Kingworld Medicines Seizes the Opportunity Foster the Diversified Development of Product Specifications

HONG KONG, Mar 31, 2020 – (ACN Newswire) – Kingworld Medicines Group Limited (“Kingworld Medicines” or the “Group”, stock code: 01110.HK), a globally leading and well-known omni-channel enterprise with a complete supply chain in the greater healthcare products and services industry in China, has announced its unaudited annual results for the year ended 31 December 2019 (the “Year Under Review”).

For the Year Under Review, the global economic environment is complicated and aggravated the downward pressure on the Chinese economy. The Group continued to monitor changes in the domestic and foreign environment and optimise its product portfolio while continuing to develop down-market penetration in different channels and strengthening channel management to explore market niches and expand product coverage. For the Year Under Review, facing the financial volatility and uncertainty in China and abroad, the Group’s total revenue slightly decreased by 9.4% to approximately RMB977,928,000, profit attributable to owners of the Company increased by 5.9% to approximately RMB43,427,000 and basic earnings per share increased by 6.1% to approximately RMB7.00 cents. For the Year Under Review, revenue from the pharmaceutical products segment amounted to approximately RMB633,700,000, accounting for 64.8% of the Group’s total revenue. Revenue from the healthcare products segment was approximately RMB151,114,000, accounting for 15.5% of the Group’s total revenue. Revenue from the medical devices segment amounted to approximately RMB193,114,000, accounting for 19.7% of the Group’s total revenue.

Mr. Zhao Li Sheng, Chairman of the Board of Kingworld Medicines, said, “During the Year Under Review, both the domestic and global economic environment are complex and challenging which have slowed down global economic growth. Social unrest in Hong Kong and subsequently the outbreak of coronavirus (COVID-19) epidemic caused more uncertainties in the overall economic development in China. Facing the uncertainty in the macroeconomic environment, the Group continues to provide customers with high-quality healthcare products, has seized market opportunities, and bolstered its competitive advantages to achieve steady development. In 2019, the Group geared up for further penetration of various product channels to widen the product coverage in third- and fourth-tier cities and rural villages, which can further expand the exploration to the market gaps.

For the pharmaceutical products segment, the Group continued to undergo channel optimisation for the Nin Jiom product series. By leveraging its brand appeal and product reputation, Nin Jiom has expanded the market into lower-tier cities and enhanced terminal coverage for the products as well as the cooperation with regional pharmacy chains, so that more consumers can enjoy the benefits of Nin Jiom products. The Group actively coordinated with Nin Jiom and conducted various large-scale promotional events and new media brand promotion activities which aimed at cultivating younger consumer group as well as consolidating the loyalty of old customers and injecting a contemporary sense into the brand. During the Year Under Review, the China Pharmaceutical Enterprises Cooperation and Development Organisation Summit (“the CPEO Summit”) announced that “Nin Jiom” ranked 18th in the “Brand. Value Ranking”, with a brand value of RMB3.989 billion. In addition, the Group implemented orderly marketing activities and maintained a stable price for Taiko Seirogan from Japan, another core product of the Group’s pharmaceutical segment. The Group through full-scale distribution and market perpetration and product display in key areas, as well as through different product deployment activities to expand its market coverage. As for branding promotion, the Group placed large billboard advertisements in high-traffic areas such as alongside busy roads in cities, trains and advertising campaigns at high-speed train stations. In addition, the Group also launched online e-commerce promotional events with various cooperative companies or e-commerce platforms, mainly including JD.com, Alibaba Health, and Dingdang Medicine Express, in order to facilitate integration of its online and offline channels.

For the product series of medicated oils for external use, Kingworld Imada Red Flower Oil made breakthrough development in channel, terminal sales and brand promotion. Kingworld Medicines strived to strengthen the cooperation with downstream enterprises, so as to enlarge the market coverage of the product. As for terminal sales, the Group enlarged the deployment of products in terminal retail stores to increase market coverage. The Group also offered bundled-gift purchase activities for consumers during major festivals to improve terminal sales and boost brand influence. As for brand promotion, the Group proactively supported a variety of sports events and continued to offer product trial packs and offer massage service of Kingworld Imada Red Flower Oil to the residents in major communities. Through providing direct experience with its products to consumers, both the product recognition and purchase confidence were enhanced. For the Mentholatum series, the Group increased its market share through product deployment activities, concentrated display activities in prioritised major cities and staff training and customer education activities. And as for Hoe Hin White Flower Embrocation, the Group actively participated in marketing activities during shopping festivals on e-commerce platforms and offered gift-with- purchase activities for consumers during major festivals to improve terminal sales and brand influence.

In terms of the Healthcare Products Segment, the sales volume of Lifeline Care maternal and infant fish oil nutrients product series from Norway, another star healthcare product of the Group has significantly increased. During the Year Under Review, the Group formulated comprehensive promotional strategies for Lifeline Care maternal and infant fish oil, which mainly included establishing strategic cooperation with cross-border e-commerce platforms and maternal and infant public accounts, so as to reach a wider group of target audience. The Group captured the trend of promotion platform by cooperating with key opinion leaders (“KOL”) to raise hot topics on different promotion platforms like Xiaohongshu and Kaola.com. Meanwhile, the Group through recommendations from professional doctors, maternal and infant experts and celebrities, consumers’ trust in our brand was greatly enhanced. Lifeline Care maternal and infant fish oil nutrient product series gained well-deserved reputation towards its brand and products. For the Culturelle Probiotics product series, the Group adjusted its marketing strategy accordingly and invested the core sales resources for the development of the product in the Hong Kong and Macao markets in 2019. In addition, the Group plans to launch collaborative project in probiotics with the Hong Kong University of Science and Technology (“HKUST”). HKUST’s research and development capability with the Group’s analysis and expertise regarding the future market trends. The cooperation aims to develop Chinese medicines with probiotics and anti-inflammatory properties in order to expand its product line and accommodate various demands of a broader spectrum of consumers.

Kingworld Medicines actively carried out channels reform. In view of the uneven development of urbanisation in second- and third-tier cities, the Group proactively refined its target markets. For the Year Under Review, the Group proactively developed down-market penetration to different channels, strengthening channels management, exploring untapped market niches and expanding the product coverage to meet the consumption needs of domestic consumers while further improving channel marketing and customer loyalty. During the Year Under Review, the distribution network of the Group increased from 200,000 to 210,000 OTC retail pharmacies, which shows the channel optimisation efforts have achieved significant results.

Looking ahead, the macroeconomic environment is more complex and volatile. The uncertainty of the Sino-US trade negotiations and the continuous initiation by the Chinese government of new policies related to the pharmaceutical industry make the industry’s prospects more challenging. Facing changes in the business environment, market and consumption patterns as well as technology, Kingworld Medicines strives to seize opportunities presented by the favourable policies toward the vigorous development of the Chinese medicine industry in China. The Group actively engages in further cooperation with long-established traditional Chinese medicine manufacturers. The Group will utilise the scientific big data analysis of the Market Sales Traceability Management System (the “SMART System”) to accommodate to the changes in consumers’ needs and competitive landscape and set up comprehensive marketing plan and distribution for each product portfolio of the Group. In the future, the Group will continue to develop channels in lower-tier cities. Through the “SMART System” together with its upstream and downstream integrated supply chain and logistics, the Group will further enlarge its product coverage and reach in third- and fourth-tier cities and explore untapped markets, so as to increase market share and profitablity.

Mr. Zhao concluded, “The domestic and global economic environment are complex and challenging in 2019. At the end of the year, affected by COVID-19 outbreak, the overall sentiment of the market is poor, and the Group also encountered opportunities and challenges amidst the turbulence. The Group will continue to adhere to its motto of “to serve the community and to heal the souls”, and continuously source home healthcare products for consumers. The “Pu Ji Kang Gan Granules” can be applied to upper respiratory tract infections. The product is highly efficacious with limited side effects and can help to prevent and treat virus infections. In the future, the Group will enlarge its existing product categories, including anti-epidemic items for households, such as face masks, disinfection supplies, hygiene goods, and strive to counter the epidemic together with the nation. Looking forward to 2020, Kingworld Medicines will further build a sound foundation and enhance competitiveness of its core products in an orderly and effective manner. The Group also focuses on cost control as it strives to maintain its profits, continues to develop a sound system in financial risk management and maintains sufficient cash flow, so as to protect the return on investment of shareholders and other stakeholders. In the future, Kingworld Medicines will continue to introduce new products while optimising its product structure, expediting the implementation of negotiated projects and enriching its product portfolio, At the same time, the Group will expand its development in the greater health industry in order to develop the Company to become a domestic leading and world-renowned enterprise with a well-established upstream and downstream supply chain for the greater health products and service industry.”

About Kingworld Medicines Group Limited

Kingworld Medicines Group is a globally leading and well-known omni-channel enterprise with a complete supply chain in the greater health products and services industry in China. It provides high-end logistics management service, B2C trading service and data service to major leading pharmaceutical and healthcare product suppliers, manufacturers and distributors, and is a pharmaceutical and healthcare product supply chain management service enterprise integrated with logistics, product and information flow. The Group’s business in the greater health industry includes: (i) an agent and distributor of high-quality and well-known pharmaceutical products from overseas, including the star product series of Nin Jiom product series from Hong Kong and Taiko Seirogan from Japan; (ii) actively introducing high-quality and well-known healthcare products from overseas into the China market, such as the star product Culturelle probiotics product series from the United States, Lifeline Care maternal and infant fish oil nutrient product series from Norway, “Global Slimming” product series and medicated oils for external use; (iii) undertaking research and development, manufacturing and production of medical devices. In terms of total import value, Kingworld Medicines Group was among the Top 100 Import Enterprises of Pharmaceutical and Healthcare Product for six consecutive years from 2009 to 2014, and was named as one of the Top 5 Sales Enterprises of Chinese Patent Medicine in terms of sales in 2013. The Group also ranked among Shenzhen Top 500 Enterprises in 2018 and 2019 respectively, and continued to be recognized as a “Shenzhen Time-honoured Brand” in 2019. The Group manages a portfolio of over 60 kinds of medicines and healthcare products manufactured in Hong Kong, Japan, the United States, Australia, Europe, Canada, Singapore and Mainland China, and has a distribution network covered about 210,000 OTC retail pharmacies.

For further information, please visit http://www.kingworld.com.cn/.

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