The company’s 2014 annual shareholders’ meeting was held in Lanzhou.

　　The photo shows some of the company’s directors, supervisors, and senior executives posing for a group photo at the Lanzhou Manufacturing Center.

　　On May 19, the company held its 2014 Annual General Meeting in Lanzhou. Nearly 20 people, including shareholders, directors, supervisors, and senior management personnel, attended the meeting. The meeting reviewed and approved the following proposals: the “2014 Board of Directors’ Work Report,” the “2014 Supervisory Board’s Work Report,” the “2014 Financial Closing Report,” the “2014 Annual Report and Summary,” the “2014 Profit Distribution Proposal,” and the “Proposal on Reappointing Zhongqin Wanshin Certified Public Accountants (Special General Partnership) as the company’s auditor for 2015.”

　　For the pharmaceutical industry, 2014 was a year marked by both challenges and opportunities. On the one hand, influenced by factors such as the overall slowdown in the nation’s macroeconomic growth, continued government price controls within the industry, the implementation of the new GMP and GSP standards, delayed bidding processes, efforts to curb medical insurance expenditures, and stricter regulatory policies aimed at controlling the proportion of drug costs, the pharmaceutical industry as a whole experienced slower growth. According to data released by the Southern Institute for Pharmaceutical Economic Research under the CFDA, from January to September 2014, the growth rate of pharmaceutical industry sales revenue was 13.3%, a 5% decrease compared to the same period last year. Affected by the broader pharmaceutical market environment and the decline in performance of key products in the medicinal material market, the company achieved total operating revenue of 950 million yuan for the full year 2014, representing a 2.00% decrease compared to the same period last year.

　　On the other hand, the accelerating pace of population aging, the continuous improvement of the medical insurance system, and the growing health awareness among the general public are driving up demand for pharmaceutical products and creating opportunities for the sustained expansion of the pharmaceutical market. Industry mergers and acquisitions, reforms of public hospitals, pharmaceutical e-commerce, and internet-based healthcare are injecting new vitality and dynamism into what might otherwise seem like a traditionally conservative pharmaceutical sector. Meanwhile, the expansion of essential drug programs and increased reimbursement limits for rural farmers have become significant drivers of overall pharmaceutical market growth. In 2014, facing both opportunities and challenges in the pharmaceutical industry, the company seized the opportunity presented by essential drugs to firmly promote the deepening and broadening of its distribution channels, actively expanding its presence in the essential drug market. As a result, the pharmaceutical business segment showed a marked increase, contributing significantly to the company’s continued performance growth. Throughout the year, the company achieved an operating profit of 233 million yuan, up 6.01% from the same period last year; net profit attributable to shareholders of the listed company reached 238 million yuan, up 11.32% year-on-year; and the weighted average return on equity stood at 16.31%, an increase of 0.56 percentage points over the same period last year. Among these, the pharmaceutical business generated sales revenue of 811 million yuan, up 16.06% from the previous year, with the primary contribution to this growth coming from the robust increase in sales of essential drugs.

　　In 2015, the company entered the inaugural year of its three-year “2015-2017” strategic plan. The company’s business plan will be centered around the strategic initiative of “one axis, two wings, and one support.” With a focus on the pharmaceutical business and taking pain-relief plaster patches as the core product, the company will leverage essential medicines to further enhance its nationwide sales network and expand its target market coverage by deepening its distribution channels. The company will place particular emphasis on strengthening six key capabilities: professionalizing academic marketing, refining brand management, optimizing sales management, systematizing market access, standardizing new-product launch planning, and streamlining production management—and will continue to improve its overall management level.

　　At this shareholders’ meeting, members of the company’s Board of Directors and Supervisory Board visited the company’s manufacturing centers in Yuzhong, Lanzhou, and Foge, Gannan, gaining firsthand insights into the grassroots level and obtaining a comprehensive understanding of all aspects of the company’s operations. They also listened to a report from the company’s management team on the company’s business performance for the first quarter of 2015. The directors and supervisors engaged in thorough discussions around key issues and hot topics of interest to investors, enabling the management team to share their wisdom and experience. This approach fully leveraged the expertise of each director and supervisor, helping to elevate the company’s management to a new level and further solidify the foundation for the company’s sustainable development.