On August 24, CR Sanjiu published the half-year business results for 2013. In the first half of 2013, CR realized total business revenue of 3.8 billion yuan, a year-on-year growth of 14.99% and a total net profit of 0.597 billion yuan delivered to the parent company, a year-on-year growth of 15.79%. The company enjoyed a healthy cash flow, with a net cash flow of 0.697 billion yuan for business activities, a year-on-year growth of 84.27%.

According to the interim report, the company enjoys an advantageous position in the OTC Industry. With the overall growth of the OTC industry remaining below 10%, the OTC business of the company realized a growth greater than the average level of the whole industry, with business revenue of 2.071 billion yuan, a year-on-year growth of 16.28%. Of all OTC products, drugs for colds and gastrointestinal problems saw a steady growth, with the sales of Wen Wei Shu and Infants Cough-Suppressing Syrup growing by approximately 30%. After Shunfeng and Tianhe were merged with CR Sanjiu’s distribution system, the distribution channels were improved and the prices were raised. Skin care products also saw a significant growth in the reporting period. Meanwhile, the company has reinforced its core competency in terms of image promotion and distribution, developing a full range of products for family use in the brand name of “999”, including 999 Pi Yan Ping, 999 Ganmaoling, Sanjiu Weitai, 999 Qiangli Pipa Lu, ranking the company on the top of the list on the market of drugs for colds and skin care products. In the first half of 2013, the company continues to develop products in the brand name “999” and communicate the core values of the full range of products for family use through online communication and offline promotion. As to brand name “N”, the company has further defined the core position and communication strategy for skin care products in the name of “Shunfeng”. In addition, the company also devotes reasonable efforts to the development of the brand name “Tianhe”. The OTC sales network of the company now involves the best distributors in China and covers about 80,000 sales points. The company has also enhanced the in-depth development of the distribution channels.

Prescription drug business, growing at a low rate due to the limitation of the production capacity during the reporting period, is expected to regain its growth rate in the second half of the year. In the first half of this year, the prescription drug sector of the company realized total revenue of 1.266 billion yuan, an increase of 15.65%, lower than expected, mainly due to the slowing growth of some products due to the limitation of the production capacity. Three factors are worth mentioning: The first is the impact of the earthquake in Ya’an and the GMP certification on the normal production of Ya’an Sanjiu. The company focused its energy on the production of Shenfu Injections, a core product of the company, realizing a year-on-year growth of over 30%, while that of other products remain the same as the same period of last year. The second is the impact of the production line certification on the production of Cefazolin Sodium Pentahydrate for Injection, with a year-on-year growth of 20%. The third is the completion and operation of the traditional Chinese medicine granule production base in Anhui in the last quarter of 2012, gradually expanding the production capacity. In the prescription drug sector, CR Sanjiu continues to enhance its core competency in terms of product development and marketing and promote the chemical research on and marketing of prescription drugs, focusing on Shenfu Injections, Cinobufotalin Injections and Chinese medicine granules, with its prescription drug distribution network covering over 5,000 hospitals across the nation. Taking the medicare reform under way as an opportunity, the company also actively explored the county-level hospitals and the low-end medicare market. Both the industry and the capital market are confident of the future growth of Chinese medicine injections and granules of CR Sanjiu.

At the same time, CR Sanjiu sought to enhance its capacity of developing products of the best quality through external expansion following its well-defined development strategy. In 2013, the Company completed the acquisition of 97.43% of the stock of Guilin Tianhe, winning over Gutong Plaster and Tianhe Zhuifeng Plaster, two famous brands of Chinese medicine. The company has also completed the acquisition of the whole stock of Shandong Linqing Huawei Pharmaceutical Co., Ltd., increasing several tonics and gastrointestinal drugs.