Annual Report Annual Report Annual 2020
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Pharmaron Beijing Co., Ltd. Pharmaron Beijing Co., Ltd.* (a joint stock company incorporated in the People’s Republic of China with limited liability) Stock Code: 3759 * 2020 ANNUAL REPORT ANNUAL REPORT 2020 * For identification purposes only PREMIER R&D SERVICE PROVIDER FOR THE LIFE SCIENCES INDUSTRY About Pharmaron (Stock Code: 300759.SZ/3759.HK) is a premier R&D service Pharmaron provider for the life sciences industry. Founded in 2004, Pharmaron has invested in its people and facilities, and established a broad spectrum of R&D service capabilities ranging from synthetic and medicinal chemistry, biology, DMPK, pharmacology, safety assessment, radiochemistry and radiolabelled metabolism, clinical pharmacology, clinical analytical sciences, clinical CRO and SMO, to chemical & pharmaceutical development. With over 11,000 employees, and operations in China, the U.S., and the U.K., Pharmaron has an excellent track record in the delivery of R&D solutions to its partners in North America, Europe, Japan and China. CONTENTS 2 Corporate Information 4 Chairman’s Statement 8 Financial Highlights 9 Financial Summary 14 Management Discussion and Analysis 40 Profile of Directors, Supervisors and Senior Management 49 Corporate Governance Report 68 Directors’ Report 86 Environmental, Social and Governance Report 121 Independent Auditor’s Report 125 Consolidated Statement of Profit or Loss 126 Consolidated Statement of Comprehensive Income 127 Consolidated Statement of Financial Position 129 Consolidated Statement of Changes In Equity 130 Consolidated Statement of Cash Flows 132 Notes to the Consolidated Financial Statements 218 Definitions Corporate Information EXECUTIVE DIRECTORS NOMINATION COMMITTEE Dr. LOU Boliang (樓柏良) (Chairman) Ms. CHEN Guoqin (陳國琴) (Chairperson) Mr. LOU Xiaoqiang (樓小強) Dr. LOU Boliang (樓柏良) Ms. ZHENG Bei (鄭北) Ms. ZHENG Bei (鄭北) Ms. SHEN Rong (沈蓉) NON-EXECUTIVE DIRECTORS (ceased on July 28, 2020) Ms. LI Lihua (李麗華) Mr. CHEN Pingjin (陳平進) (ceased on July 28, 2020) Mr. HU Baifeng (胡柏風) Mr. TSANG Kwan Hung Benson (曾坤鴻) Mr. LI Jiaqing (李家慶) (appointed on July 28, 2020) Mr. ZHOU Hongbin (周宏斌) Mr. YU Jian (余堅) INDEPENDENT NON-EXECUTIVE (appointed on July 28, 2020) DIRECTORS STRATEGY COMMITTEE Mr. DAI Lixin (戴立信) Dr. LOU Boliang (樓柏良) (Chairperson) Ms. LI Lihua (李麗華) Mr. LOU Xiaoqiang (樓小強) (ceased on July 23, 2020) Mr. CHEN Pingjin (陳平進) Ms. CHEN Guoqin (陳國琴) Mr. LI Jiaqing (李家慶) Ms. SHEN Rong (沈蓉) Mr. DAI Lixin (戴立信) (ceased on July 23, 2020) 曾坤鴻 Mr. TSANG Kwan Hung Benson ( ) COMPANY SECRETARY Mr. YU Jian (余堅) (appointed on July 23, 2020) Ms. MAK Po Man Cherie (麥寶文) SUPERVISORS AUTHORIZED REPRESENTATIVES Dr. YANG Kexin (楊珂新) (Chairperson) Mr. LOU Xiaoqiang (樓小強) Mr. LIU Jun (劉駿) Ms. MAK Po Man Cherie (麥寶文) (ceased on December 11, 2020) Ms. FENG Shu (馮書) AUDITOR (appointed on December 11, 2020) Ernst & Young Ms. ZHANG Lan (張嵐) Certified Public Accountants AUDIT COMMITTEE Registered Public Interest Entity Auditor 22/F, CITIC Tower Ms. SHEN Rong (沈蓉) (Chairperson) 1 Tim Mei Avenue (ceased on July 28, 2020) Central Mr. YU Jian (余堅) (Chairperson) Hong Kong (appointed on July 28, 2020) Ms. LI Lihua (李麗華) LEGAL ADVISERS (ceased on July 28, 2020) Ms. CHEN Guoqin (陳國琴) As to Hong Kong law: Mr. TSANG Kwan Hung Benson (曾坤鴻) O’Melveny & Myers (appointed on July 28, 2020) 31st Floor, AIA Central 1 Connaught Road Central REMUNERATION AND APPRAISAL Hong Kong COMMITTEE Ms. SHEN Rong (沈蓉) (Chairperson) As to PRC law: (ceased on July 28, 2020) Zhong Lun Law Firm 樓柏良 Dr. LOU Boliang ( ) 28/31/33/36/37F, SK Tower 樓小強 Mr. LOU Xiaoqiang ( ) 6A Jianguomenwai Avenue 李麗華 Ms. LI Lihua ( ) Chaoyang District (ceased on July 28, 2020) Beijing 100022 陳國琴 Ms. CHEN Guoqin ( ) (Chairperson) PRC (appointed on July 28, 2020) Mr. TSANG Kwan Hung Benson (曾坤鴻) (appointed on July 28, 2020) Mr. YU Jian (余堅) (appointed on July 28, 2020) 2 Pharmaron Beijing Co., Ltd. Annual Report 2020 Corporate Information REGISTERED OFFICE IN THE PRC H SHARE REGISTRAR AND TRANSFER OFFICE 8th Floor, Block 1 6 Tai-He Road Computershare Hong Kong Investor Services Limited Beijing Economic Technological Development Area Shops 1712-1716, 17th Floor Beijing Hopewell Centre PRC 183 Queen’s Road East Wanchai, Hong Kong PRINCIPAL PLACE OF BUSINESS IN HONG KONG STOCK CODE 40th Floor, Dah Sing Financial Centre 3759 No. 248 Queen’s Road East Wanchai COMPANY WEBSITE Hong Kong www.pharmaron.com Pharmaron Beijing Co., Ltd. Annual Report 2020 3 Chairman’s Statement Dear Shareholders: I would like to extend my sincere gratitude for your continuous trust and support. On behalf of the Pharmaron Board of Directors and its subsidiaries (collectively, the “Company”), I present to you the results of the Company for the year ended December 31, 2020. With the COVID-19 global pandemic, 2020 marked an extraordinary year for the world and the Company. On account of the solidarity and resilience of Pharmaron colleagues around the globe and the implementation of robust protection and preventive measures, the Company achieved the development and business targets set out in early 2020 and further strengthened the integrated services platform. I am pleased to report the major achievements we made in 2020. I. Focus on our principal business of providing fully integrated R&D services to accelerate global drug innovation The year 2020 is the first full fiscal year of the Company after the successful completion of the A+H listing. Each business segment maintained a strong growth momentum, which benefited from the advantage of a global and fully integrated pharmaceutical R&D services platform. The Company recorded total revenue of RMB5,133.6 million, representing an increase of 36.6% over the same period last year. With the benefit from economies of scale and the growth in revenue, the Company achieved a gross profit of RMB1,916.1 million and a gross profit margin of 37.3%, net profit attributable to owners of the parent of RMB1,172.4 million, representing an increase of 114.3% over the same period last year. A non-IFRS adjusted net profit attributable to owners of the parent of RMB1,064.0 million, representing an increase of 93.8% over the same period last year, and a net cash flow from operating activities of RMB1,648.6 million, representing an increase of 75.6% over the same period last year. 4 Pharmaron Beijing Co., Ltd. Annual Report 2020 Chairman’s Statement 1. Support the global and Chinese drug 2. Enhance our fully integrated services innovation platform Our pharmaceutical R&D service platform In 2020, the Company continued to provided services to 1,500 customers, strengthen the service platform from which include 721 new customers as multiple dimensions. Vertically, we well as the global top 20 pharmaceutical strengthened the synergies of the same companies. At the same time, the discipline in different stages of innovative Company contributed to the development drug R&D, which further improved our of global innovative drug R&D by expertise and expanded our service applying our long-accumulated expertise offerings. Horizontally, we emphasized in pharmaceutical R&D. The Company the collaboration between different conducted studies for 58 investigational disciplines in the same stage of new drug new drugs (IND) or new drug applications R&D to achieve seamless interdisciplinary (NDA) filing for our Chinese customers of collaboration and create value for our pharmaceutical and biotech companies, of customers by saving time and costs. Over which, 46 projects applied simultaneously 80% of the revenue of our discovery stage in multiple jurisdictions (including China, bioscience services was contributed by our the U.S. and EU). Our pharmaceutical existing laboratory chemistry customers. process development and manufacturing Approximately 77% of CMC (small services segment worked on 739 APIs molecule CDMO) revenue was contributed or intermediates in 2020, including 487 by our existing customers from drug preclinical stage, 202 Phase I-II clinical discovery services (laboratory chemicals stage, 47 Phase III clinical stage and 3 and bioscience services). in commercial stage. By providing high- quality services, we gained trust from more 3. Build more laboratory spaces and customers and deepened our partnerships. facilities In addition, the Company conducted extensive scientific collaborations with The Company added 22,500 m2 of customers, jointly published research laboratory space in Beijing to further findings and obtained numerous patented enhance the capacity of laboratory services. inventorship at home and abroad The Company is close to completing the (with intellectual properties owned by Phase III expansion of the Tianjin plant, customers). which will significantly increase the capacity of our CMC (small molecule CDMO) The Company participated in the research services. of COVID-19 vaccine and drugs. The clinical pharmacology center in the US For long-term development, the Company participated in two Phase III clinical trials of continued the Phase II expansion for the COVID-19 vaccine research studies, which Ningbo Hangzhou Bay R&D service center are now available in major international and Phase I construction of the Shaoxing markets with mass vaccination underway. Plant. The biologics CDMO service The bioanalytical services center in the platform’s build-up will be carried out at U.S. applied the advanced technology of our Ningbo Hangzhou Bay service center II accelerator mass spectrometry to a clinical phase I. pharmacokinetic study for the only FDA- approved drug currently available for the treatment of COVID-19. The clinical development services team in China participated in clinical research of several high-profile Chinese COVID-19 vaccines. Pharmaron Beijing Co., Ltd. Annual Report 2020 5 Chairman’s Statement 4. Expand our global footprint 2. Invest in technology In 2020, the Company continued Advanced technology is essential for to expand its global footprint and the Company to maintain a leading acquired Absorption Systems LLC and position in the industry. In the area of its subsidiaries in November 2020.