Interpretation of Qizheng Tibetan Medicine’s Sixth CSR Report

　　On April 10, Tibet Qizheng Tibetan Medicine Co., Ltd. released its 2014 Corporate Social Responsibility Report. This marks the sixth consecutive year that the company has voluntarily published a corporate social responsibility report since its IPO in 2009.

　　1

　　The company is operating steadily and developing smoothly.

　　In 2014, the pharmaceutical industry continued to face a mix of challenges and opportunities. While the company encountered external pressures such as healthcare insurance cost controls and declining drug prices, it also faced increasingly fierce competition within the industry and greater pressure to achieve performance growth than ever before.

　　However, the state-led direction of healthcare reform has also opened up more opportunities for companies, as the market is gradually playing a decisive role in resource allocation. Healthcare reform is bringing benefits to the vast rural population, and companies believe that those enterprises closely integrated with grassroots communities will also reap significant advantages from this trend—after all, this segment of the market holds enormous potential.

　　In 2014, Qizheng Tibetan Medicine achieved an operating revenue of 950 million yuan, of which its core pharmaceutical business generated sales revenue of 811 million yuan and a net profit of 238 million yuan. The company paid a total of 166 million yuan in taxes, including 151 million yuan in taxes paid in the Tibet region. To date, the company has cumulatively paid 1.082 billion yuan in taxes in the Tibet region.

　　In an environment where pharmaceutical distribution companies are facing increasing cash flow pressures, the company’s cash collection ratio has further improved to 101%, achieving healthy capital turnover.

　　2

　　Consistent and stable research investment enables continuous innovation.

　　Starting from the application of low-temperature vacuum freeze-drying technology to transform traditional paste-like black ointments into modern wet compresses and bring them into the mainland market, Qizheng Tibetan Medicine has consistently focused on the modernization of the Tibetan medicine industry. Through scientific research innovation, technological innovation, and marketing innovation, the company validates Tibetan medicines using modern medical methods and promotes their academic value, continuously enabling this ancient Tibetan medical practice to realize greater value in today’s society.

　　In 2014, all of the company’s production lines and product varieties obtained certification under the new GMP standards. For the first time, Honghua Ruyi Wan was included in the authoritative Western medicine guideline—the “Clinical Practice Guidelines for Pelvic Inflammatory Disease” issued by the Obstetrics and Gynecology Branch of the Chinese Medical Association (2014 edition). This marked the first time that a traditional ethnic medicine had been incorporated into such a guideline. At the inaugural China National Medicine Science and Technology Awards, the company’s “Integrated Innovation in Key Manufacturing Technologies for Tibetan Medicine Pain-Relieving Plaster” won the First Prize for Scientific and Technological Progress, while “Driving the Development of the Tibetan Medicine Industry through Technological Innovation” received the First Prize for Innovation in the Ethnic Medicine Industry.

　　Moreover, Qizheng Tibetan Medicine has long been engaged in research and the establishment of conservation bases on three fronts: the protection of Tibetan medicinal materials, the study of Tibetan medicinal plant cultivation, and the wild conservation and management of Tibetan medicinal resources. As of 2014, the company had established conservation research bases covering 3,090 mu dedicated to the protection of Tibetan medicinal materials, and was conducting conservation studies on 31 different species of Tibetan medicinal plants.

　　3

　　Ensure consumers can shop with peace of mind.

　　Through continuous insights into consumer needs and deep exploration of the core characteristics of Tibetan medicinal resources, Qizheng Tibetan Medicine delivers its brand message to consumers via multiple channels, consistently providing high-quality, safe, and effective Tibetan medicine products. Moreover, by implementing a drug recall management system, a monitoring and reporting system for adverse drug reactions, as well as consumer consultation and complaint manuals and procedures, Qizheng Tibetan Medicine ensures that consumers can shop with peace of mind.

　　In 2014, the company organized consumer community education activities, reaching 40,000 consumers. At the same time, the company launched the “Qizheng Pain Management Butler” WeChat platform, which delivers pain management knowledge to consumers by educating pharmacy staff.

　　The company’s ongoing and in-depth efforts to educate pain patients on self-medication have earned widespread social recognition, earning it the “Best Contribution to Consumer Education” award at the 2nd China Over-the-Counter Drug Brand Communication Awards.

　　4

　　Rooted in the Tibetan areas, with a focus on cultivating talent in ethnic minority regions.

　　Since the first group of Tibetan local employees joined Qizheng Tibetan Medicine in Linzhi, Tibet, in 1996, the company has consistently emphasized the cultivation of talent from ethnic minority regions throughout its years of development. In recruitment, it gives priority to local residents and places equal importance on nurturing and developing local talent as it does on attracting external talent. The company promotes ethnic integration, cultural integration, and talent integration.

　　In 2014, the company had 250 employees from ethnic minority groups, of whom 22 were appointed to management positions within the company. Among the company’s senior managers, local residents accounted for 51%.

　　Reporting Media: Capital Market CSR

　　News link: http://mp.weixin.qq.com/s?__biz=MzA4NjI3MTYyNA==&mid=204939276&idx=2&sn=54211288d057067aa31e56593679a03d&3rd=MzA3MDU4NTYzMw==&scene=6#rd