 10, 2023, the Company was converted into a joint stock company with limited liability.
34. RESERVES
The amounts of the Group’s reserves and the movements therein for the Relevant Periods are presented in the
consolidated statements of changes in equity.
(a) Capital reserve
The capital reserve of the Group represents the difference between the par value of the shares issued and the
consideration received.
(b) Share-based payment reserve
The share-based payment reserve represents the equity-settled share awards as set out in note 35 to the
Historical Financial Information.
(c) Surplus Reserve
In accordance with the Company Law of the PRC, certain subsidiaries of the Group which are domestic
enterprises are required to allocate 10% of their profit after tax, as determined in accordance with the relevant PRC
accounting standards, to their respective statutory surplus reserve until the reserves reach 50% of their respective
registered capital. Subject to certain restrictions set out in the Company Law of the PRC, part of the statutory surplus
reserve may be converted to increase share capital, provided that the remaining balance after the capitalization is not
less than 25% of the registered capital.
(d) Other reserve
The other reserve of the Group represents recognition of redemption liabilities on Series A equity shares as
stipulated in note 30 of Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 501 ---
(e) Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of
the financial statements of entities of which the functional currency is not RMB.
The Company
Capital
reserve
Share-based
payment
reserve
Other
reserve
Surplus
reserve
Retained
profits/
(Accumulated
losses) Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2022 449,929 246 (471,602) 32,556 244,443 255,572
Loss for the year –––– (63,845) (63,845)
Total
comprehensive
loss for the year –––– (63,845) (63,845)
Share-based
payment
compensation – 1,890 – – – 1,890
At December 31,
2022 and
January 1, 2023 449,929 2,136 (471,602) 32,556 180,598 193,617
Loss for the year –––– (41,183) (41,183)
Total
comprehensive
loss for the year –––– (41,183) (41,183)
Share-based
payment
compensation – 1,912 – – – 1,912
Conversion into a
joint stock
company* 269,050 – – (32,556) (239,821) (3,327)
At December 31,
2023 and
January 1, 2024 718,979 4,048 (471,602) – (100,406) 151,019
Loss for the year –––– (78,353) (78,353)
Total
comprehensive
loss for the year –––– (78,353) (78,353)
Share-based
payment
compensation – 4,441 – – – 4,441
At December 31,
2024 718,979 8,489 (471,602) – (178,759) 77,107
* According to the audit report of the Company upon joint stock reform issued by an independent auditor
as at August 31, 2022, the net assets of the Company were converted at a rate of 1:0.143, into
125,000,000 ordinary shares at RMB1.0 each and issued to the then shareholders of the Company in
proportion to their capital contribution to the Company. The remaining amount was converted into
capital reserve.
APPENDIX I ACCOUNTANTS’ REPORT
– I-66 –


--- page 502 ---
35. SHARE INCENTIVE PLAN
The Pre-IPO Employee Incentive Scheme
In December 2020, the shareholders’ meeting of the Company passed a resolution to adopt 2020 share
incentive plan (the “Pre-IPO Employee Incentive Scheme”) in order to attract and retain senior management and
employees for the continual operation and development of the Group. The Pre-IPO Employee Incentive Scheme was
further amended in November 2021 and November 2022. Pursuant to the adopted and amended Pre-IPO Employee
Incentive Scheme, 10,273,500 shares of the Company were transferred to two employee incentive platforms owned
by Ms. Li Xiangli, namely Hangzhou Y uanxi Enterprise Management Consulting Partnership (Limited Partnership)
ψʩဢΆุ၍ଣፔ༔ΥྫΆุ(Υྫ) and Hangzhou Xiyong Enterprise Management Consulting Partnership
(Limited Partnership)ψဢ͑Άุ၍ଣፔ༔ΥྫΆุ(Υྫ), from Hangzhou Haiding Technology Co., Ltd. (؄
ʮ̡, Hangzhou Haiding”), a company wholly owned by Ms. Li Xiangli and her spouse at the price
of RMB3.89 per share (equivalent to RMB4.00 paid-in capital before the conversion into a joint stock company).
Each grant of share awards needs to meet service requirements from the date of grant to the later of (1) five
years since the grant date (the “Service Period”) and (2) one year after successful listing of the Company (the
“Lock-up Period”). In the first three years of the Service Period, 30%, 30% and 40% of the total number of share
awards shall be released to eligible participants on the first, second and third anniversary date of grant date upon
meeting certain individual and the Group’s performance targets. The eligible participants would be repaid with
original subscription price plus single digit interest if employment were terminated within the Service Period and
would be entitled to portion of economic benefits of the released share awards if employment were terminated within
the Lock-up Period. After taking into consideration of the best estimation of the listing date, the management
determined the vesting period of the relevant restricted shares based on the above performance conditions and service
requirements. As such, the share-based payment expenses are amortized during the vesting period.
Details of granted shares during the Relevant Periods are as follows:
Date of grant
Number of
restricted shares
Subscription price
per share
Fair value per
share
March 17, 2022 102,735 RMB3.89 RMB8.77
May 9, 2022 92,462 RMB3.89 RMB10.20
July 14, 2022 236,291 RMB3.89 RMB10.20
January 1, 2024 820,000 RMB4.00 RMB12.83
January 1, 2024 1,280,000 RMB7.50 RMB12.83
March 1, 2024 150,000 RMB7.50 RMB12.83
Total 10,289,015
The fair value of services received in return for a share award granted is measured by reference to the fair value
of the share award granted less the subscription price. The fair value of the share award granted is measured as the
market value at the grant date, which is determined by an external valuer using the discounted cash flows method
or recent transaction method, taking into account the terms and conditions upon which the restricted shares were
granted.
APPENDIX I ACCOUNTANTS’ REPORT
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Set out below are details of the movements of the outstanding restricted shares granted under the Pre-IPO
Employee Incentive Scheme throughout the Relevant Periods.
As at December 31,
2022 2023 2024
At the beginning of the year 7,098,989 7,314,733 6,852,425
Granted during the year 431,488 – 2,250,000
Forfeited during the year (215,744) (380,120) (164,376)
V ested during the year – (82,188) –
At the end of the year 7,314,733 6,852,425 8,938,049
During the years ended December 31, 2022, 2023 and 2024, equity-settled Share-based payment compensation
expenses of RMB1,890,000, RMB1,912,000 and RMB4,441,000 were charged to profit or loss, respectively.
The weighted average remaining contractual lives for the outstanding restricted shares granted were 3.43 years,
2.25 years and 2.01 years as at the end of each of the Relevant Periods, respectively.
All numbers of shares of the Company and subscription price per share in this note have been adjusted
retrospectively as if the Company’s conversion into joint stock limited company on February 10, 2023 as set out in
note 33 to the Historical Financial Information had been completed at the beginning of the Relevant Period.
36. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(a) Changes in liabilities arising from financing activities
Lease
liabilities
Bank
borrowings
Due to
related
parties-non
trade
Convertible
bonds
Accrued
listing
expenses
included in
other
payables
and
accruals
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At January 1, 2022 5,926 87,818 5,312 300,000 –
Changes from financing
cash flows:
Payments (2,477) (88,546) (5,312) – –
Exchange adjustment 473 (186) – – –
Change in fair value – – – 21,000 –
Accretion of interest
recognized during the
year 367 91 4–––
At December 31, 2022
and January 1, 2023 4,289 – – 321,000 –
Changes from financing
cash flows:
Payments (2,726) – – (21,000) –
Exchange adjustment 5 9––––
Change in fair value – – – 21,000 –
Accretion of interest
recognized during the
year 22 4––––
APPENDIX I ACCOUNTANTS’ REPORT
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Lease
liabilities
Bank
borrowings
Due to
related
parties-non
trade
Convertible
bonds
Accrued
listing
expenses
included in
other
payables
and
accruals
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At December 31, 2023
and January 1, 2024 1,846 – – 321,000 –
Changes from financing
cash flows:
Additions – 40,00 0–––
Payments (2,014) (1,065) – (306,625) (6,767)
Changes from operating
cash flows:
Payments –––– (19,514)
Exchange adjustment 9––––
Change in fair value – – – (14,375) –
Accretion of interest
recognized during the
year 76 1,06 5–––
New lease 1,22 6––––
Increase in deferred listing
expense –––– 8,907
Listing expense –––– 25,019
At December 31, 2024 1,143 40,000 – – 7,645
(b) Total cash outflow for leases
The total cash outflow for leases included in the statement of cash flows is as follows:
Y ear ended December 31
2022 2023 2024
RMB’000 RMB’000 RMB’000
Within operating activities 1,493 1,567 1,515
Within financing activities 2,477 2,726 2,014
Total 3,970 4,293 3,529
37. COMMITMENTS
The Group had the following contractual commitments at the end of each of the Relevant Periods:
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Contracted but not provided for:
Property and equipment 60,481 45,001 39,912
APPENDIX I ACCOUNTANTS’ REPORT
– I-69 –


--- page 505 ---
38. RELATED PARTY TRANSACTIONS
(a) Names and relationships
Name of related parties Relationship with the Group
Dr. Xu Qi Director of the Company
Dr. Li Xiang Director of the Company
UCP Biosciences Inc. (“UCP Biosciences”)
* Controlled by Dr. Xu Qi
Prometheus Bio Inc. (ʮ̡,
“Prometheus Bio”) *
Controlled by Dr. Xu Qi
Hangzhou Haidongqing Technology Co., Ltd.
(ʮ̡, “Hangzhou
Haidongqing”)
Controlled by Ms. Li Xiangli **
Zhejiang Handing Pharmaceutical Co., Ltd.
(ʮ̡, “Zhejiang Handing”)
Note
Hangzhou Jicheng Pharmaceutical Technology
Co., Ltd. (ʮ̡,
“Hangzhou Jicheng”)
Controlled by Dr. Xu Qi
Health Angel International Ltd. (ʮ̡,
“Qikang International”)
Controlled by Dr. Xu Qi
* Prometheus Bio and UCP Biosciences were disposed to an independent third party in March 2023 and
therefore is no longer presented as a related party of the Group since then.
** Ms. Li Xiangli is a Director of the Company.
Note: Dr. Li Xiang held approximately 41.45% interest in aggregate in Zhejiang Handing as of December 31,
2023 and held approximately 64.25% interest in aggregate in Zhejiang Handing as of March 14, 2025.
Dr. Li Xiang also served as a director and the chairman of Zhejiang Handing.
(b) Significant related party transactions
The Group had the following material related party transactions during the Relevant Periods.
Y ear ended December 31
2022 2023 2024
RMB’000 RMB’000 RMB’000
Sales to
Prometheus Bio 882 – –
Zhejiang Handing 444 852 422
1,326 852 422
Repayments of borrowings
Hangzhou Jicheng (a) (5,312) – –
Repayments of loans to
D r .X uQ i (b) – – 1,659
The directors consider that rendering of services or sales of products to related parties were based on arm’s
length negotiation between the Group and related parties with reference to market rates.
Notes:
(a) The borrowings were unsecured, borne interest rates ranging from 3% to 4% per annum and were
repayable on demand. The Group had fully repaid the borrowings in 2022.
APPENDIX I ACCOUNTANTS’ REPORT
– I-70 –


--- page 506 ---
(b) The loan was interest-free and repayable on demand, which were fully repaid by Dr. Xu Qi in 2024.
(c) Outstanding balances with related parties
Y ear ended December 31,
Nature 2022 2023 2024
RMB’000 RMB’000 RMB’000
Amounts due from related parties
Other receivables
UCP Biosciences (a) Trade 1,296 * *
D r .X uQ i (b) Non-trade 1,659 1,659 –
2,955 1,659 –
Amounts due to related parties
Contract liabilities
Prometheus Bio Trade 52 * *
Zhejiang Handing Trade 2,098 1,855 1,811
Other payables
Prometheus Bio (c) Non-trade 183 * *
2,333 1,855 1,811
The amounts due from related parties are unsecured, interest-free and repayable on demand.
Notes:
(a) The balance represented lease payments paid by the Group on behalf of UCP Biosciences.
(b) The balance represented advances to Dr. Xu Qi and had been repaid in full in May 2024.
(c) The balance represented reimbursable expenses paid by Prometheus Bio for the Group. The balance as
at December 31, 2022 had been repaid in full in May 2023.
* The balance is not presented because UCP Biosciences and Prometheus Bio were no longer related
parties since March 2023.
(d) Compensation of key management personnel of the Group:
The Group
Y ear ended December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Salaries, bonuses, allowances and
benefits in kind 9,504 11,248 16,260
Pension scheme contributions 159 167 305
Share-based payment compensation 761 703 2,274
Total compensation paid to key management
personnel 10,424 12,118 18,839
APPENDIX I ACCOUNTANTS’ REPORT
– I-71 –


--- page 507 ---
39. FINANCIAL INSTRUMENTS BY CATEGORY
The carrying amounts of each of the categories of financial instruments as at the end of each of the Relevant
Periods are as follows:
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Financial assets
Financial assets at fair value through
profit or loss:
Structured deposits and wealth management
products 332,126 110,082 –
Unlisted equity investments 1,728 1,530 1,634
Total 333,854 111,612 1,634
Financial assets at amortized cost:
Trade and notes receivables 19,800 36,418 57,720
Financial assets included in prepayments
and other receivables 794 528 199
Cash and cash equivalents 279,048 531,012 387,183
Time deposits 61,634 53,409 143,032
Amounts due from related parties 2,955 1,659 –
Restricted cash 430 435 439
Total 364,661 623,461 588,573
Financial liabilities
Financial liabilities at fair value through
profit or loss:
Convertible bonds 321,000 321,000 –
Redemption liabilities on equity shares 517,667 542,038 639,805
Total 838,667 863,038 639,805
Financial liabilities at amortized cost:
Trade payables 12,711 6,731 23,469
Financial liabilities included in
other payables 80,314 104,299 28,786
Lease liabilities 4,289 1,846 1,143
Amounts due to related parties 2,333 1,855 1,811
Interest-bearing bank borrowings – – 40,000
Total 99,647 114,731 95,209
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 508 ---
40. FAIR V ALUE AND FAIR V ALUE HIERARCHY OF FINANCIAL INSTRUMENTS
Fair values
Management has assessed that the fair values of cash and cash equivalents, time deposits, pledged bank
deposits, trade and notes receivables, financial assets included in prepayments, other receivables and other assets,
amounts due from related parties, trade payables, financial liabilities included in other payables and accruals and
lease liabilities approximate to their carrying amounts largely due to the short-term maturities of these instruments.
The fair values of the non-current time deposits have been calculated by discounting the expected future cash flows
using rates currently available for instruments with similar terms, credit risk and remaining maturities.
The Group’s finance department headed by the financial director is responsible for determining the policies
and procedures for the fair value measurement of financial instruments. At the end of each of the Relevant Periods,
the finance department analyzes the movements in the values of financial instruments and determines the major inputs
applied in the valuation. The directors review the results of the fair value measurement of financial instruments
periodically for financial reporting.
The fair values of the financial assets and liabilities are included at the amount at which the instrument could
be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following
methods and assumptions were used to estimate the fair values:
The Group invests in unlisted investments, structured deposits and wealth management products provided by
banks in Mainland China. The Group has estimated the fair values of these unlisted investments by using a discounted
cash flow valuation model based on the market interest rates of instruments with similar terms and risks.
The fair values of the redemption liabilities on equity shares measured at FVTPL are determined using the
option pricing model. Further details are set out in note 30 to the Historical Financial Information.
The discounted cash flow method was used to determine the fair value of convertible bonds. Further details
are set out in note 31 to the Historical Financial Information.
Fair value hierarchy
The following table illustrates the fair value measurement hierarchy of the Group’s financial instruments:
Assets and liabilities measured at fair value:
As at December 31, 2022
Fair value measurement using
Quoted
prices in
active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Structured deposits and wealth
management products – 332,126 – 332,126
Unlisted equity investments – – 1,728 1,728
Financial liabilities
Convertible bonds – 321,000 – 321,000
Redemption liabilities on equity
shares – – 517,667 517,667
APPENDIX I ACCOUNTANTS’ REPORT
– I-73 –


--- page 509 ---
As at December 31, 2023
Fair value measurement using
Quoted
prices in
active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Structured deposits and wealth
management products – 110,082 – 110,082
Unlisted equity investments – – 1,530 1,530
Financial liabilities
Convertible bonds – 321,000 – 321,000
Redemption liabilities on equity
shares – – 542,038 542,038
As at December 31, 2024
Fair value measurement using
Quoted
prices in
active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3) Total
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Unlisted equity investments – – 1,634 1,634
Financial liabilities
Redemption liabilities on equity
shares – – 639,805 639,805
During the Relevant Periods, there were no transfers of fair value measurements between Level 1 and Level
2 and no transfers into or out of Level 3 for both financial assets and financial liabilities.
Below is a summary of significant unobservable inputs to the valuation of financial instruments together with
a quantitative sensitivity analysis as at the end of each of the Relevant Periods.
APPENDIX I ACCOUNTANTS’ REPORT
– I-74 –


--- page 510 ---
2022
Valuation
technique
Significant
unobservable
input Range
Sensitivity of fair
value to the input
Unlisted equity
investments
Market approach DLOM 20.9% 5% increase/
decrease in
DLOM would
result in
decrease/increase
in fair value by
6.41%
Redemption
liabilities on
equity shares
Discounted cash
flow method
Risk-free interest
rate
2.55% 1% increase/
decrease in risk-
free interest rate
would result in
decrease/increase
in fair value by
1.49%/1.97%
V olatility 54.32% 1% increase/
decrease in
volatility would
result in
decrease/increase
in fair value by
0.22%/0.21%
DLOM 21.84% 1% increase/
decrease in
DLOM would
result in
decrease/increase
in fair value by
1.18%
2023
Valuation
technique
Significant
unobservable
input Range
Sensitivity of fair
value to the input
Unlisted equity
investments
Market approach DLOM 21.1% 5% increase/
decrease in
DLOM would
result in
decrease/increase
in fair value by
6.44%
Enterprise
value/Sale
multiple
7.3 10% increase/
decrease in the
ratio of EV/Sale
would result in
increase/decrease
in fair value by
10.78%/10.52%
APPENDIX I ACCOUNTANTS’ REPORT
– I-75 –


--- page 511 ---
Valuation
technique
Significant
unobservable
input Range
Sensitivity of fair
value to the input
Redemption
liabilities on
equity shares
Discounted cash
flow method
Risk-free interest
rate
2.29% 1% increase/
decrease in risk-
free interest rate
would result in
decrease/
increase in fair
value by
1.04%/1.26%
V olatility 56.91% 1% increase/
decrease in
volatility would
result in
decrease/
increase in fair
value by
0.15%/0.14%
DLOM 16.58% 1% increase/
decrease in
DLOM would
result in
decrease/
increase in fair
value by 1.13%
2024
Valuation
technique
Significant
unobservable
input Range
Sensitivity of fair
value to the input
Unlisted equity
investments
Market approach DLOM 23.7% 5% increase/
decrease in
DLOM would
result in
decrease/increase
in fair value by
6.65%
Enterprise
value/Sale
multiple
6.4 10% increase/
decrease in the
ratio of EV/Sale
would result in
increase/decrease
in fair value by
9.33%/8.96%
Redemption
liabilities on
equity shares
Discounted cash
flow method
Risk-free interest
rate
1.08% 1% increase/
decrease in risk-
free interest rate
would result in
decrease/increase
in fair value by
0.66%/0.79%
APPENDIX I ACCOUNTANTS’ REPORT
– I-76 –


--- page 512 ---
Valuation
technique
Significant
unobservable
input Range
Sensitivity of fair
value to the input
V olatility 54.84% 1% increase/
decrease in
volatility would
result in
increase/decrease
in fair value by
0.01%/0.02%
DLOM 10.54% 1% increase/
decrease in
DLOM would
result in
decrease/increase
in fair value by
1.08%
41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial instruments comprise cash and cash equivalents, time deposits, financial assets
at fair value through profit or loss and redemption liabilities on equity shares. The main purpose of these financial
instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities
such as trade receivables and trade payables, which arise directly from its operations.
The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk,
credit risk and liquidity risk. The board of the directors reviews and agrees policies for managing each of these risks
and they are summarized below.
Foreign currency risk
The Group has transactional currency exposures. Such exposures arise from financing activities by subsidiaries
in currencies other than the subsidiaries’ functional currencies.
The following table demonstrates the sensitivity at the end of each of the Relevant Periods to a reasonably
possible change in the USD, HKD and EUR exchange rates, with all other variables held constant, of the Group’s
profit before tax and equity (due to changes in the fair value of monetary assets and liabilities).
Increase/
(decrease)
in rate of
foreign
currency
Increase/
(decrease)
in profit
before tax
Increase/
(decrease)
in equity
% RMB’000 RMB’000
December 31, 2022
If RMB weakens against USD 5 9,551 9,551
If RMB strengthens against USD (5) (9,551) (9,551)
December 31, 2023
If RMB weakens against USD 5 14,639 14,639
If RMB strengthens against USD (5) (14,639) (14,639)
If RMB weakens against HKD 5 11 11
If RMB strengthens against HKD (5) (11) (11)
APPENDIX I ACCOUNTANTS’ REPORT
– I-77 –


--- page 513 ---
Increase/
(decrease)
in rate of
foreign
currency
Increase/
(decrease)
in profit
before tax
Increase/
(decrease)
in equity
% RMB’000 RMB’000
December 31, 2024
If RMB weakens against USD 5 20,683 20,683
If RMB strengthens against USD (5) (20,683) (20,683)
If RMB weakens against HKD 5 40 40
If RMB strengthens against HKD (5) (40) (40)
If RMB weakens against EUR 5 3 3
If RMB strengthens against EUR (5) (3) (3)
Credit risk
The Group trades only with recognized and creditworthy third parties. It is the Group’s policy that all
customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable
balances are monitored on an ongoing basis and the Group’s exposure to bad debts is not significant. The Group also
expects that there is no significant credit risk associated with pledged bank deposits, time deposits and cash at banks
since they are substantially deposited at state-owned banks and other medium or large-sized listed banks. The
management of the Group does not expect that there will be any significant losses from non-performance by these
counterparties.
Maximum exposure and year-end staging as at December 31, 2022, 2023 and 2024
The table below shows the credit quality and the maximum exposure to credit risk based on the Group’s credit
policy, which is mainly based on aging information unless other information is available without undue cost or effort,
and staging classification as at December 31, 2022, 2023 and 2024. The amounts presented are gross carrying
amounts for financial assets.
At December 31, 2022
12-month
ECLs Lifetime ECLs
Stage 1 Stage 2 Stage 3
Simplified
approach Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables* – – – 20,744 20,744
Notes receivables 3,00 8––– 3,008
Financial assets included
in prepayments, other
receivables and other
assets 79 4––– 7 9 4
Amounts due from related
parities 2,95 5––– 2,955
Time deposits 61,63 4––– 61,634
Pledged bank deposits 43 0––– 4 3 0
Cash and cash equivalents 279,04 8––– 279,048
Total 347,869 – – 20,744 368,613
APPENDIX I ACCOUNTANTS’ REPORT
– I-78 –


--- page 514 ---
At December 31, 2023
12-month
ECLs Lifetime ECLs
Stage 1 Stage 2 Stage 3
Simplified
approach Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables* – – – 40,902 40,902
Financial assets included
in prepayments, other
receivables and other
assets 52 8––– 5 2 8
Amounts due from related
parities 1,65 9––– 1,659
Time deposits 53,40 9––– 53,409
Pledged bank deposits 43 5––– 4 3 5
Cash and cash equivalents 531,01 2––– 531,012
Total 587,043 – – 40,902 627,945
At December 31, 2024
12-month
ECLs Lifetime ECLs
Stage 1 Stage 2 Stage 3
Simplified
approach Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables* – – – 62,645 62,645
Financial assets included
in prepayments, other
receivables and other
assets 24 6––– 2 4 6
Time deposits 143,03 2––– 143,032
Pledged bank deposits 43 9––– 4 3 9
Cash and cash equivalents 387,18 3––– 387,183
Total 530,900 – – 62,645 593,545
* For trade receivables to which the Group applies the simplified approach for impairment, information
based on the general matrix is disclosed in note 22 to the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 515 ---
Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use
of internally generated cash flows from operations and lease liabilities. The Group regularly reviews its major
funding positions to ensure that it has adequate financial resources in meeting its financial obligations.
The maturity profile of the Group’s financial liabilities as at the end of each of the Relevant Periods, based
on the contractual undiscounted payments, was as follows:
As at December 31, 2022 On demand
Within
1 year
1t o5
years
Over
5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Redemption liabilities on equity
shares – – 658,000 – 658,000
Convertible bonds – 342,000 – – 342,000
Lease liabilities – 1,280 2,805 – 4,085
Trade payables 237 12,474 – – 12,711
Amounts due to related parities 2,333 – – – 2,333
Financial liabilities included in other
payables and accruals 80,314 – – – 80,314
Total 82,884 355,754 660,805 – 1,099,443
As at December 31, 2023 On demand
Within
1 year
1t o5
years
Over
5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Redemption liabilities on equity
shares – – 658,000 – 658,000
Convertible bonds – 321,000 – – 321,000
Lease liabilities – 1,366 – – 1,366
Trade payables 185 6,546 – – 6,731
Amounts due to related parities 1,855 – – – 1,855
Financial liabilities included in other
payables and accruals 104,299 – – – 104,299
Total 106,339 328,912 658,000 – 1,093,251
As at December 31, 2024 On demand
Within
1 year
1t o5
years
Over
5 years Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Redemption liabilities on equity
shares – – 658,000 – 658,000
Lease liabilities – 447 813 – 1,260
Trade payables 141 23,328 – – 23,469
Amounts due to related parities 1,811 – – – 1,811
Financial liabilities included in other
payables and accruals 28,786 – – – 28,786
Interest-bearing bank borrowings – 40,111 – – 40,111
Total 30,738 63,886 658,813 – 753,437
APPENDIX I ACCOUNTANTS’ REPORT
– I-80 –


--- page 516 ---
Capital management
The primary objectives of the Group’s capital management are to safeguard the Group’s ability to continue as
a going concern and to maintain healthy capital ratios in order to support its business and maximize shareholders’
value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions
and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Group may adjust
the dividend payment to shareholders, return capital to shareholders or issue new shares. The Group is not subject
to any externally imposed capital requirements. No changes were made in the objectives, policies or processes for
managing capital during the Relevant Periods.
The asset-liability ratios as at the end of each of the Relevant Periods are as follows:
As at December 31,
2022 2023 2024
RMB’000 RMB’000 RMB’000
Total assets 1,239,152 1,308,746 1,172,628
Total liabilities 1,036,685 1,054,862 853,878
Asset-liability ratio (note) 84% 81% 73%
Note: Asset-liability ratio is calculated by dividing total liabilities by total asset.
42. EVENTS AFTER THE RELEV ANT PERIODS
No significant events occurred after December 31, 2024.
43. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Group or any of the subsidiaries in respect of any
period subsequent to December 31, 2024.
APPENDIX I ACCOUNTANTS’ REPORT
– I-81 –


--- page 517 ---
The following information does not form part of the Accountants’ Report from Ernst &
Young, Certified Public Accountants, Hong Kong, the Company’ s reporting accountants, as set
out in Appendix I to this Prospectus, and is included herein for information purpose only. The
unaudited pro forma financial information should be read in conjunction with the section
headed “Financial Information” in this Prospectus and the Accountants’ Report set out in
Appendix I to this Prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma adjusted consolidated net tangible assets of the Group
prepared in accordance with paragraph 4.29 of the Rules Governing the Listing of Securities
on the Stock Exchange of Hong Kong Limited and with reference to Accounting Guideline 7
Preparation of Pro Forma Financial Information for inclusion in Investment Circulars issued
by the Hong Kong Institute of Certified Public Accountants for illustration purposes only, and
is set out here to illustrate the effect of the Global Offering on the consolidated net tangible
assets of the Group attributable to owners of the parent as at December 31, 2024 as if the
Global Offering had taken place on December 31, 2024.
The unaudited pro forma adjusted consolidated net tangible assets of the Group has been
prepared for illustrative purpose only and, because of its hypothetical nature, it may not give
a true picture of the consolidated net tangible assets of the Group attributable to owners of the
parent had the Global Offering been completed as of December 31, 2024 or as at any future
date.
Consolidated
net tangible
assets of
the Group
attributable to
owners of the
parent as at
December 31,
2024
Estimated net
Proceeds from
the Global
Offering
Estimated
impact to the
consolidated
net tangible
assets upon the
derecognition
of redemption
liabilities on
equity shares
upon Listing
Unaudited pro
forma adjusted
consolidated
net tangible
assets
attributable to
owners of the
parent as at
December 31,
2024
Unaudited pro forma
adjusted consolidated
net tangible assets
attributable to owners of
the parent per Share as at
December 31, 2024
RMB’000 RMB’000 RMB’000 RMB’000 RMB HK$
(Note 1) (Note 2) (Note 3) (Note 4) (Note 5)
Based on an Offer
Price of HK$28.40
per Offer Share 187,328 385,053 639,805 1,212,186 8.55 9.35
Based on an Offer
Price of HK$30.60
per Offer Share 187,328 417,162 639,805 1,244,295 8.78 9.59
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 518 ---
Notes:
1. The consolidated net tangible assets of the Group attributable to owners of the parent as at December 31, 2024
was equal to the consolidated net assets attributable to owners of the parent as at December 31, 2024 of
RMB318,750,000 after deducting goodwill of RMB95,406,000 and other intangible assets of RMB36,016,000
set out in the Accountants’ Report in Appendix I to this Prospectus.
2. The estimated net proceeds from the Global Offering are based on estimated low-end and high-end offer prices
of HK$28.40 and HK$30.60 per Share after deduction of the underwriting fees and other related expenses
payable by the Company excluding the listing expenses that had been charged to profit and loss during the
Track Record Period.
3. Upon the Listing and the completion of the Global Offering, all redemption liabilities on equity shares will be
automatically derecognized. The redemption liabilities on equity shares will then be transferred from liabilities
to equity. Accordingly, for the purpose of the unaudited pro forma financial information, the unaudited pro
forma adjusted net tangible assets attributable to owners of the parent will be increased by RMB639,805,000,
being the carrying amount of the redemption liabilities on equity shares as at December 31, 2024.
4. The unaudited pro forma adjusted consolidated net tangible assets attributable to owners of the parent per
Share is arrived at after adjustments referred to in the preceding notes 2, 3 and on the basis that 141,800,000
Shares were in issue assuming the Global Offering has been completed on December 31, 2024.
5. For the purpose of this unaudited pro forma adjusted net tangible assets per Share, the balances stated in RMB
are converted into HK$ at the rate of RMB1.00 to HK$1.0934.
6. No other adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to
reflect any trading results or open transactions of the Group entered into subsequent to December 31, 2024.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 519 ---
B. INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE
COMPILATION OF PRO FORMA FINANCIAL INFORMATION
The following is the text of a report, prepared for the purpose of incorporation in this
Prospectus, received from the Reporting Accountants, Ernst & Y oung, Certified Public
Accountants, Hong Kong, in respect of the unaudited pro forma financial information.
⭰㰟㛪姯⸒Ṳ⋀㈧
榀㸖毩歁㵳勘䙮怺 979噆
⤑⏋✱ᷧ⺎27㧺
Tel 曢婘: +852 2846 9888
Fax ₚ䜆: +852 2868 4432
ey.com
Ernst & Young
27/F, One Taikoo Place
979 King’s Road
Quarry Bay, Hon
g Kong
To the Directors of Medtide Inc.
We have completed our assurance engagement to report on the compilation of pro forma
financial information of Medtide Inc. (the “Company”) and its subsidiaries (hereinafter
collectively referred to as the “Group”) by the directors of the Company (the “Directors”) for
illustrative purposes only. The pro forma financial information consists of the pro forma
consolidated net tangible assets as at December 31, 2024, and related notes as set out on pages
II-1 to II-2 of the Prospectus dated June 20, 2025 issued by the Company (the “Pro Forma
Financial Information”). The applicable criteria on the basis of which the Directors have
compiled the Pro Forma Financial Information are described in Part A of Appendix II to the
Prospectus.
The Pro Forma Financial Information has been compiled by the Directors to illustrate the
impact of the global offering of shares of the Company on the Group’s financial position as at
December 31, 2024 as if the transaction had taken place at December 31, 2024. As part of this
process, information about the Group’s financial position has been extracted by the Directors
from the Group’s financial statements for the year ended December 31, 2024, on which an
accountants’ report has been published.
Directors’ responsibility for the Pro Forma Financial Information
The Directors are responsible for compiling the Pro Forma Financial Information in
accordance with paragraph 4.29 of the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) and with reference to Accounting
Guideline (“AG”) 7 Preparation of Pro Forma Financial Information for Inclusion in
Investment Circulars issued by the Hong Kong Institute of Certified Public Accountants (the
“HKICPA”).
Our independence and quality management
We have complied with the independence and other ethical requirements of the Code of
Ethics for Professional Accountants issued by the HKICPA, which is founded on fundamental
principles of integrity, objectivity, professional competence and due care, confidentiality and
professional behavior.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 520 ---
Our firm applies Hong Kong Standard on Quality Management 1 Quality Management for
Firms that Perform Audits or Reviews of Financial Statements, or Other Assurance or Related
Services Engagements which requires the firm to design, implement and operate a system of
quality management including policies or procedures regarding compliance with ethical
requirements, professional standards and applicable legal and regulatory requirements.
Reporting accountants’ responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the
Listing Rules, on the Pro Forma Financial Information and to report our opinion to you. We do
not accept any responsibility for any reports previously given by us on any financial
information used in the compilation of the Pro Forma Financial Information beyond that owed
to those to whom those reports were addressed by us at the dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420 Assurance Engagements to Report on the Compilation of Pro Forma
Financial Information Included in a Prospectus issued by the HKICPA. This standard requires
that the reporting accountants plan and perform procedures to obtain reasonable assurance
about whether the Directors have compiled the Pro Forma Financial Information in accordance
with paragraph 4.29 of the Listing Rules and with reference to AG 7 issued by the HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the Pro Forma
Financial Information, nor have we, in the course of this engagement, performed an audit or
review of the financial information used in compiling the Pro Forma Financial Information.
The purpose of the Pro Forma Financial Information included in the Prospectus is solely
to illustrate the impact of the global offering of shares of the Company on unadjusted financial
information of the Group as if the transaction had been undertaken at an earlier date selected
for purposes of the illustration. Accordingly, we do not provide any assurance that the actual
outcome of the transaction would have been as presented.
A reasonable assurance engagement to report on whether the Pro Forma Financial
Information has been properly compiled on the basis of the applicable criteria involves
performing procedures to assess whether the applicable criteria used by the Directors in the
compilation of the Pro Forma Financial Information provide a reasonable basis for presenting
the significant effects directly attributable to the transaction, and to obtain sufficient
appropriate evidence about whether:
 the related pro forma adjustments give appropriate effect to those criteria; and
 the Pro Forma Financial Information reflects the proper application of those
adjustments to the unadjusted financial information.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 521 ---
The procedures selected depend on the reporting accountants’ judgment, having regard to
the reporting accountants’ understanding of the nature of the Group, the transaction in respect
of which the Pro Forma Financial Information has been compiled, and other relevant
engagement circumstances.
The engagement also involves evaluating the overall presentation of the Pro Forma
Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion:
(a) the Pro Forma Financial Information has been properly compiled on the basis stated;
(b) such basis is consistent with the accounting policies of the Group; and
(c) the adjustments are appropriate for the purpose of the Pro Forma Financial
Information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
Ernst & Y oung
Certified Public Accountants
Hong Kong
June 20, 2025
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 522 ---
This Appendix contains the key provisions of the Articles of Association adopted by the
Company on May 23, 2024, which will take effect on the date of listing of H shares on the
Hong Kong Stock Exchange. This appendix is intended to provide potential investors with an
overview of the Company’s Articles of Association and may not contain all information that is
material to the investors.
DIRECTORS AND BOARD
Power to Allot and Issue Shares
There is no provision in the Articles of Association to empower the Board to allot or issue
shares. The Board shall prepare a proposal for the allotment or issue of shares which shall be
subject to the approval of the Shareholders by a special resolution at the general meeting. Any
such allotment or issue shall be in accordance with the procedures prescribed by applicable
laws, administrative regulations and the regulatory requirements of the territory in which the
Shares are listed.
Power to Dispose of the Assets of the Company or any Subsidiary
The Board shall determine the authority over the Company’s external investment,
acquisition and sale of assets, asset mortgage, external guarantee matters, entrusted wealth
management, connected transactions, external donations, etc., and establish strict review and
decision-making procedures; major investment projects shall be reviewed by relevant experts
and professionals and reported to the general meeting for approval.
Termination Indemnity or Payment
There is no provision for termination compensation or payment in the Articles of
Association.
Provision of Loan Guarantees to Directors, Supervisors or Other Management Personnel
(1) The following external guarantee provided by the Company shall be examined and
approved by the general meeting (except for the guarantee provided by the Company
in the annual budget for the Company’s controlling subsidiary);
(2) Any guarantee provided after the total external guarantee of the Company and the
Company’s controlling subsidiaries exceeds 50% of the latest audited net assets;
(3) Any guarantee provided after the total external guarantee of the Company exceeds
30% of the latest audited total assets;
(4) A guarantee that the amount guaranteed by the Company within one year exceeds
30% of the Company’s latest audited total assets;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-1 –


--- page 523 ---
(5) The guarantee provided for the guarantee object with the asset-liability ratio
exceeding 70%;
(6) A guarantee in which the amount of a single guarantee exceeds 10% of the latest
audited net assets;
(7) Guarantees provided to shareholders, actual controllers and their related parties;
(8) Other guarantees as required by laws, administrative regulations, departmental
rules, regulatory rules of the place where the Company’s shares are listed or the
Articles of Association to be decided by the general meeting.
The aforesaid external guarantee that should be approved by the general meeting must be
examined and approved by the Board before being submitted to the general meeting for
approval.
For the guarantee within the scope of authority of the Board, it shall be approved by more
than half of all Directors, and shall also be approved by more than two-thirds of the Directors
present at the Board meeting; The guarantee in item (2) of the preceding paragraph shall be
approved by more than two-thirds of the voting rights held by the shareholders present at the
meeting. When the general meeting deliberates the guarantee proposal for shareholders, actual
controllers and their related parties, such shareholder or the shareholder controlled by such
actual controllers shall not participate in such voting, and such voting shall be passed by more
than half of the voting rights held by other shareholders present at the general meeting.
Financial Assistance for the Purchase of Shares of the Company or any of its Subsidiaries
The Company or the Company’s subsidiaries (including the Company’s affiliates) do not
provide any assistance to those who purchase or intend to purchase the Company’s shares in
the form of gift, advance, guarantee, compensation or loan.
Disclosure of Interests in Contracts with the Company or any of its Subsidiaries
The Directors shall not enter into contracts or conduct transactions with the Company in
violation of the provisions of the Articles of Association or without the consent of the general
meeting.
Salary
The remuneration and payment method of the members of the Board and the Board of
Supervisors shall be passed by ordinary resolution of the general meeting.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-2 –


--- page 524 ---
Appointment, Resignation and Removal
A Director is elected or replaced by a general meeting and may be removed from office
by the general meeting before the expiry of his/her term of office. The term of office of the
Directors is three years and they may be re-elected upon expiry of the term.
The term of office of a Director commences on the date of taking office and ends on the
expiry of the term of office of the current Board. If a Director is not re-elected in a timely
manner upon expiry of his/her term of office, the former Director shall still perform his/her
duties as a Director in accordance with laws, administrative regulations, departmental rules and
the Articles of Association before the re-elected director takes office.
Directors may be concurrently held by the general manager or other senior management
personnel, but the total number of directors concurrently holding the positions of general
manager or other senior management personnel and directors held by staff representatives shall
not exceed one-half of the total number of Directors of the Company.
The Board is composed of nine Directors with one chairman. At all times, the Board shall
have more than one-third of the independent directors and the total number of independent
directors shall not be less than three, at least one of whom shall have appropriate professional
qualifications as required by regulatory requirements, or appropriate accounting or related
financial management expertise. The term of office of an independent director shall not exceed
nine years.
The chairman of the Board is elected by the Board by a majority of all the directors. The
term of office of the chairman is three years and he may be re-elected.
A Director of the Company is a natural person and cannot serve as a Director of the
Company under any of the following circumstances:
(1) no capacity for civil conduct or limited capacity for civil conduct;
(2) has been sentenced to a penalty for corruption, bribery, embezzlement of property,
misappropriation of property or disruption of the order of the socialist market
economy, and the period of execution has not exceeded five years, or he has been
deprived of political rights for a crime, and the period of execution has not exceeded
five years;
(3) has served as a director, factory director or general manager of a company or
enterprise in bankruptcy liquidation and is personally responsible for the bankruptcy
of the company or enterprise, not more than three years have elapsed since the date
of completion of the bankruptcy liquidation of the company or enterprise;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-3 –


--- page 525 ---
(4) has served as the legal representative of a company or enterprise whose business
license has been revoked or ordered to close down due to violation of the law and
bears personal responsibility, not more than three years have elapsed since the date
on which the business license of the company or enterprise has been revoked;
(5) has a relatively large sum of debt which was not paid at maturity;
(6) has been banned from the securities market by the CSRC for a period not exceeding
the prescribed time limit;
(7) other circumstances as prescribed by laws, administrative regulations, departmental
rules, other regulatory documents, the Hong Kong Listing Rules and other securities
regulatory rules of the place where the Company’s shares are listed.
Where a director is elected or appointed in violation of the above provisions, such
election, appointment or engagement shall be invalid. If any of the above-mentioned
circumstances occurs during the term of office of a Director, the Company shall remove him
from office.
Borrowing Power
The Board has the power to formulate the Company’s plans for the issue of bonds or other
securities and listing. Such bond issue must be approved by the shareholders in general
meeting.
Duties
The Directors shall abide by the laws, administrative regulations and the Articles of
Association and have the following faithful obligations to the Company:
(1) not to take advantage of his power to accept bribes or other illegal income, nor to
occupy the company’s property;
(2) not to misappropriate the Company’s funds;
(3) the assets or funds of the Company shall not be deposited in an account opened in
its own name or in the name of any other individual;
(4) shall not, in violation of the provisions of the Articles of Association, without the
consent of the general meeting or the Board, lend the Company’s funds to others or
provide guarantees for others with the Company’s property;
(5) not to enter into contracts or conduct transactions with the Company in violation of
the Articles of Association or without the consent of the general meeting;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-4 –


--- page 526 ---
(6) without the consent of the general meeting, it is not allowed to take advantage of his
position to seek business opportunities that should belong to the Company for
himself or others, and to conduct business of the same kind as the Company for
himself or for others;
(7) not to accept commissions for transactions between others and the Company as one’s
own;
(8) not to disclose the Company’s confidential information without authorization;
(9) not to use its connected relationship to harm the interests of the Company;
(10) other faithful obligations as prescribed by laws, administrative regulations,
departmental rules, the Hong Kong Listing Rules, other securities regulatory rules
of the place where the Company’s shares are listed and the Articles of Association.
The income earned by the Directors in violation of the above provisions shall be owned
by the Company; If losses are caused to the Company, the Directors shall be liable for
compensation.
The Directors shall abide by the laws, administrative regulations and the Articles of
Association and have the following diligent obligations to the Company:
(1) to exercise the rights conferred by the Company with care, seriousness and diligence
to ensure that the Company’s commercial activities comply with the requirements of
national laws, administrative regulations and various national economic policies,
and that the commercial activities do not exceed the business scope stipulated in the
business license;
(2) to treat all shareholders equally;
(3) to keep abreast of the business operation and management of the Company;
(4) to sign written confirmation for the Company’s periodic report and ensure that the
information disclosed by the Company is true, accurate and complete;
(5) to truthfully provide the Board of Supervisors with relevant information and
materials, and shall not hinder the Board of Supervisors or supervisors from
exercising their functions and powers;
(6) to perform other due diligence obligations under laws, administrative regulations,
departmental rules, the Hong Kong Listing Rules, other securities regulatory rules
of the place where the Company’s shares are listed and the Articles of Association.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-5 –


--- page 527 ---
When the resignation of a Director becomes effective or his term of office expires, all
hand-over process shall be completed to the Board. His obligation of loyalty to the Company
and the shareholders shall not be released automatically after the expiration of his term of
office and shall remain in force for a reasonable period as stipulated in the Articles of
Association. It shall remain in force for five years after the resignation of a Director becomes
effective or the term of office expires, but its obligation to keep the company’s trade secret
confidential shall not be limited to five years until such secret becomes public information.
No Director may act on behalf of the Company or the Board in his own name without the
provisions of the Articles of Association or the lawful authority of the Board. When a Director
acts in his/her own name, he/she should declare his/her position and identity in advance if a
third party would reasonably believe that he/she is acting on behalf of the Company or the
Board.
Where the Directors or senior management personnel violate laws, administrative
regulations or the Articles of Association when performing their duties and cause losses to the
Company, the shareholders holding more than 1% of the Company’s shares individually or
collectively for more than 180 consecutive days shall have the right to request the Board of
Supervisors to file a lawsuit in a people’s court in writing; If the Board of Supervisors violates
laws, administrative regulations or the Articles of Association when performing its duties and
causes losses to the Company, the shareholders may request the Board in writing to bring a
lawsuit to the people’s court.
If the Board of Supervisors and the Board refuse to file a lawsuit after receiving the
written request of the shareholders as specified in the preceding paragraph, or fail to file a
lawsuit within 30 days from the date of receiving the request, or the situation is urgent and
failure to file a lawsuit immediately will cause irreparable damage to the interests of the
Company, the shareholders as specified in the preceding paragraph have the right to file a
lawsuit directly in their own name to the people’s court for the benefit of the Company.
Where any other person infringes upon the lawful rights and interests of the Company and
causes losses to the Company, the shareholders as prescribed above may bring a lawsuit to the
people’s court in accordance with the provisions of the preceding two paragraphs.
Where the Directors, supervisors and senior management personnel of a wholly-owned
subsidiary of the Company have any of the aforesaid circumstances, or any other person
infringes upon the lawful rights and interests of the wholly-owned subsidiary of the Company
and causes losses, the shareholders of the Company who individually or collectively hold more
than 1% of the Company’s shares for more than 180 consecutive days may, in accordance with
the aforesaid provisions, request in writing the Board of Supervisors and the Board of the
wholly-owned subsidiary to bring a lawsuit to the people’s court or bring a lawsuit directly to
the people’s court in their own.
If the Directors or senior management personnel violate laws, administrative regulations
or the provisions of the Articles of Association and damage the interests of the shareholders,
the shareholders may bring a lawsuit to the people’s court.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-6 –


--- page 528 ---
AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Under any of the following circumstances, the Company shall amend the Articles of
Association:
(1) where the Company Law or relevant laws, administrative regulations, the Hong
Kong Listing Rules and other securities regulatory rules of the place where the
Company’s shares are listed are amended, resulting in the conflict between
provisions stipulated in the Articles of Association and with the provisions of the
amended laws, administrative regulations, the Hong Kong Listing Rules and other
securities regulatory rules of the place where the Company’s shares are listed;
(2) the Company’s conditions have changed, which is inconsistent with the matters
recorded in the Articles of Association;
(3) the general meeting decides to amend the Articles of Association.
Amendments to the Articles of Association adopted by the resolution of the general
meeting shall be submitted to the competent authority for approval if they are subject to the
approval of the competent authority; Where the Company’s registered items are involved, the
change registration shall be handled in accordance with the law.
The Board shall amend the Articles of Association in accordance with the resolution of
the general meeting on the amendments to the Articles of Association and the approval
opinions of relevant competent authorities.
Amendments to the Articles of Association are discloseable information under laws and
regulations, and shall be disclosed in accordance with relevant regulations.
MODIFICATION OF RIGHTS TO EXISTING SHARES OR CLASS OF SHARES
There is no provision in the Articles of Association for modification of rights to existing
shares or classes of shares of the Company.
SPECIAL RESOLUTIONS NEEDED TO BE ADOPTED BY ABSOLUTE MAJORITY
VOTE
The resolutions of the general meeting are divided into ordinary resolutions and special
resolutions.
An ordinary resolution made by the general meeting shall be passed by a simple majority
of the voting rights held by the shareholders (including proxies of shareholders) present at the
meeting.
A special resolution made by the general meeting shall be passed by more than two-thirds
of the voting rights held by the shareholders (including proxies of shareholders) present at the
meeting.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-7 –


--- page 529 ---
VOTING RIGHTS
Shareholders (including proxies of shareholders) exercise their voting rights in the
number of voting shares they represent, one vote per share. When voting, shareholders
(including proxies of shareholders) with two or more votes are not required to vote for or
against of all the voting rights.
Where a shareholder is required under the Hong Kong Listing Rules to abstain from
voting or is restricted to casting an affirmative or negative vote on a matter, the shareholder
is required to abstain from voting or voting in accordance with that requirement; Any poll
casted by or on behalf of a shareholder in contravention of such provision or restriction shall
not be counted in the result of the poll.
When the general meeting considers major issues affecting the interests of small and
medium-sized investors, separate votes shall be counted for the votes of small and
medium-sized investors. The results of separate counting shall be disclosed in a timely and
public manner.
Where the laws, administrative regulations and the regulatory rules of the place where the
Company’s shares are listed require a shareholder to waiver his voting rights on a proposal or
restrict the shareholder to vote only for or against a proposal, the voting rights of the
shareholder or his/her proxies in violation of the aforesaid provisions or restrictions shall not
be included in the voting results.
The shares of the Company held by the Company do not have voting rights and such
shares are excluded from the total number of voting shares present at the meeting of
shareholders.
Where a shareholder’s purchase of voting shares of the Company violates the provisions
of the first and second paragraphs of Article 63 of the Securities Law, the voting rights of the
shares in excess of the prescribed proportion shall not be exercised within 36 months after the
purchase and shall not be included in the total number of voting shares present at the general
meeting.
The Board, independent Directors or shareholders holding more than 1% of the voting
shares of the Company, or the investor protection institution established in accordance with
laws, administrative regulations or the provisions of the securities regulatory authority in the
place where the Company’s shares are listed, may publicly solicit the voting rights of
shareholders. In solicitating of shareholders’ voting rights, the specific voting intentions and
other information shall be fully disclosed to the solicitees. It is prohibited to collect
shareholders’ voting rights by way of compensation or in any disguised form. The Company
shall not impose a minimum shareholding limit on the solicitation of voting rights.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-8 –


--- page 530 ---
The resolutions referred to in Rules 2.2 and 2.10 of the Takeovers and Mergers Code and
3.3 of the Code on Share Buy-backs of the Hong Kong Securities and Futures Commission and
other resolutions which shall be passed only by the H-share shareholders under the relevant
provisions of the Hong Kong Listing Rules, the Takeovers and Mergers Code and the Code on
Share Buy-backs as amended from time to time, shall be passed only by the class meeting of
holders of H shares.
When the general meeting considers the related transactions, the related shareholders
shall not participate in the voting, and the number of voting shares represented by them shall
not be included in the total number of valid votes; The announcement of the resolution of the
general meeting shall fully disclose the voting of the unrelated shareholders.
Before the general meeting considers the connected transactions, the Company shall
determine the scope of connected persons in accordance with the relevant national laws and
regulations, the Hong Kong Listing Rules and the regulatory requirements of the securities
regulatory authority in the place where the Company’s shares are listed. The connected
shareholders or their proxies may attend the general meeting and may make their views known
to the shareholders present in accordance with the rules of procedure of the general meeting,
but shall abstain from voting. When the general meeting decides on matters related to
connected transactions, the connected shareholders shall voluntarily abstain from voting; If the
connected shareholder does not voluntarily abstain from voting, the other shareholders present
at the meeting have the right to request the connected shareholder to do so.
After the abstention of the connected shareholders, the other shareholders shall vote
according to their voting rights and adopt corresponding resolutions in accordance with the
provisions of the Articles of Association; The abstention and voting procedures of the
connected shareholders shall be notified by the presider of the general meeting and recorded
in the minutes of the meeting.
A resolution of a general meeting on connected transactions shall be subject to the
approval of a majority of the voting rights held by the non-connected shareholders present at
the meeting. However, when such connected transaction involves matters shall be passed by
special resolution as stipulated in the Articles of Association, the resolution of the general
meeting shall be subject to the approval of more than two-thirds of the voting rights held by
the non-connected shareholders present at the general meeting.
Resolutions proposed to the general meeting shall be resolved by way of open ballot.
The same voting right can only be voted either on site or by any other means at a general
meeting. In case of repeated voting for the same voting right, the first voting result shall
prevail.
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--- page 531 ---
Shareholders present at the general meeting shall express one of the following opinions
on the proposal submitted for voting: for, against or abstain. The securities depository and
clearing institution, as the nominal holder of the shares in the Mainland and Hong Kong stock
markets under the Exchange Interconnection Mechanism, shall make a declaration in
accordance with the actual holder’s intention.
Blank, incorrect, illegible ballots and undelivered ballots shall be deemed as a waiver of
the voting rights of the voters, and the voting result of the number of shares held by the voters
shall be counted as “abstain”.
PROVISIONS ON GENERAL MEETING
The general meeting is divided into annual general meeting and extraordinary general
meeting. The annual general meeting shall be held once a year and shall be held within six
months after the end of the previous fiscal year.
ACCOUNTING AND AUDITING
Financial and Accounting System
The Company formulates the Company’s financial and accounting systems in accordance
with laws, administrative regulations and provisions of relevant authorities of PRC. Where the
securities regulatory authority of the place where the Company’s shares are listed has other
provisions, such provisions shall prevail.
An annual financial accounting report of the Company shall be prepared within one
hundred and twenty days after the end of each accounting financial year and an interim
financial accounting report of the Company shall be prepared within sixty days after the end
of each accounting financial quarter. The above financial and accounting reports are prepared
and disclosed in accordance with relevant laws, administrative regulations, departmental rules,
the Hong Kong Listing Rules and other securities regulatory rules of the place where the
Company’s shares are listed.
Apart from the statutory accounting books, the Company will not keep separate
accounting books. The assets of the Company are not deposited in an account opened in the
name of any individual.
Appointment and Dismissal of Accounting Firms
The Company employs an accounting firm that meets the requirements of the Securities
Law, the Hong Kong Listing Rules and other securities regulatory rules of the place where the
Company’s shares are listed to conduct audit of accounting statements, verification of net
assets and other related consulting services, etc. The engagement term is one year and may be
renewed.
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--- page 532 ---
The appointment of an accounting firm by the Company must be decided by a simple
majority of shareholders in the general meeting. The Board shall not appoint an accounting
firm before the decision of the general meeting.
The Company guarantees to provide true and complete accounting documents, accounting
books, financial accounting reports and other accounting information to the accounting firm
appointed, and shall not refuse, conceal or misrepresent them.
The remuneration of the accounting firm or the method of determining the remuneration
shall be decided by the general meeting.
When the Company dismisses or no longer reappoints an accounting firm, the Company
shall notify the accounting firm 30 days in advance, and when the general meeting of the
Company votes on the dismissal of the accounting firm, the accounting firm shall be allowed
to make statements.
If the accounting firm proposes to resign, it shall explain to the general meeting whether
the company has any improper circumstances.
NOTICE AND AGENDA OF GENERAL MEETING
The general meeting is the authority of the Company. Under any of the following
circumstances, the Company shall convene an extraordinary general meeting within two
months from the date of occurrence of the facts:
(1) when the number of Directors is less than two-thirds of the number as provided in
in the Companies Law or the Articles of Association;
(2) when the Company’s unrecovered loss reaches one-third of the total paid-in share
capital;
(3) when requested by shareholders who individually or collectively hold more than
10% of the Company’s shares;
(4) when the Board considers it necessary;
(5) when the Board of Supervisors proposes to convene the meeting;
(6) other circumstances as prescribed by laws, administrative regulations, departmental
rules, the Hong Kong Listing Rules and other securities regulatory rules of the place
where the Company’s shares are listed or the Articles of Association.
The independent directors have the right to propose to the Board for convening an
extraordinary general meeting. For the proposal of an independent director for convening an
extraordinary general meeting, the Board shall, in accordance with the laws, administrative
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 533 ---
regulations, the Hong Kong Listing Rules and the Articles of Association, provide written
feedback on whether or not it agrees to convene an extraordinary general meeting within ten
days after receiving the proposal.
If the Board decides to convene an extraordinary general meeting, a notice of convening
the general meeting shall be given within five days after the Board decides to convene such
meeting; If the Board of Directors does not agree to convene an extraordinary general meeting,
the reasons will be explained and announced.
The Board of Supervisors has the right to propose to the Board for convening of an
extraordinary general meeting, which shall be proposed to the Board in writing. The Board
shall, in accordance with the laws, administrative regulations, the Hong Kong Listing Rules
and the Articles of Association, provide written feedback on whether it agrees or disagrees to
convene an extraordinary general meeting within ten days after receiving the proposal.
If the Board of Directors agrees to convene an extraordinary general meeting, a notice of
convening the general meeting shall be given within five days after the Board decides to
convene such meeting. Any change to the original proposal in the notice shall be approved by
the Board of Supervisors.
If the Board of Directors does not agree to convene an extraordinary general meeting or
fails to provide feedback within ten days after receiving the proposal, it shall be deemed that
the Board cannot perform or fails to perform the duty of convening a general meeting, and the
Board of Supervisors may convene and preside over the meeting on its own.
Shareholders who individually or collectively hold more than 10% of the Company’s
shares have the right to request the Board to convene an extraordinary general meeting, which
shall be submitted to the Board in writing. The Board shall, in accordance with the laws,
administrative regulations, the Hong Kong Listing Rules and other securities regulatory rules
of the place where the Company’s shares are listed and the provisions of the Articles of
Association, provide written feedback on whether it agrees or disagrees with the convening of
an extraordinary general meeting within ten days after receiving the request.
Where the Board agrees to convene an extraordinary general meeting, it shall issue a
notice of convening the general meeting within five days after the Board decides to convene
such meeting. Any change to the original request in the notice shall be subject to the consent
of the relevant shareholders.
If the Board does not agree to convene an extraordinary general meeting, or fails to
provide feedback within ten days after receiving the request, the shareholders who individually
or collectively hold more than 10% of the Company’s shares have the right to propose to the
Board of Supervisors for convening an extraordinary general meeting, and shall submit the
request to the Board of Supervisors in writing.
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– III-12 –


--- page 534 ---
If the Board of Supervisors agrees to convene an extraordinary general meeting, it shall
issue a notice of convening the general meeting within five days after receiving the request.
Any change to the original request in the notice shall be approved by the relevant shareholders.
If the Board of Supervisors fails to give notice of the general meeting within the
prescribed time limit, it shall be deemed that the Board of Supervisors does not convene and
preside over the general meeting. Shareholders holding more than 10% of the Company’s
shares individually or in aggregate for more than 90 consecutive days may convene and preside
over the meeting themselves.
When the Company holds a general meeting, the Board, the Board of Supervisors and
shareholders holding more than 3% of the Company’s shares individually or collectively shall
have the right to make proposals to the Company.
Shareholders who individually or collectively hold more than 1% of the Company’s
shares may submit additional proposals to the convener in writing 10 days before the general
meeting. The convener shall issue a supplementary notice to the general meeting within two
days after receiving the proposal, announce the contents of the additional proposal, and submit
the additional proposal to the general meeting for deliberation; However, the temporary
proposal violates the provisions of laws, administrative regulations or the Articles of
Association, or does not fall within the scope of authority of the general meeting. The
Company shall not increase the shareholding ratio of the shareholders making the additional
proposal.
Except for the circumstances specified in the preceding paragraph, the convener shall not
modify the proposals listed in the notice of general meeting or add new proposals after issuing
the notice of general meeting.
Proposals that are not specified in the notice of the general meeting or that do not conform
to the provisions of the Articles of Association shall not be voted and resolutions shall be made
by the general meeting.
The notice of the general meeting includes the following contents:
(1) The time, place and duration of the meeting;
(2) Matters and proposals submitted to the meeting for consideration;
(3) Clearly stated in writing: All shareholders have the right to attend the general
meeting and may appoint a proxy to attend the meeting and vote in writing, and such
proxy may not be a shareholder of the Company;
(4) Date of record for shareholders entitled to attend the general meeting;
(5) The name and telephone number of the permanent contact person for the meeting;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-13 –


--- page 535 ---
(6) The voting time and voting procedures, if any, online or otherwise;
(7) Other requirements as prescribed by laws, administrative regulations, departmental
rules, the Hong Kong Listing Rules and other securities regulatory rules and articles
of association of the place where the Company’s shares are listed.
The notice of the general meeting and the supplementary notice shall fully and completely
disclose all specific contents of all proposals and all information or explanations necessary to
enable the shareholders to make a reasonable judgment on the matters to be discussed. If the
matters to be discussed require the independent directors to express their opinions, the
independent directors’ opinions and reasons will be disclosed when the notice of general
meeting or supplementary notice is issued.
The resolutions of the general meeting are divided into ordinary resolutions and special
resolutions.
The following matters shall be passed by ordinary resolutions of the general meeting:
(1) Work reports of the Board and the Board of Supervisors;
(2) The profit distribution plan and loss compensation plan drawn up by the Board;
(3) The appointment and removal of members of the Board and the Board of
Supervisors, and their remuneration and payment methods;
(4) The annual budget plan and final accounting plan of the Company;
(5) The annual report of the Company;
(6) Other matters other than those required by laws, administrative regulations, the
Hong Kong Listing Rules, other securities regulatory rules of the place where the
Company’s shares are listed or the Articles of Association to be passed by special
resolutions.
The following matters shall be passed by special resolutions of the general meeting:
(1) The Company increases or decreases its registered capital;
(2) Merger, spin-off, division, dissolution, liquidation or change of corporate form of
the Company;
(3) Amendments to the Articles of Association;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 536 ---
(4) The Company purchases or dispose of significant assets or the amount of guarantee
exceeds 30% of the Company’s total audited assets in the latest period within one
year;
(5) Equity incentive plan;
(6) Other matters as prescribed by laws, administrative regulations, departmental rules,
the Hong Kong Listing Rules and other securities regulatory rules of the place where
the Company’s shares are listed or the Articles of Association, and as determined by
ordinary resolutions of the general meeting to have a significant impact on the
members of the Group, and as required to be passed by special resolutions.
SHARE TRANSFER
Shares issued before the Company’s public offering shall not be transferred for one year
from the date on which the Company’s shares are listed and traded on the stock exchange.
Where there are other provisions in laws, administrative regulations or the the State Council
Securities Regulatory Authority and the Hong Kong Stock Exchange regarding the transfer of
the Company’s shares held by shareholders and actual controllers of listed companies, such
provisions shall prevail.
If Shareholders, directors, supervisors and senior management of the Company who hold
more than 5% of the shares sell the Company’s shares or other equity securities held by them
within six months after purchase, or buy them again within six months after sale, the proceeds
therefrom shall be owned by the Company, and the Board of the Company shall recover the
proceeds therefrom, except for those securities companies that hold more than 5% of the shares
as a result of purchasing the remaining shares after underwriting, and other circumstances as
prescribed by the China Securities Regulatory Commission and the securities regulatory
authority of the place where the company’s shares are listed. The above shareholders holding
more than 5% of the shares of the Company do not include a recognized clearing house and
its agents as defined in the relevant ordinances from time to time in force under the laws of
Hong Kong.
The shares or other equity securities held by the directors, supervisors, senior
management personnel and natural person shareholders mentioned above include the shares or
other equity securities held by their spouses, parents and children and held by using the
accounts of others.
If the Board of the Company fails to comply with the aforesaid provisions, the
shareholders have the right to require the Board to comply within 30 days. If the Board of the
Company fails to execute within the aforesaid time limit, the shareholders shall have the right
to bring a lawsuit directly to the people’s court in their own name for the benefit of the
Company.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-15 –


--- page 537 ---
If the Board of the Company fails to comply with the aforesaid provisions, the responsible
directors shall be jointly and severally liable in accordance with the law.
THE COMPANY’S RIGHT TO REPURCHASE ITS OUTSTANDING SHARES
The Company shall not acquire shares of the Company, except in any of the following
circumstances:
(1) Reducing the registered capital of the Company;
(2) Consolidation with other companies holding shares in the Company;
(3) The use of shares in ESOP or equity incentives;
(4) Where a shareholder requests the Company to acquire its shares because he
disagrees with the resolution of merger or division made by the general meeting;
(5) Corporate bonds convertible into shares issued by the conversion company in which
the shares are used;
(6) Necessary to safeguard the Company’s value and shareholders’ interests;
(7) Other circumstances permitted by laws, administrative regulations, departmental
rules, regulatory rules of the place where the Company’s shares are listed, etc.
The Company’s acquisition of the Company’s shares may be made by way of open
centralized transactions, or by other means approved by laws, administrative regulations, the
Hong Kong Listing Rules and the securities regulatory rules of the place where the Company’s
shares are listed and the China Securities Regulatory Commission (if necessary). Where the
Company acquires the shares of the Company due to the circumstances specified in items (3),
(5) and (6) above, the acquisition shall be conducted through open centralized trading provided
that the requirements of the Hong Kong Listing Rules and other securities regulatory rules of
the place where the Company’s shares are listed are met.
ANY SUBSIDIARY OF THE COMPANY HAS THE POWER TO OWN THE SHARES OF
ITS PARENT COMPANY
There is no provision in the Articles of Association for subsidiaries of the Company to
own shares in its parent company.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-16 –


--- page 538 ---
DIVIDENDS AND OTHER DISTRIBUTIONS
The distribution of dividends (or shares) shall be completed within two months after the
general meeting of the Company has made a resolution on the profit distribution plan, or after
the Board of the Company has formulated a specific plan based on the medium-term dividend
distribution conditions and ceiling for the next year as approved by the annual general meeting.
The Company’s profit distribution policy is that the Company shall implement a dividend
policy of sharing the same share and profits, and shall distribute the shares held by the
shareholders in cash, shares or other legally recognized manner.
SHAREHOLDER’S PROXY
Any shareholder who has the right to attend the general meeting and has the right to vote
may attend the general meeting in person or may entrust one or more persons (who may not
be shareholders) to attend and vote on his behalf as his shareholder’s proxy.
The power of attorney issued by the shareholders to entrust others to attend the general
meeting shall specify the following contents:
(1) The name of the proxy;
(2) Whether it has the right to vote;
(3) An instruction to vote for, against or abstain from voting on each item included in
the agenda of the general meeting respectively;
(4) The date on which the power of attorney is issued and the term of validity thereof;
(5) Signature (or seal) of the appointing shareholder. If the appointing shareholder is a
legal person/other institutional shareholder, the seal of the legal person/institutional
unit shall be affixed.
The form of proxy should state whether the shareholder’s proxy may vote in his/her
discretion if the shareholder does not give specific instructions.
If the proxy is authorized by the appointing shareholder to be signed by another person,
the power of attorney or other authorized documents authorized to be signed shall be notarized.
The notarized power of attorney or other authorized documents and the proxy form must be
kept at the Company’s residence or other places designated in the notice convening the
meeting.
If the proxy is a legal person/other institution, its legal representative/managing partner
or a person authorized by the Board or other decision-making bodies by resolution shall attend
the Company’s shareholders’ meeting as a proxy.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 539 ---
If the proxy is a partnership, its managing partner or a person authorized by him/her shall
attend the Company’s shareholders’ meeting as a proxy.
If the Shareholder is a recognized clearing house (or its proxy) as defined in the relevant
Ordinance enacted in Hong Kong from time to time, the Shareholder may authorize such
person or persons as he thinks fit to represent him at any meeting of shareholders; However,
if more than one person is authorised, the authorisation shall state the number and type of
shares to which each such person is subject to such authorisation and shall be signed by an
authorised officer of a recognised clearing house. A person so authorised may, on behalf of a
recognised clearing house (or its proxy), attend meetings (without presenting a certificate of
shareholding, a notarized authorisation and/or further evidence that he is duly authorised) to
exercise his rights as if he were an individual shareholder of the Company.
CALLS AND FORFEITURE OF SHARES
There is no provision for calls and forfeiture of shares in the Company in the Articles of
Association.
INSPECTION OF REGISTER OF MEMBERS AND OTHER RIGHTS OF
SHAREHOLDERS
The Company shall establish a register of shareholders based on the certificates provided
by the securities registration authority. The register of shareholders is sufficient evidence to
prove that the shareholders hold the shares of the Company. Shareholders have rights and
obligations according to the types of shares they hold; Shareholders holding the same class of
shares have the same rights and obligations.
When the Company convenes a general meeting, distributes dividends, liquidates and
engages in other acts that require the identification of shareholders, the Board or the convener
of the general meeting shall determine the shareholders registered in the register of
shareholders as shareholders with relevant interests.
QUORUM OF GENERAL MEETING
There is no provision in the Articles of Association for a quorum at the general meeting
of the Company.
RESTRICTIONS ON THE RIGHTS OF CONTROLLING SHAREHOLDERS
The Controlling Shareholders and actual controllers of the Company shall not use their
connected relationship to harm the interests of the Company. In the event of any Controlling
Shareholder or the actual controller violates the regulations and causes losses to the Company,
he or she shall be liable for compensation.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-18 –


--- page 540 ---
The Controlling Shareholders and actual controllers of the Company have fiduciary duties
towards the Company and the public shareholders of the Company. Controlling Shareholders
shall exercise the rights as a capital contributor in strict compliance with the law. Controlling
Shareholders shall not harm the legitimate rights and interests of the Company and other
shareholders of the Company by way of, among other things, profit distribution, asset
restructuring, external investment, capital occupation, loan guarantee, nor use their controlling
position to harm the interests of the Company and other shareholders of the Company.
LIQUIDATION PROCEDURE
The Company may be dissolved for the following reasons:
(1) The business term stipulated in the Articles of Association expires or other causes
for dissolution stipulated in the Articles of Association arise;
(2) The general meeting resolved to dissolve the Company;
(3) Dissolution is required due to merger or division of the Company;
(4) Having its business license revoked, ordered to close down or revoked in accordance
with the law;
(5) Serious difficulties arise in the operation and management of the Company and the
continued existence of the Company would cause material loss to the interests of the
shareholders and such difficulties cannot be resolved through other means,
shareholders holding more than 10% of the voting rights of all shareholders of the
Company may request a people’s court to dissolve the Company.
The Company may survive by amending the Articles of Association in case of occurrence
of circumstance set out in item (1) above. Any amendment to the Articles of Association in
accordance with the aforesaid provisions shall be approved by more than two-thirds of the
voting rights held by the shareholders present at the general meeting.
Where the Company is dissolved due to the provisions of items (1), (2), (4) and (5) above,
a liquidation group shall be established within 15 days from the date of occurrence of the cause
of dissolution to commence liquidation. The liquidation group shall be composed of Directors
or personnel determined by the general meeting. If a liquidation group is not established for
liquidation within the time limit, the creditors of the Company may apply to a people’s court
for designating relevant personnel to form a liquidation group for liquidation.
The liquidation group shall notify the creditors within ten days from the date of
establishment and make an announcement in a newspaper within sixty days. The creditor shall
declare its creditor’s rights to the liquidation group within 30 days from the date of receiving
the notice or within 45 days from the date of announcement if the notice is not received.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 541 ---
When declaring a creditor’s right, the creditor shall explain the relevant matters of the
creditor’s right and provide supporting materials. The liquidation group shall register the
creditor’s rights. During the period when creditors declare their rights, the liquidation group
shall not pay off the debts to the creditors.
After the liquidation group has checked up the Company’s property and prepared the
balance sheet and property list, it shall formulate a liquidation plan and report it to the general
meeting or the people’s court for confirmation.
The remaining property of the Company after paying liquidation expenses, staff wages,
social insurance premiums and statutory compensation, taxes owed and debts of the Company
shall be distributed in proportion to the shares held by the shareholders.
During the liquidation period, the Company continues to exist, but shall not carry out any
business activities unrelated to the liquidation. The Company’s property shall not be distributed
to the Shareholders until it has made the payments out of its property in accordance with the
above provisions.
If the liquidation group finds that the company’s property is insufficient to pay off the
debts after checking up the company’s property and preparing the balance sheet and property
list, it shall file a bankruptcy petition with the people’s court for bankruptcy in accordance with
the law.
After the Company is declared bankrupt by the ruling of the people’s court, the
liquidation group shall hand over the liquidation affairs to the people’s court.
After the liquidation of the Company is completed, the liquidation group shall prepare a
liquidation report and submit it to the general meeting or the people’s court for confirmation.
The liquidation group shall also submit the report to the company registration authority, apply
for deregistration of the Company and announce the termination of the Company.
The members of the liquidation group shall be faithful in the discharge of their duties and
perform their liquidation obligations in accordance with the law.
Members of the liquidation group shall not take advantage of their authority to accept
bribes or other illegal income, and shall not encroach on the Company’s property.
Where a member of the liquidation group causes losses to the Company or its creditors
intentionally or through gross negligence, he or she shall be liable for compensation.
Where the Company is declared bankrupt according to law, bankruptcy liquidation shall
be carried out in accordance with the laws on bankruptcy of enterprises.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-20 –


--- page 542 ---
OTHER MATERIAL REQUIREMENTS RELATING TO THE COMPANY OR THE
SHAREHOLDERS
General Rules
The Company is a company limited by shares with perpetual existence.
Shareholders are liable to the Company to the extent of their subscribed shares, and the
Company is liable to the debts of the Company to the extent of all its assets.
From the effective date, the Articles of Association of the Company shall become legally
binding documents regulating the organization and behavior of the Company, the rights and
obligations between the Company and its shareholders, and among the shareholders, and shall
be legally binding documents for the Company, shareholders, directors, supervisors and senior
management personnel. According to the Articles of Association, any shareholder may bring a
lawsuit against another shareholder, any directors, supervisors, managers and other senior
management personnel of the Company, and the Company, and the Company may bring a
lawsuit against any shareholders, directors, supervisors, managers and other senior
management personnel.
Shares and Transfers
According to the needs of operation and development and in accordance with the
provisions of laws and regulations, the Company may increase its capital by any of the
following methods upon separate resolutions of the general meeting:
(1) Public offering of shares;
(2) Non-public offering of shares;
(3) Placing or distributing new shares to existing shareholders;
(4) Conversion from reserve fund to share capital;
(5) Other means permitted by laws and administrative regulations, and the China
Securities Regulatory Commission and the Hong Kong Stock Exchange.
Where the Company has increased its capital in the manner prescribed above, the existing
shareholders of the Company do not have any pre-emptive rights in respect of the new shares
issued by the Company, unless otherwise agreed between the Company and any existing
shareholders.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
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--- page 543 ---
The Company may reduce its registered capital. The Company shall reduce its registered
capital in accordance with the procedures prescribed in the Company Law, the Hong Kong
Listing Rules and other securities regulatory rules of the place where the Company’s shares are
listed and the Articles of Association.
Shareholders
Shareholders have rights and obligations according to the class of shares they hold;
Shareholders holding the same class of shares have the same rights and obligations.
Shareholders of the Company have the following rights:
(1) To receive dividends and other forms of distribution of benefits in proportion to the
number of shares held;
(2) To request, convene, preside over, participate in or appoint proxy(ies) to participate
in the general meeting, and exercise the corresponding right to speak and vote in
accordance with the law;
(3) To supervise the operation of the Company and make suggestions or inquiries;
(4) To transfer, offer as gift or pledge their shares in accordance with laws,
administrative regulations and the Articles of Association;
(5) To inspect and photocopy the Articles of Association, register of shareholders,
minutes of General Meetings, resolutions of the Board meetings, resolutions of the
Board of Supervisors meetings, and financial and accounting reports;
(6) To participate in the distribution of the remaining property of the Company in
proportion to the number of shares held, in the event of the termination or
liquidation of the Company;
(7) To request the Company to acquire the shares held by shareholders who disagree
with the resolution of merger or division of the Company proposed in any general
meeting;
(8) To enjoy any other rights as provided by laws, administrative regulations,
departmental rules, the Hong Kong Listing Rules or the Articles of Association.
Where a shareholder requests to access the above-mentioned relevant information or
request for information, he/she shall provide the Company with written documents evidencing
the type of shares and the number of shares held by him/her. The Company shall provide such
documents upon verification of the identity of the shareholder in accordance with the request
of the shareholder.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-22 –


--- page 544 ---
The shareholders of the Company undertake the following obligations:
(1) To comply with laws, administrative regulations and the Articles of Association;
(2) To pay subscription funds in accordance with the number of shares subscribed and
the method of subscription;
(3) Not to withdraw shares unless in the circumstances stipulated by laws and
regulations;
(4) Not to abuse shareholder’s rights to harm the interests of the Company or other
shareholders; not to abuse the status of the Company as an independent legal person
or the limited liability as a shareholder to harm the interests of the creditors of the
Company;
(5) To fulfill other obligations under laws, administrative regulations and the Articles of
Association.
Where any shareholder of the Company abuses shareholders’ rights and causes losses to
the Company or other shareholders, he or she shall be liable for compensation in accordance
with the law. Where any shareholder of the Company who abuses the status of the Company
as an independent legal entity or the limited liability as a shareholders to evade debts and
causes sever harms to the interests of the Company’s creditors, he or she shall be jointly and
severally liable for the debts of the Company.
The Board
The Board exercises the following functions and powers:
(1) To convene the general meeting and report to the general meeting;
(2) To implement the resolutions of the general meeting;
(3) To determine the Company’s business plans and investment plans;
(4) To formulate the annual financial budget plans and final accounting plans of the
Company;
(5) To formulate the Company’s profit distribution plans and loss recovery plans;
(6) To formulate the Company’s plans for increasing or decreasing its registered capital,
issuing bonds or other securities and listing;
(7) To formulate plans for the Company’s material acquisitions, acquisition of the
Company’s shares or merger, division, dissolution and change of corporate form;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-23 –


--- page 545 ---
(8) Within the scope of authority granted by the general meeting, to decide on matters
such as the Company’s external investment, acquisition and sale of assets, asset
mortgage, external guarantee matters, entrusted wealth management, connected
transactions, external donations, etc.;
(9) To determine the establishment of the internal management organization of the
Company;
(10) To decide on the appointment or dismissal of the general manager, secretary of the
Board and other senior management personnel of the Company, and to decide on
matters of their remuneration and rewards and punishments; according to the
nomination of the general manager, to decide to appoint or dismiss the Company’s
deputy general manager, financial controller and other senior management
personnel, and to decide on matters of their remuneration and rewards and
punishments;
(11) To formulate the basic management system of the Company;
(12) To formulate proposals to amend the Articles of Association;
(13) To manage the Company’s information disclosure matters;
(14) To propose to the general meeting the appointment or replacement of the accounting
firm as the Company’s auditor;
(15) To listen to the work report of the general manager of the Company and examine the
work of the general manager;
(16) To exercise other powers conferred by laws, administrative regulations,
departmental rules, the Hong Kong Listing Rules and other securities regulatory
rules of the place where the Company’s shares are listed or the Articles of
Association.
Matters beyond the scope of authority delegated by the general meeting shall be
submitted to the general meeting for deliberation.
A meeting of the Board shall be held only if a majority of the Directors are present.
Resolutions made by the Board must be passed by a majority of all Directors. V oting on the
resolutions of the Board shall be on a “one person, one vote” basis.
Independent Non-Executive Directors
At all times, the Board shall have more than one-third of the independent Directors and
the total number of independent Directors shall not be less than three, with at least one of
whom shall have appropriate professional qualifications that meet regulatory requirements, or
appropriate accounting or related financial management expertise. The term of office of an
independent Director shall not exceed nine years.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-24 –


--- page 546 ---
Secretary of the Board
The Company has a secretary of the Board, who is responsible for the preparation of the
General Meetings and the board meetings, document keeping, information management of the
Company’s shareholders, information disclosures and other matters.
The secretary of the Board shall comply with the relevant provisions of laws,
administrative regulations, departmental rules and the Articles of Association. Any Director or
other senior management personnel of the Company may concurrently serve as the secretary
of the Board of the Company. However, the accountant of the accounting firm engaged by the
Company shall not concurrently serve as the secretary of the Board of the Company.
When the secretary of the Board of the Company is concurrently a Director, the person
concurrently serving as a Director and secretary of the Board of the Company shall not act in
a dual capacity if an act should be performed by the Director and the secretary separately.
Board of Supervisors
The Company has a Board of Supervisors. The Board of Supervisors is composed of three
Supervisors, with one chairman. The chairman of the Board of Supervisors shall be elected by
a majority of all Supervisors. The chairman of the Board of Supervisors shall convene and
preside over the meetings of the Board of Supervisors; If the chairman of the Board of
Supervisors is unable to perform his or her duties or fails to perform his or her duties, a
Supervisor jointly elected by more than half of the Supervisors shall convene and preside over
the meeting of the Board of supervisors.
The Board of Supervisors shall include representatives of shareholders and an appropriate
proportion of representatives of the employees of the Company, among which the proportion
of representatives of the employees shall not be less than one-third. The employee
representatives on the Board of Supervisors shall be elected by the employees of the Company
through employee representative congress, the employee congress, or other forms of
democratic election.
The Board of Supervisors shall have at least three members.
The Board of Supervisors shall exercise the following functions and powers:
(1) To review and give written opinions on the Company’s periodic reports prepared by
the Board;
(2) To examine the Company’s financial matters;
(3) To supervise the conduct of Directors and senior management personnel in
performing their duties of the Company, and to propose the dismissal of Directors
and senior management personnel who violate laws, administrative regulations, the
Articles of Association or resolutions of the general meeting;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-25 –


--- page 547 ---
(4) To require the Directors and senior management to to rectify their acts when such
acts harm the interests of the Company;
(5) To propose to convene an extraordinary general meeting; to convene and preside
over the general meeting when the Board fails to perform its duties of convening and
presiding over the general meeting as stipulated in the Company Law;
(6) To submit proposals to the general meeting;
(7) To institute legal proceedings against the Directors and senior management in
accordance with Article 189 of the Company Law;
(8) If the Company’s operations are found to be abnormal, to conduct investigation;
when necessary, to engage professional organizations such as accounting firms and
law firms to assist its work at the Company’s expense;
(9) To exercise other powers as provided for in the Articles of Association or delegated
by the general meeting.
General Manager
The Company shall have a general manager, who shall be appointed or dismissed by the
Board.
The general manager is responsible to the Board and exercises the following functions
and powers:
(1) To be in charge of the production, operation and management of the Company,
organize the implementation of the resolutions of the Board, and report to the Board;
(2) To organize the implementation of the Company’s annual operation plans and
investment plans;
(3) To draft a plan for the establishment of the internal management organization of the
Company;
(4) To draft the basic management system of the Company;
(5) To formulate specific rules and regulations of the Company;
(6) To propose to the Board the appointment or dismissal of the Company’s deputy
general manager and financial controller;
(7) To decide on the appointment or dismissal of management personnel other than
those to be appointed or dismissed by the Board;
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-26 –


--- page 548 ---
(8) To exercise other powers conferred by the Articles of Association or the Board.
The general manager shall attend Board meetings.
Reserves
When the Company allocates the profit after tax for the current year, it shall allocate 10%
of the profit as the Company’s statutory reserve fund. If the accumulated amount of the
Company’s statutory reserve fund reaches more than 50% of the Company’s registered capital,
further allocation may be dispensed.
Where the Company’s statutory reserve fund is insufficient to cover the losses of previous
years, the current year’s profits shall be used to cover the losses before the statutory reserve
fund is allocated in accordance with the provisions of the preceding paragraph.
After the Company withdraws the statutory common reserve fund from the after-tax
profits, it may also withdraw any common reserve fund from the after-tax profits upon the
resolution of the general meeting.
The Company’s remaining profit after tax after making up the losses and allocation to the
reserve fund shall be distributed according to the proportion of shares held by the shareholders,
unless such distribution shall not be made in accordance with the proportion of shareholdings
as stipulated in the Articles of Association.
If the general meeting violates the provisions of the preceding paragraphs by distributing
the profits to the shareholders before the Company makes up the losses and makes allocation
to the statutory reserve fund, the shareholders must return the profits distributed in violation
of the provisions to the Company.
Profits shall not be distributed for the shares held by the Company itself.
The Company’s reserve fund shall be used to cover the Company’s losses, expand the
Company’s production and operation, or to increase the Company’s capital. Any reserve fund
and statutory reserve fund shall be used first to cover the losses of the Company; if it still
cannot be made up for, the capital reserve fund may be used in accordance with the regulations.
When the statutory reserve fund is converted into an increase in registered capital, the
amount of such reserve fund retained shall not be less than 25% of the registered capital of the
Company before the conversion.
APPENDIX III SUMMARY OF ARTICLES OF ASSOCIATION
– III-27 –


--- page 549 ---
FURTHER INFORMATION ABOUT OUR COMPANY
Establishment of our Company
Our Company was established as a limited liability company in the PRC on June 11, 2020
and was converted into a joint stock limited company with limited liability on February 10,
2023 under the laws of the PRC. As of the Latest Practicable Date, the registered share capital
of our Company is RMB125,000,000.
Our Company has established a place of business in Hong Kong at 46/F, Hopewell Centre,
183 Queen’s Road East, Wanchai, Hong Kong and has been registered as a non-Hong Kong
company in Hong Kong under Part 16 of the Companies Ordinance on May 31, 2024. Mr. Lee
Chung Shing (ϓ), one of our joint company secretaries, has been appointed as authorized
representatives in Hong Kong and our agents for the acceptance of service of process in Hong
Kong whose correspondence address is the same as our place of business in Hong Kong.
As we are established in the PRC, our corporate structure and Articles of Association are
subject to the relevant laws and regulations of the PRC. A summary of the relevant provisions
of our Articles of Association is set out in the section headed “Summary of Articles of
Association” in Appendix III.
Changes in Share Capital of Our Company
Save as disclosed in the section headed “History, Development and Corporate Structure
– Corporate Development and Major Shareholding Changes”, there has been no other alteration
in the share capital of our Company during the two years immediately preceding the date of
this Prospectus.
Changes in Share Capital of Our Subsidiaries
A summary of the corporate information and the particulars of our subsidiaries are set out
in the Accountants’ Report in Appendix I.
There had been no other alterations of share capital of our subsidiaries within the two
years preceding the date of this Prospectus.
Resolutions of our Shareholders
Pursuant to a general meeting held on May 23, 2024, among other things, our
Shareholders resolved that:
(a) the issuance by our Company of the H Shares of nominal value of RMB1.00 each
and such H Shares being listed on the Hong Kong Stock Exchange;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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--- page 550 ---
(b) the number of H Shares to be issued shall not be less than 15% of the total issued
share capital of our Company as enlarged by the Global Offering;
(c) subject to the filing procedure with the CSRC, upon completion of the Global
Offering, 56,798,888 Unlisted Shares in aggregate will be converted into H Shares
on a one-for-one basis;
(d) subject to the completion of the Global Offering, the conditional adoption of the
Articles of Association which shall become effective on the Listing Date, and
authorization to the Board to amend the Articles of Association in accordance with
the requirements of the relevant laws and regulations and upon the request from the
Stock Exchange and relevant PRC regulatory authorities;
(e) authorization of the Board to handle matters relating to, among other things, the
Global Offering, the issue and listing of the H Shares;
(f) subject to the completion of the Global Offering, the granting of a general mandate
to the Board to repurchase H Shares issued on the Stock Exchange at any time within
a period commencing from the Listing Date and up to the date of the conclusion of
the next annual general meeting of the Shareholders to be held after the Listing or
the date on which the Shareholders pass a resolution to revoke or change such
mandate, whichever is earlier, upon such terms and conditions and for such purposes
as the Board in their absolute discretion deem fit, and to make necessary
amendments to the Articles of Association, provided that, the number of Shares to
be repurchased shall not exceed 10% of the number of the total issued H Shares
(excluding any treasury shares) as at the Listing Date; and
(g) subject to the completion of the Global Offering, the granting of a general mandate
to the Board to allot, issue Shares, or sell and/or transfer Shares out of treasury that
are held as treasury shares at any time within a period up to the date of the
conclusion of the next annual general meeting of the Shareholders to be held after
the Listing or the date on which the Shareholders pass a resolution to revoke or
change such mandate, whichever is earlier, upon such terms and conditions and for
such purposes as the Board in their absolute discretion deem fit, and to make
necessary amendments to the Articles of Association, provided that, the number of
Shares to be issued shall not exceed 20% of the number of the Shares in issue
(excluding any treasury shares) as at the Listing Date.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2–


--- page 551 ---
Explanatory Statement on Repurchase of Our Own Securities
The following paragraphs include, among others, certain information required by the
Stock Exchange to be included in this Prospectus concerning the repurchase of our own
securities.
(a) Reasons and impact for repurchase
The Board considered that the repurchase of the Shares would be beneficial to and in the
best interests of the Company and its Shareholders as a whole. It can strengthen the investors’
confidence in the Company and promote a positive effect on maintaining the Company’s
reputation in the capital market. Such repurchases will only be made when the Board believes
that such repurchases will benefit the Company and its Shareholder as a whole.
Following a repurchase of Shares, the Company may cancel any repurchased Shares
and/or hold them as treasury shares subject to, among others, market conditions and its capital
management needs at the relevant time of the repurchases, which may change due to evolving
circumstances.
(b) Exercise of the general mandate to repurchase Shares
Subject to the passing of the special resolution approving the grant of the general mandate
to repurchase Shares at annual general meetings, the Board will be granted general mandate to
repurchase Shares until the end of the relevant period. The general mandate to repurchase
Shares would expire on the earlier of:
(i) the conclusion of the next annual general meeting of the Company to be held after
the Listing of which time it shall lapse unless, by special resolutions passed at that
meeting, the authority is renewed, either conditionally or subject to conditions; or
(ii) the revocation or variation of the mandate under the resolution by a special
resolution at any general meeting of the Company.
Furthermore, we need to complete registration and approval procedures with relevant
government authorities for the actual grant of the repurchase mandate to the Board, as
applicable. The exercise in full of the general mandate to repurchase H Shares (on the basis of
73,598,888 H Shares in issue as of the Listing Date and no H Shares will be allotted and issued
or repurchased by the Company on or prior to the date of the next annual general meeting to
be held after the Listing) would result in a maximum of 7,359,888 H Shares being repurchased
by the Company during the relevant period, being the maximum of 10% of the H Shares in
issue (excluding any treasury shares) as of the Listing Date.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3–


--- page 552 ---
(c) Source of funds
In repurchasing its Shares, the Company intends to apply funds from the Company’s
internal resources (which may include surplus funds and retained profits) legally available for
such purpose in accordance with the Articles of Association and the applicable laws, rules and
regulations of the PRC.
The Company is empowered by its Articles of Association to repurchase its Shares. Any
shares to be repurchased will be cancelled or kept as treasury shares if allowed by the Articles
of Association and applicable laws and regulations. The Company may not purchase securities
on the Stock Exchange for a consideration other than cash or for settlement otherwise than in
accordance with the trading rules of the Stock Exchange from time to time.
(d) Suspension of repurchase
A listed company shall not repurchase its shares on the Stock Exchange at any time after
inside information has come to its knowledge until the information is made publicly available.
In particular, during the period of one month immediately preceding the earlier of: (i) the date
of the board meeting (as such date is first notified to the Stock Exchange in accordance with
the Listing Rules) for the approval of the company’s results for any year, half-year, quarterly
or any other interim period (whether or not required under the Listing Rules); and (ii) the
deadline for the issuer to announce its results for any year or half-year under the Listing Rules,
or quarterly or any other interim period (whether or not required under the Listing Rules), until
the date of the results announcement, the company may not repurchase its shares on the Stock
Exchange unless there are exceptional circumstances.
(e) Close associates and core connected persons
None of our Directors or, to the best of their knowledge having made all reasonable
inquiries, any of their close associates have a present intention, in the event the general
mandate to repurchase Shares is approved, to sell any Shares to our Company.
No core connected person of our Company has notified our Company that they have a
present intention to sell Shares to our Company, or have undertaken to do so, if the general
mandate to repurchase Shares is approved.
A listed company shall not knowingly purchase its shares on the Stock Exchange from a
core connected person (namely a director, supervisor, chief executive or substantial
shareholder of the company or any of its subsidiaries, or a close associate of any of them), and
a core connected person shall not knowingly sell their interest in shares of the company to it.
(f) Status of repurchased Shares
Any shares to be repurchased will be cancelled or kept as treasury shares, subject to the
Articles of Association, the Listing Rules and any other applicable laws and regulations.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4–


--- page 553 ---
(g) Takeover implications
If, as a result of any repurchase of Shares, a Shareholder’s proportionate interest in the
voting rights of our Company increases, such increase will be treated as an acquisition for the
purposes of the Takeovers Code. Accordingly, a Shareholder or a group of Shareholders acting
in concert could obtain or consolidate control of our Company and become obliged to make a
mandatory offer in accordance with Rule 26 of the Takeovers Code.
Save as aforesaid, our Directors are not aware of any consequences which would arise
under the Takeovers Code as a consequence of any repurchases pursuant to the general mandate
to repurchase Shares.
(h) Interim measures
For any treasury shares of the Company deposited with CCASS pending resale on the
Stock Exchange, the Company shall, upon approval by the Board, implement the below interim
measures which include (without limitation):
(i) procuring its broker not to give any instructions to HKSCC to vote at general
meetings for the treasury shares deposited with CCASS;
(ii) in the case of dividends or distributions (if any and where applicable), withdrawing
the treasury shares from CCASS, and either re-register them in its own name as
treasury shares or cancel them, in each case before the relevant record date for the
dividend or distributions; or
(iii) taking any other measures to ensure that it will not exercise any Shareholders’ rights
or receive any entitlements which would otherwise be suspended under the
applicable laws if those Shares were registered in its own name as treasury shares.
(i) General
The Company did not hold any treasury shares as of the Latest Practicable Date and will
not hold any treasury shares upon Listing. Neither the explanatory statement on repurchase of
our own securities nor the proposed share repurchase has any unusual features.
If the general mandate to repurchase Shares were to be carried out in full at any time,
there may be a material and adverse impact on our working capital or gearing position (as
compared with the position disclosed in our most recent published audited accounts). However,
our Directors do not propose to exercise the general mandate to repurchase Shares to such an
extent as would have a material and adverse effect on our working capital or gearing position.
Our Directors have undertaken to the Stock Exchange that they will exercise the general
mandate to repurchase Shares in accordance with the Listing Rules and the applicable laws in
the PRC.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5–


--- page 554 ---
FURTHER INFORMATION ABOUT OUR BUSINESS
Summary of Material Contracts
We have entered into the following contracts (not being contracts entered into in the
ordinary course of business) within the two years immediately preceding the date of this
Prospectus that are or may be materials:
(a) the cornerstone investment agreement dated June 18, 2025 entered into among our
Company, Dragon Merit Holdings Limited (ʮ̡), Morgan Stanley
Asia Limited, CITIC Securities (Hong Kong) Limited and CLSA Limited pursuant
to which Dragon Merit Holdings Limited agreed to subscribe for H Shares at the
Offer Price in the aggregate amount of Hong Kong dollar equivalent of US$5
million (exclusive of brokerage, SFC transaction levy, the Stock Exchange trading
fee and the AFRC transaction levy);
(b) the cornerstone investment agreement dated June 18, 2025 entered into among our
Company, Welight Capital L.P ., Morgan Stanley Asia Limited, CITIC Securities
(Hong Kong) Limited and CLSA Limited pursuant to which Welight Capital L.P .
agreed to subscribe for H Shares at the Offer Price in the aggregate amount of Hong
Kong dollar equivalent of US$5 million (exclusive of brokerage, SFC transaction
levy, the Stock Exchange trading fee and the AFRC transaction levy); and
(c) the Hong Kong Underwriting Agreement.
Intellectual Property Rights
As of the Latest Practicable Date, our Group has registered, or has applied for the
registration of the following intellectual property rights which were material to our Group’s
business.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 6–


--- page 555 ---
Trademarks
As of the Latest Practicable Date, we have registered the following trademarks which we
consider to be or may be material to our business:
No. Trademark
Registration
Number Owner
Date of
Registration
Place of
Registration
1.
 4141236 Chinese Peptide 2008/2/28 PRC
15374122 Chinese Peptide 2016/09/21 PRC
2.
 4702258 Chinese Peptide 2008/11/28 PRC
4702263 Chinese Peptide 2009/02/07 PRC
15374124 Chinese Peptide 2016/11/07 PRC
3.
4702264 Chinese Peptide 2019/08/28 PRC
4702265 Chinese Peptide 2019/08/28 PRC
4.
 15208100 Chinese Peptide 2015/10/7 PRC
5. TIDEMEDICINE 56352833 The Company 2022/04/07 PRC
56363863 The Company 2022/04/07 PRC
6. TIDEMED 56365827 The Company 2022/04/07 PRC
7.
70162776 The Company 2023/09/14 PRC
70184734 The Company 2023/09/14 PRC
70168572 The Company 2023/09/14 PRC
70184731 The Company 2023/09/21 PRC
8. Medtide 68519638 The Company 2023/06/21 PRC
68519632 The Company 2023/07/28 PRC
68508792 The Company 2023/07/21 PRC
68501814 The Company 2023/07/21 PRC
68501830 The Company 2023/08/07 PRC
68521522 The Company 2023/08/28 PRC
68514259 The Company 2023/09/14 PRC
68519647 The Company 2023/10/14 PRC
71390685 The Company 2024/01/28 PRC
79968040 The Company 2025/01/21 PRC
79976903 The Company 2025/01/21 PRC
79962733 The Company 2025/01/21 PRC
79975209 The Company 2025/01/21 PRC
79970461 The Company 2025/01/21 PRC
79964827 The Company 2025/02/07 PRC
79985808 The Company 2025/04/21 PRC
79980422 The Company 2025/04/28 PRC
9. OmniPeptSynth 79162548 The Company 2024/12/14 PRC
10. PeptiConjuX 79170136 The Company 2024/12/14 PRC
11.
306592230 The Company 2024/06/25 Hong Kong
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 7–


--- page 556 ---
No. Trademark
Registration
Number Owner
Date of
Registration
Place of
Registration
12.
 306631128 The Company 2024/05/08 Hong Kong
13.
 306631146 The Company 2024/05/08 Hong Kong
As of the Latest Practicable Date, we had applied for the registration of the following
trademarks which we consider to be or may be material to our business:
No. Trademark Owner
Place of
Registration
1. ʕ㹻͛ʷCPC Chinese Peptide PRC
2. इᅃ The Company PRC
Patents
For material patents and patent applications of our Group as of the Latest Practicable
Date, see paragraph headed “Business—Intellectual Property” for more details.
Domain Names
As of the Latest Practicable Date, we have registered the following internet domain names
which we consider to be or may be material to our business:
No. Domain Name
Registered
Owner
Registration
Date Expiry Date
1. medtideinc.com The Company 2023/04/26 2028/04/26
2. chinesepeptide.com Chinese
Peptide
2023/12/25 2029/08/03
Save as the above, as of the Latest Practicable Date, there were no other intellectual
property rights which were material to our business.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 8–


--- page 557 ---
FURTHER INFORMATION ABOUT OUR DIRECTORS, SUPERVISORS, SENIOR
MANAGEMENT AND SUBSTANTIAL SHAREHOLDERS
Interests and short positions of our Directors, Supervisors and chief executive of our
Company in the Shares, underlying Shares and debentures of our Company and our
associated corporations
Save as disclosed in the section headed “Substantial Shareholders” and below,
immediately following the completion of the Global Offering, so far as our Directors are aware,
none of our Directors, Supervisors and chief executive has any interests and short positions in
our Shares, underlying Shares or debentures of our Company or any of our associated
corporations (within the meaning of Part XV of the SFO) (i) which will have to be notified to
us and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including
interests and short positions in which they are taken or deemed to have under such provisions
of the SFO), or (ii) which will be required, pursuant to section 352 of the SFO, to be entered
in the register referred to therein, or (iii) which will be required to be notified to us and the
Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed
Issuers contained in the Listing Rules:
Director/
Supervisor Nature of Interest
Number and class of
Shares held as at
the Latest
Practicable Date
and immediately
prior to the
Listing
(1)
Approximate
percentage of
shareholding in
the total share
capital of our
Company as at
the Latest
Practicable Date
and immediately
prior to the
Listing (1)
Approximate
percentage of
shareholding in
the Shares after
the Global
Offering (1)
Directors
Ms. Cheng Tao Interests in the Employee
Incentive Platform
1,541,025 Unlisted
Shares (L)
1.23% 1.09%
Ms. Li Lingmei (ૠ) Interests in the Employee
Incentive Platform
500,000 Unlisted
Shares (L)
0.40% 0.35%
Supervisors
Mr. Wu Haigang (࡝Interests in the Employee
Incentive Platform
508,205 Unlisted
Shares (L)
0.41% 0.36%
Ms. Y an Xiya ( ᕙఃԭ) Interests in the Employee
Incentive Platform
503,555.50 Unlisted
Shares (L)
0.40% 0.36%
Ms. Fu Hongying (ߵߎInterests in the Employee
Incentive Platform
203,555.50 Unlisted
Shares (L)
0.16% 0.14%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 9–


--- page 558 ---
Note:
(1) The letter “L” denotes the person’s long position in our Shares. For illustrating the indirect interests of
grantees in the Shares, the number of Shares are presented and calculated by multiplying their respective
percentage of partnership interests in the relevant Employee Incentive Platform by the total number of
Shares held by the relevant Employee Incentive Platform.
Interests of the substantial shareholders in the Shares
Save as disclosed in the section headed “Substantial Shareholders”, immediately
following the completion of the Global Offering, our Directors are not aware of any other
person (not being a Director, Supervisor or chief executive of our Company) who will have an
interest or short position in our Shares or the underlying Shares which would fall to be
disclosed to us and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV
of the SFO, or who is, directly or indirectly, interested in 10% or more of the issued voting
shares of our Company.
Interests of the substantial shareholders in other members of our Group
As of the Latest Practicable Date, our Directors are not aware of any persons who would,
immediately following the completion of the Global Offering, be directly or indirectly
interested in 10% or more of the issued voting shares of the following member of our Group
(other than our Company).
Particulars of Directors’ and Supervisors’ Service Contracts
We have entered into a service contract or a letter of appointment with each of our
Directors and Supervisors in respect of, among other things, compliance with the relevant laws
and regulations and the Articles of Association. Each of the agreements or the letter is for a
term of three years following their respective appointment date, and each of the agreements is
subject to termination in accordance with their respective terms. The service agreements and
the letter of appointments may be renewed in accordance with our Articles of Association and
the applicable laws and regulations.
Save as disclosed above, we have not entered into, and do not propose to enter into any
service contracts with any of our Directors or Supervisors in their respective capacities as
Directors or Supervisors (excluding agreements expiring or determinable by any member of
our Group within one year without payment of compensation other than statutory
compensation).
Remuneration of Directors and Supervisors
Save as disclosed in “Directors, Supervisors and Senior Management” and Note 10 to the
Accountants’ Report set out in Appendix I for the financial years ended December 31, 2022,
2023 and 2024, none of our Directors or Supervisors received other remunerations of benefits
in kind from us.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-10 –


--- page 559 ---
Disclaimers
Save as disclosed in this Prospectus:
(a) none of our Directors, Supervisors or our chief executive has any interest or short
position in our Shares, underlying Shares or debentures of our Company or any of
our associated corporations (within the meaning of Part XV of the SFO) which will
have to be notified to us and the Stock Exchange pursuant to Divisions 7 and 8 of
Part XV of the SFO, or which will be required, pursuant to section 352 of the SFO,
to be entered in the register referred to therein, or which will be required to be
notified to us and the Stock Exchange pursuant to Model Code for Securities
Transactions by Directors of Listed Issuers once the H Shares are listed on the Stock
Exchange;
(b) none of our Directors or Supervisors is aware of any person (not being a Director,
Supervisor or chief executive of our Company) who will, immediately following the
completion of the Global Offering and the conversion of Unlisted Shares into H
Shares, have an interest or short position in our Shares or underlying Shares which
would fall to be disclosed to us under the provisions of Divisions 2 and 3 of Part XV
of the SFO or who is interested, directly or indirectly, in 10% or more of the issued
voting shares of any member of our Group;
(c) none of our Directors, their respective close associates (as defined under the Listing
Rules) or Shareholders who own more than 5% of the number of issued shares of our
Company have any interests in the five largest customers or suppliers of our Group
in each year during the Track Record Period; and
(d) none of our Directors, Supervisors or any of the parties listed in “Qualifications of
Experts” in this Appendix is:
i. interested in our promotion, or in any assets which have been, within two years
immediately preceding the date of this Prospectus, acquired or disposed of by
or leased to us, or are proposed to be acquired or disposed of by or leased to
any member of our Group; or
ii. materially interested in any contract or arrangement subsisting at the date of
this Prospectus which is significant in relation to our business.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 1–


--- page 560 ---
PRE-IPO EMPLOYEE INCENTIVE SCHEME
The following is a summary of the principal terms of the Pre-IPO Employee Incentive
Scheme, which was adopted by the Company and took effect in December 2020, and amended
in November 2021 and November 2022. The terms of the Pre-IPO Employee Incentive Scheme
are not subject to the provisions of Chapter 17 of the Listing Rules as the Pre-IPO Employee
Incentive Scheme does not involve the grant of new Shares or awards by our Company after
the Listing. The Pre-IPO Employee Incentive Scheme will not cause any dilution of the
shareholding of our Shareholders after the Listing given all underlying Shares of the Awards
granted under the Pre-IPO Employee Incentive Scheme have been issued to the Employee
Incentive Platforms.
Purpose
The main purpose of the Pre-IPO Employee Incentive Scheme is to improve the incentive
mechanism of the Group, further enhance the sense of responsibility and mission of the
participants thereto (the “ Eligible Participants ”), promote the continued growth of the
performance of the Group, and bring economic benefits to the Eligible Participants while
enhancing the value of the Group, so as to realize the common development of the Eligible
Participants and the Group.
Administration
The general meeting of our Company (the “ General Meeting ”) is responsible for
considering and approving the adoption, alteration and termination of the Pre-IPO Employee
Incentive Scheme. The Board shall be authorized by the General Meeting for relevant matters
under the Pre-IPO Employee Incentive Scheme. The general partner of each of the Employee
Incentive Platforms, Ms. Li, is the administrator of the Pre-IPO Employee Incentive Scheme
(the “ Administrator ”), responsible for managing and implementing the Pre-IPO Employee
Incentive Scheme.
Eligible Participants
The participants under the Pre-IPO Employee Incentive Scheme include the following
personnel of the Group: (i) personnel at the director level and above with at least one year
working experience, (ii) professional personnel at the manager level (including senior
managers and assistant managers), and P3 level and above with at least three-year employment,
and (iii) other personnel recognized by the Administrator.
Form of the Pre-IPO Employee Incentive Scheme
The Participants, as partners of the Employee Incentive Platforms which are limited
partnerships, shall subscribe for partnership interests of the Employee Incentive Platforms as
partners according to the number of awards granted under the Pre-IPO Employee Incentive
Scheme, thereby indirectly holding the Shares of our Company by virtue of their capacity as
partners of the relevant Employee Incentive Platform.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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Total Number of the Underlying Shares of the Awards
As of the date of this Prospectus, the participants made an aggregate capital contribution
of RMB10 million into the Employee Incentive Platforms, which in turn subscribed for a total
of 10,273,500 Shares, representing approximately 8.22% of the total issued share capital of our
Company immediately prior to the Global Offering. The subscription price per each
corresponding Share underlying the Awards granted was RMB4.0 or RMB7.5 per Share
(without taking into account the effect of stock conversion).
Term
The Pre-IPO Employee Incentive Scheme shall take effective from the date of approval
at the Shareholders’ general meeting to the date when all underlying Shares of the Awards have
been repurchased or sold under the Pre-IPO Employee Incentive Scheme, and subject to the
decision of the Administrator, shall not exceed 10 years.
Payment of Contribution
Grantees must subscribe for the partnership interests of the Employee Incentive Platforms
in cash, and should ensure that their source of funds is genuine and lawful. All contribution
payments shall be made fully and timely.
Rights Attached to Awards
The general partner of the Employee Shareholding Platforms shall exercise voting rights
on behalf of the Eligible Participants in respect of the Shares underlying the Awards. The
Eligible Participants have the rights to any dividends or distributions from any Shares
underlying the Award.
Transfer Restrictions
Except for circumstances specified under the terms of the Pre-IPO Employee Incentive
Scheme, no Eligible Participant shall in any way transfer his or her partnership interest under
the Pre-IPO Employee Incentive Scheme, within five years from the date of grant of the
Eligible Participants.
The Awards shall subject to release restrictions in the following manner:
 30% of the total number of Awards shall be released from the calendar day following
the twelve months of the date of grant to February 28 of the first anniversary of the
date of grant;
 30% of the total number of Awards shall be released from the calendar day following
the twenty-four months of the date of grant to February 28 of the second anniversary
of the date of grant; and
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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 40% of the total number of Awards shall be released from the calendar day following
the thirty-six months of the date of grant to February 28 of the third anniversary of
the date of grant;
(together, the “ Time-Based Release Schedule ”).
In addition to the Time-Based Release Schedule sets forth above, the release of the
Awards shall be further subject to the achievement of the certain performance targets of the
Company and the grantee, including (i) performance targets of the Company based on the
Company’s certain financial performance indicator(s) of the relevant year; and (ii) the
grantee’s performance appraisal result reaching C level or above.
Details of interests in the Employee Shareholding Platforms
As of the date of this Prospectus, all partnership interests in the Employee Incentive
Platforms have been granted to, vested in and subscribed by and fully paid up by the partners,
and the relevant registration had been completed. No Awards will be further granted after the
Listing pursuant to the Pre-IPO Employee Incentive Scheme.
As of the Latest Practicable Date, Employee Incentive Platforms held 10,273,500 Shares,
representing approximately 8.22% of the total issued Shares of our Company. Ms. Li, as the
sole general partner of each of Hangzhou Xiyong and Hangzhou Y uanxi, held 0.6% and 18.00%
partnership interests, respectively. Ms. Li’s partnership interests in the Employee Incentive
Platforms corresponded to a total of 955,332 underlying Shares of our Company. Other than
Ms. Li’s interests as a general partner in Hangzhou Xiyong and Hangzhou Y uanxi, details of
the Awards (which have been fully vested and corresponded to a total of 9,328,441 underlying
Shares of our Company) granted to Directors, Supervisors and senior management of our
Company, and connected persons of the Company under the Pre-IPO Employee Incentive
Scheme are set out below:
Name Position(s)
Relevant Employee
Shareholding
Platforms
Approximate
partnership
interests in the
relevant Employee
Incentive Platform
Approximate
number of Shares
corresponding to
partnership
interests held by
the grantees
(1)
Approximate
shareholding
percentage of total
issued Shares
immediately prior
to the Listing (2)
Directors
Ms. Cheng Tao Executive Director and Chief
Business Officer
Hangzhou Xiyong 30.00% 1,541,025 1.23%
Ms. Li Lingmei (ૠ) Executive Director and Secretary
to the Board
Hangzhou Y uanxi 9.73% 500,000 0.40%
Subtotal of Directors Hangzhou Xiyong/
Hangzhou Y uanxi
39.73% 2,041,025 1.63%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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Name Position(s)
Relevant Employee
Shareholding
Platforms
Approximate
partnership
interests in the
relevant Employee
Incentive Platform
Approximate
number of Shares
corresponding to
partnership
interests held by
the grantees
(1)
Approximate
shareholding
percentage of total
issued Shares
immediately prior
to the Listing (2)
Supervisors
Mr. Wu Haigang
(࡝)
Supervisor Hangzhou Xiyong/
Hangzhou Y uanxi
9.89% 508,205 0.41%
Ms. Y an Xiya ( ᕙఃԭ) Chairperson of the Supervisory
Committee
Hangzhou Xiyong/
Hangzhou Y uanxi
9.80% 503,555.50 0.41%
Ms. Fu Hongying
(ߵߎ)
Supervisor Hangzhou Xiyong 3.96% 203,555.50 0.16%
Subtotal of supervisors Hangzhou Xiyong/
Hangzhou Y uanxi
23.66% 1,215,316 0.98%
Senior management
Mr. Xu Weiqun (ਃ໊) Finance Director Hangzhou Y uanxi 1.75% 90,000 0.07%
Connected person
Mr. Li Congyan (֧Supervisor of Chinese Peptide
and spouse of Ms. Li
Hangzhou Xiyong/
Hangzhou Y uanxi
2.00% 102,735 0.08%
Other grantees
36 other grantees – Hangzhou Xiyong 55.84% 2,868,375 2.32%
37 other grantees – Hangzhou Y uanxi 58.42% 3,000,717 2.40%
Notes:
(1) For illustrating the indirect interests of grantees in the Shares, the number of Shares are presented and
calculated by multiplying their respective percentage of partnership interests in the relevant Employee
Incentive Platform by the total number of Shares held by the relevant Employee Incentive Platforms.
(2) All the Unlisted Shares held by the relevant Employee Incentive Platforms will be converted into H Shares,
subject to the relevant regulatory approvals and registration.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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The table below sets out the details of the Awards granted to the limited partners under
the Pre-IPO Employee Incentive Scheme as of the Latest Practicable Date. No Awards will be
further granted after the Listing pursuant to the Pre-IPO Employee Incentive Scheme.
Shares corresponding to Awards
held by Hangzhou Xiyong
Number of
grantees
Approximate total
number of Shares
corresponding to
awards held by
Hangzhou Xiyong
(1)
Approximate total
shareholding percentage
corresponding to awards
in the total number of
Shares in issue
immediately prior to the
Global Offering (2)
0 to 61,999 shares 15 616,410 0.49%
62,000 to 123,999 shares 17 1,426,922.50 1.14%
124,000 to 199,999 shares 7 1,009,965.50 0.81%
200,000 to 1,100,000 shares 3 2,052,785.50 1.64%
Shares corresponding to Awards
held by Hangzhou Yuanxi
Number of
grantees
Approximate total
number of Shares
corresponding to
awards held by
Hangzhou Yuanxi (1)
Approximate total
shareholding percentage
corresponding to awards
in the total number of
Shares in issue
immediately prior to the
Global Offering (2)
0 to 61,999 shares 26 1,005,435.50 0.80%
62,000 to 123,999 shares 8 779,299 0.62%
124,000 to 199,999 shares 2 330,000 0.26%
200,000 to 1,100,000 shares 6 2,097,350 1.68%
Notes:
(1) For illustrating the indirect interests of grantees in the Shares, the number of Shares are presented and
calculated by multiplying their respective percentage of partnership interests in the relevant Employee
Incentive Platform by the total number of Shares held by the relevant Employee Incentive Platform.
(2) All the Unlisted Shares held by Hangzhou Xiyong and Hangzhou Y uanxi will be converted into H Shares,
subject to the relevant regulatory approvals and registration.
OTHER INFORMATION
Estate Duty
Our Directors have been advised that no material liability for estate duty is likely to fall
on our Company or any of our subsidiaries under the laws of the PRC.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-16 –


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Litigation
As of the Latest Practicable Date, we were not engaged in any litigation, arbitration or
claim of material importance and no litigation, arbitration or claim of material importance was
known to our Directors to be pending or threatened by or against any member of our Group,
that would have a material and adverse effect on our Group’s results of operations or financial
conditions, taken as a whole.
Preliminary Expenses
As of the Latest Practicable Date, our Company had not incurred any material preliminary
expenses.
Promoter
The promoters of the Company are all of the 12 then Shareholders as of February 10, 2023
immediately before our conversion into a joint stock limited liability company. Within the two
years immediately preceding the date of this Prospectus, no cash, securities or other benefit has
been paid, allotted or given or is proposed to be paid, allotted or given to the promoters in
connection with the Global Offering and the related transactions described in this Prospectus.
Taxation of Holders of H Shares
The sale, purchase and transfer of H Shares registered with our Hong Kong branch
register of members will be subject to Hong Kong stamp duty. The current rate charged on each
of the purchaser and seller is 0.1% of the consideration of or, if higher, of the fair value of our
Shares being sold or transferred.
No Material Adverse Change
Our Directors confirm that up to the date of this Prospectus, there has been no material
adverse change in our financial, operational, or trading position, indebtedness, mortgage,
contingent liabilities, guarantees or prospects since December 31, 2024, being the end of the
period reported on the Accountants’ Report included in Appendix I; and there has been no
event since December 31, 2024, and up to the date of this Prospectus which would materially
affect the information shown in the Accountants’ Report set out in Appendix I to this
Prospectus. However, our financial performance may be affected by changes in the fair value
of redemption liabilities on equity shares until their conversion into equity upon Listing.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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Qualifications of Experts
The qualifications of the experts (as defined under the Listing Rules and the Companies
(Winding Up and Miscellaneous Provisions) Ordinance) who have given their opinion and/or
advice in this Prospectus are as follows:
Name Qualification
Morgan Stanley Asia Limited A corporation licenced to conduct type 1
(dealing in securities), type 4 (advising
on securities), type 5 (advising on futures
contracts), type 6 (advising on corporate
finance) and type 9 (asset management)
regulated activities under the SFO
CITIC Securities (Hong Kong) Limited A corporation licenced to conduct type 4
(advising on securities) and type 6
(advising on corporate finance) regulated
activities under the SFO
Ernst & Y oung Certified Public Accountants and Registered
Public Interest Entity Auditor
Grandall Law Firm (Hangzhou) PRC legal adviser
Han Kun Law Offices PRC legal adviser
MagStone Law, LLP U.S. legal adviser
Frost & Sullivan Independent industry consultant
As of the Latest Practicable Date, none of the experts named above had any shareholding
interest in our Company or any of our subsidiaries or the right (whether legally enforceable or
not) to subscribe for or to nominate persons to subscribe for securities in any member of our
Group.
Consents of Experts
Each of the experts as referred to “Qualifications of Experts” in this Appendix has given
and has not withdrawn their respective written consents to the issue of this Prospectus with the
inclusion of their reports and/or letters (as the case may be) and the references to their names
included in the form and context in which they are respective included.
Joint Sponsors’ Independence
The Joint Sponsors have made an application on behalf of the Company to the Listing
Committee of the Stock Exchange for the listing of, and permission to deal in, all the H Shares
in issue and to be issued as mentioned in this Prospectus.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
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Each of the Joint Sponsor confirms that it satisfies the independence criteria applicable
to sponsors set out in Rule 3A.07 of the Listing Rules. Each of the Joint Sponsors will receive
a fee of US$500,000 for acting as the sponsors for the Listing. As of the Latest Practicable
Date, US$250,000 and US$125,000 were still payable by the Company to Morgan Stanley Asia
Limited and CITIC Securities (Hong Kong) Limited, respectively.
Binding Effect
This Prospectus shall have the effect, if an application is made in pursuance of it, of
rendering all persons concerned bound by all of the provisions (other than the penal provisions)
of sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance so far as applicable.
Bilingual Prospectus
The English and Chinese language versions of this Prospectus are being published
separately, in reliance upon the exemption provided under section 4 of the Companies
(Exemption of Companies and Prospectuses from Compliance with Provisions) Notice
(Chapter 32L of the Laws of Hong Kong).
Miscellaneous
Save as otherwise disclosed in this Prospectus:
(a) within the two years preceding the date of this Prospectus: (i) we have not issued nor
agreed to issue any share or loan capital fully or partly paid either for cash or for
a consideration other than cash; and (ii) no commissions, discounts, brokerage fee
or other special terms have been granted in connection with the issue or sale of any
shares of our Company;
(b) no share or loan capital of our Company is under option or is agreed conditionally
or unconditionally to be put under option;
(c) we have not issued nor agreed to issue any founder shares, management shares or
deferred shares;
(d) there are no arrangements under which future dividends are waived or agreed to be
waived;
(e) there are no procedures for the exercise of any right of pre-emption or transferability
of subscription rights;
(f) there are no contracts for hire or hire purchase of plant to or by us for a period of
over one year which are substantial in relation to our business;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-19 –


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(g) there have been no interruptions in our business which may have or have had a
significant effect on our financial position in the last 12 months;
(h) there are no restrictions affecting the remittance of profits or repatriation of capital
by us into Hong Kong from outside Hong Kong;
(i) no part of the equity or debt securities of our Company, if any, is currently listed on
or dealt in on any stock exchange or trading system, and no such listing or
permission to list on any stock exchange other than the Hong Kong Stock Exchange
is currently being or agreed to be sought;
(j) our Company has no outstanding convertible debt securities or debentures;
(k) our Company is a joint stock limited company and is subject to the PRC Company
Law; and
(l) our Company has adopted a code of conduct regarding Directors’ and Supervisors’
securities transactions on terms as required under the Model Code for Securities
Transactions by Directors of Listed Issuers as set out in Appendix C3 to the Listing
Rules.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-20 –


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DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG
The documents attached to a copy of this Prospectus and delivered to the Registrar of
Companies in Hong Kong for registration were:
(a) a copy of each of the material contracts referred to in “Appendix IV—Statutory and
General Information—Further Information about our Business—Summary of
Material Contracts”; and
(b) the written consents referred to in “Appendix IV—Statutory and General
Information—Other Information—Consents of Experts”.
DOCUMENTS A V AILABLE ON DISPLAY
Copies of the following documents will be published on the Stock Exchange’s website at
www.hkexnews.hk and the Company’s website at medtideinc.com during a period of 14 days
from the date of this Prospectus:
(a) the Articles of Association;
(b) the audited consolidated financial statements of our Group for the financial years
ended December 31, 2022, 2023 and 2024;
(c) the Accountants’ Report from the Reporting Accountants, the text of which is set out
in Appendix I;
(d) the report from Ernst & Y oung on the unaudited pro forma financial information of
our Group, the text of which is set out in Appendix II;
(e) the material contracts referred to in “Appendix IV—Statutory and General
Information—Further Information about our Business—Summary of Material
Contracts”;
(f) the written consents referred to in “Appendix IV—Statutory and General
Information—Other Information—Consents of Experts”;
(g) the service contracts and letters of appointment referred to in “Appendix
IV—Statutory and General Information—Further Information about our Directors,
Supervisors, Senior Management and Substantial Shareholders—Particulars of
Directors’ and Supervisors’ Service Contracts”;
(h) the legal opinions issued by Grandall Law Firm (Hangzhou), our PRC Legal
Adviser, in respect of, among other things, the general corporate matters and
property interests of our Group under the PRC law;
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES IN HONG KONG AND A V AILABLE ON DISPLAY
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(i) the PRC legal opinions issued by Han Kun Law Offices, our PRC legal adviser in
respect of PRC data compliance law;
(j) the legal opinions issued by MagStone Law, LLP , our U.S. legal adviser in respect
of certain aspects of U.S. laws relating to compliance matters;
(k) the industry report issued by Frost & Sullivan referred to in “Industry Overview”;
and
(l) a copy of the following PRC laws, together with unofficial English translations:
(i) the PRC Company Law;
(ii) the PRC Securities Law; and
(iii) the Overseas Listing Trial Measures.
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES IN HONG KONG AND A V AILABLE ON DISPLAY
–V - 2–


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泰德醫藥（浙江）股份有限公司
Medtide Inc.
