一致Ｂ：2018年半年度报告（英文版）

China National Accord Medicines Corporation Ltd.

Semi-Annual Report 2018

August 2018

Section I. Important Notice Contents and Paraphrase

Board of Directors Supervisory Committee all directors supervisors and senior

executives of China National Accord Medicines Corporation Ltd. (hereinafter

referred to as the Company) hereby confirm that there are no any fictitious

statements misleading statements or important omissions carried in this report

and shall take all responsibilities individual and/or joint for the reality

accuracy and completion of the whole contents.Lin Zhaoxiong Principal of the Company Wei Pingxiao person in charger of

accounting works and Wang Ying person in charge of accounting organ

(accounting principal) hereby confirm that the Financial Report of Semi -

Annual Report 2018 is authentic accurate and complete.

All directors are attended the Board Meeting for report deliberation.

The Company plans not to pay cash dividends bonus and carry out capitalizing

of common reserves.

Contents

Section I Important Notice and Paraphrase .................................................................................... 1

Section II Company Profile and Main Financial Indexes .............................................................. 5

Section III Summary of Company Business .................................................................................. 8

Section IV Discussion and Analysis of Business ............................................................................ 12

Section V Important Events ............................................................................................................ 28

Section VI Changes in Shares and Shareholders .......................................................................... 49

Section VII Preferred Stock ............................................................................................................ 55

Section VIII Particulars about Directors Supervisors and Senior Executives .......................... 55

Section IX Corporate Bonds ........................................................................................................... 56

Section X Financial Report ............................................................................................................. 57

Section XI Documents Available for Reference ........................................................................... 223

Paraphrase

Items Refers to Contents

Listed Company Company the Company

Sinopharm Accord the Group

Refers to China National Accord Medicines Corporation Ltd.Sinopharm Refers to China National Pharmaceutical Group Corporation

Sinopharm Holding Refers to Sinopharm Group Co. Ltd; Controlling shareholder of the Company

Company Law Refers to Company Law of the People’s Republic of China

Securities Law Refers to Securities Law of the People’s Republic of China

Yuan 10 thousand Yuan 100 million Yuan Refers to RMB RMB 10 thousand RMB 100 million

Terminology: Refers to

Two Invoices System Refers to

The first invoice refers to the invoice from the manufacturer to the

distributor and the second invoice refers to the invoice from the

distributor to the medical service provider. By this way circulation links

have been greatly reduced and the number of distributors for each

medicine category shall not exceed two.Pharmacy Trust Refers to

It is a kind of operation activity that the medical organization has

medicine enterprise with strong management ability and larger risk

appetites to operate and manage their drugstores in the form of contracts

with payment which has clearly stated the relationship of right and duty

between hospitals and pharmacy owners and operators ensuring

preservation and appreciation of hospital and pharmacy property and

creating a kind of management activity with considerable social benefit

and economic benefit under the condition that there is no change in the

ownership of drugstores

GPO Refers to Group purchasing organizations

Direct selling Refers to A sales method of selling drug to the hospital directly

GSP certificate Refers to Good Supply Practice certificate

Supply Chain Management Refers to

That is CMS and information system processing workflow &

procurement inventory & sales documents

Abbreviation: Refers to

Sinopharm Holding Guangzhou Refers to Sinopharm Holding Guangzhou Co. Ltd.Guoda Drugstore Refers to Sinopharm Holding Guoda Drugstore Co. Ltd.Sinopharm Holding Guangxi Refers to Sinopharm Holding Guangxi Co. Ltd.

Foshan Nanhai Refers to Foshan Nanhai Pharmaceutical Group Co. Ltd.

Southern Pharmaceutical Foreign Trade Refers to Guangdong Southern Pharmaceutical Foreign Trade Co. Ltd.Zhijun Pharmaceutical Refers to China National Zhijun (Shenzhen) Pharmaceutical Co. Ltd.Zhijun Pharmacy Trade Refers to Shenzhen Zhijun Pharmacy Trade Co. Ltd.Pingshan Pharmaceutical Refers to China National Zhijun (Shenzhen) Pingshan Pharmaceutical Co. Ltd.Main Luck Pharmaceuticals Refers to Shenzhen Main Luck Pharmaceuticals Inc.Section II Company Profile and Main Finnaical Indexes

I. Company profile

Short form of the stock Sinopharm Accord ; Accord B Stock code 000028 200028

Stock exchange for listing Shenzhen Stock Exchange

Name of the Company (in

Chinese)国药集团一致药业股份有限公司

Short form of the Company

(in Chinese)

国药一致

Foreign name of the Company

(if applicable)

China National Accord Medicines Corporation Ltd.

Short form of foreign name of

the Company (if applicable)

Sinopharm Accord

Legal representative Lin Zhaoxiong

II. Person/Way to contact

Secretary of the Board Representative of security affairs

Name Chen Changbing Wang Zhaoyu

Contact add.

Accord Pharm. Bldg. No. 15 Ba Gua Si

Road Futian District Shenzhen

Guangdong Province

Accord Pharm. Bldg. No. 15 Ba Gua Si

Road Futian District Shenzhen

Guangdong Province

Tel. +(86)755 25875195 +(86)755 25875222

Fax. +(86)755 25195435 +(86)755 25195435

E-mail gyyzinvestor@sinopharm.com gyyz0028@sinopharm.com

III. Others

1. Way of contact

Whether registrations address offices address and codes as well as website and email of the Company changed in reporting period or

not

□ Applicable √ Not applicable

Registrations address offices address and codes as well as website and email of the Company has no change in reporting period

found more details in Annual Report 2017

2. Information disclosure and preparation place

Whether information disclosure and preparation place changed in reporting period or not

□ Applicable √ Not applicable

The newspaper appointed for information disclosure website for semi-annual report publish appointed by CSRC and preparation

place for semi-annual report have no change in reporting period found more details in Annual Report 2017

IV. Main accounting data and financial indexes

Whether it has retroactive adjustment or re-statement on previous accounting data

□Yes √ No

Current period Same period of last year

Increase/decrease in this

report y-o-y

Operating revenue (RMB) 20779166699.67 20524807669.57 1.24%

Net profit attributable to shareholders of

the listed Company(RMB)

641727034.93 556125318.19 15.39%

Net profit attributable to shareholders of

the listed Company after deducting non-

recurring gains and losses(RMB)

623296339.34 546253390.00 14.10%

Net cash flow arising from operating

activities(RMB)

225357709.20 228337431.40 -1.30%

Basic earnings per share (RMB/Share) 1.50 1.30 15.38%

Diluted earnings per share (RMB/Share) 1.50 1.30 15.38%

Weighted average ROE 6.62% 6.41% 0.21%

End of current period End of last period

Increase/decrease in this

report-end over that of last

period-end

Total assets (RMB) 24013015677.32 22343643527.77 7.47%

Net assets attributable to shareholder of

listed Company(RMB)

9910258628.12 9396572345.88 5.47%

V. Difference of the accounting data under accounting rules in and out of China

1. Difference of the net profit and net assets disclosed in financial report under both IAS (International

Accounting Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report under both IAS (International Accounting

Standards) and Chinese GAAP (Generally Accepted Accounting Principles)

2. Difference of the net profit and net assets disclosed in financial report under both foreign accounting

rules and Chinese GAAP (Generally Accepted Accounting Principles)

□ Applicable √ Not applicable

The Company had no difference of the net profit or net assets disclosed in financial report under both foreign accounting rules and

Chinese GAAP (Generally Accepted Accounting Principles)

VI. Items and amounts of extraordinary profit (gains)/loss

√ Applicable □ Not applicable

In RMB

Item Amount Note

Gains/losses from the disposal of non-current asset (including the

write-off that accrued for impairment of assets)

4254942.60

The income from disposal of

intangible assets by subsidiary

Sinopharm Holding Guangxi

Logistic Co. Ltd.Governmental subsidy calculated into current gains and

losses(while closely related with the normal business of the

Company excluding the fixed-amount or fixed-proportion

governmental subsidy according to the unified national standard)

11938416.85

The vary taxation subsidiary and

financial incentive received in the

period

Investment costs while acquiring subsidiaries joint ventures and

associated enterprise less than fair value of the identifiable net

assets from invested enterprise which should be enjoined

729.29

Income from acquisition of

subsidiary Sinopharm Holding

Guangzhou Huadu Co. Ltd. in

the period

Reversal of impairment reserve for account receivable with

separate impairment testing

4203173.20

The bad debt provision of

receivables which has accrual

independently of a prior year was

collected in the period

Gains/losses on entrusted loans 1549650.99

Other non-operating income and expenditure except for the

aforementioned items

2377946.75

Less: impact on income tax 5505057.19

Influenced amount of minority shareholders’ equity (after tax) 389106.90

Total 18430695.59 --

Concerning the extraordinary profit (gain)/loss defined by Q&A Announcement No.1 on Information Disclosure for Companies

Offering Their Securities to the Public --- Extraordinary Profit/loss and the items defined as recurring profit (gain)/loss according to

the lists of extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their

Securities to the Public --- Extraordinary Profit/loss explain reasons

□ Applicable √ Not applicable

In reporting period the Company has no particular about items defined as recurring profit (gain)/loss according to the lists of

extraordinary profit (gain)/loss in Q&A Announcement No.1 on Information Disclosure for Companies Offering Their Securities to

the Public --- Extraordinary Profit/loss.Section III Summary of Company Business

I. Main businesses of the Company in the reporting period

Whether the Company needs to comply with the disclosure requirements of the particular industry

Reference disclosure

Retailing industryThe Company complies with the disclosure requirement of “Information Disclosure Guidelines for the Shenzhen Stock ExchangeNo. 8- Listing Company Engaged in Retailing Industry”

In the reporting period the main business of Sinopharm Accord includes pharmaceutical distribution and

pharmaceutical retail specifically as follows:

(i) In the pharmaceutical distribution field the Company continues to integrate the distribution and logistics

business deeply penetrates into the end markets improves the multistep distribution network creates intelligent

supply chain and devotes to become a provider for pharmaceutical and healthcare products and services with the

strongest influence the highest share the most complete variety the best service and the fastest delivery in south

district of China.

1. The Company’s pharmaceutical distribution business is established in Guangdong and Guangxi the network

construction of Guangdong and Guangxi has completed in 2013 with business extended to the county-level

regions furthermore we speed up integration of the three tier companies in 2014. In year of 2015 the Company

achieved an operation all over the network the network has further expansion in first half of 2018 including 1785

A-grade hospitals 3433 community-oriented primary cares and 1538 retail terminal clients.

2. Pharmaceutical distribution business has achieved the first scale in Guangdong and Guangxi and the leading

position in market segment of Guangdong and Guangxi. In terms of traditional business relying on the network

layout of distribution accelerated the optimization of terminal network construction and ranked top 3 in the

market competition of hospital direct marketing in 31 prefecture-level cities; in terms of logistics network

construction transformed from the traditional commercial trade services to the professional supply chain services

established the first third-party logistics in Guangdong and Guangxi.

3. While steadily developing the traditional business the Company actively carried out innovative business:

comprehensively carried out instrument business adopted advanced supply chain management methods and

modern technology possessed professional medical supply chain companies expanded 4D business and created

SPD core competitiveness; developed retail diagnosis and treatment business complied with the general trend of

separating pharmacies from medical institutions integrated national retail resources developed a variety of retail

pharmacy models and provided patients with professional high-quality convenient and affordable medicine

pharmacy and distribution services. By the first half of 2018 the Company has 51 types of pharmacies in social

pharmacies dispensaries at the grassroots level pharmacies for chronic disease management and drug stores.(ii) In the pharmaceutical retail field Guoda Drugstore is a pharmaceutical retail enterprise that ranks the first in

the sales volume throughout the country and is one of the few enterprises in China with national direct sales drug

retail network. The retail chain network of Guoda Drugstore spreads over 19 provinces autonomous regions and

municipalities covers nearly 70 large and medium-sized cities.

By the end of first half of 2018 Guoda Drugstore has operated 4004 stores covering 19 provinces autonomous

regions and municipalities entering nearly 70 large and medium sized cities which has formed a drugstore

networks covering eastern and northern China southern coastal cities and gradually expanded into northeast

central plains and inland cities the sales scale of which has exceeded 10 billions ranking the first within industry.Guoda the business of which were mainly relying on modern retail drugstores has been putting great attention

on the development of professional service system with medical resources as core competitiveness building a

group of stores with professional commercial activities which are able to provide retails and therapy services that

integrating medical service and health-care products sales and cooperate with hospitals; at the same time the

Company has been vigorously developing new business exploring and expanding new sales channels improving

professional services being dedicated to transit from a traditional medical retail into an innovative service

enterprise. By means of conventional products retail management improving major brands and exploring business

cooperation with supplier accelerating the establishment of DTP business and continuous health care service

system Guoda has built industry-leading professional service ability. Besides the leading scale of Guoda is

regarded as one of the core competitiveness for the reason that the advantage in scale has reduced its procurement

cost and enhanced its negotiation advantages.II. Major changes in main assets

1. Major changes in main assets

Major assets Note of major changes

Equity assets

Increased 106.1159 million Yuan over that of period-begin with 6.38% up mainly

because the investment income from joint ventures increased

Fixed assets

Decreased 1.6079 million Yuan over that of period-begin with 0.29% down mainly due

to the depreciation of fixed assets

Intangible assets

Decreased 10.9347 million Yuan over that of period-begin with 3.36% down mainly due

to the amortization of intangible assets

Construction in progress

Increased 7.8586 million Yuan over that of period-begin with 34.25% up mainly due to

the ERP system update from headquarter of Guoda Drugstore

2. Main overseas assets

□ Applicable √ Not applicable

III. Core competitiveness analysis

Whether the Company needs to comply with the disclosure requirements of the particular industry

Reference disclosure

Retailing industry

As an enterprise with both wholesale and retail business Sinopharm Accord has the following competitive

advantages:

1. Strong network coverage and layout

Take the lead in scale and cover the countrywide retail network: Guoda Drugstore is a pharmaceutical retail

enterprise with sales volume ranking first for five consecutive years throughout the country established 28

regional chain enterprises with retail network spreading over 19 provinces and municipalities and autonomous

regions and covering nearly 70 cities.Leading layout and complete distribution network in Guangdong and Guangxi: the Company has complete

pharmaceutical distribution networks in Guangdong and Guangxi which comprehensively cover the medical

institutions above second grade and the large-scale chain drugstores in Guangdong and Guangxi and provide drug

distribution services for numerous drugstores community health care service networks clinics and the third

terminals represented by new rural cooperative medical system. The Company is a leading provider of drug

distribution and supply chain services in Southern China.

2. Abundant variety resources

Guoda Drugstore operates nearly 120000 merchandises. With its relatively comprehensive purchasing network

and years of experience in commodity management Guoda Drugstore has established a merchandise system with

wide coverage high professionalization and rich varieties.In the pharmaceutical distribution the Company has established extensive cooperative relations with thousands of

domestic manufacturers and commercial enterprises and established stable business relationships with hundreds of

import and joint venture manufacturers and has rich variety resources.

3. Complete logistics and distribution system

Guoda Drugstore has a nationwide modern logistics and distribution system and has established the logistics and

distribution network covering all the stores throughout the country including Shanghai National Logistics Center

and 23 provincial and municipal distribution centers.

Accord distribution adopts supply chain management and warehouse management solutions system it has built

large-scale first-grade logistics centers in Guangzhou Nanning Shenzhen and other places and established

distribution centers in Guangdong and Guangxi which has formed ladder logistics and distribution networks it is

the first enterprise in Guangdong and Guangxi that has achieved the third-party logistics qualification and has the

professional pharmaceutical logistics capabilities with the largest scale the most extensive network and the most

complete modes in southern China.

4. The advantages of medical insurance resources

Regarding medicine retails the subsidiaries of Guoda Drugstore have featured generally higher medical insurance

acquiring ability with higher medical insurance sales ratio and steady operation.

5. The advantages of Compliance: the Company had a big lead under an increasingly stringent regulatory

environment for the reason that it has kept emphasizing legalization and compliance in the process of operation

and management.

6. Unique-influence Sinopharm brand

Brand of the Company and distribution industry child-brand and controlling shareholder and actual controller’s

brand come down in one continuous line depending on powerful force of central enterprises the Company’s

popularity and influence are prominent day by day in the industry.Section IV. Discussion and Analysis of Business

1. Introduction

In the first half of 2018 Sinopharm Accord focused on a clear development strategy and clear goals transformed

both foreground and background innovated together and took serious measures to business landing and made

steady growth in business performance and showed potential in business models.(i) Performance completion in first half of 2018

Sinopharm Accord achieved a revenue from operation amounted as 20.779 billion Yuan with a y-o-y growth

1.24%; the net profit attributable to parent Company comes to 642 million Yuan with 15.39% up on a y-o-y basis.

The pharmaceutical distribution has operation revenue of 15.879 billion Yuan with y-o-y growth of 0.79%; net

profit attributable to parent Company has 333 million Yuan with y-o-y growth of 8.93%. As for the

pharmaceutical retail the Company gains 5.144 billion Yuan in operation revenue a y-o-y growth of 5.23% and

the net profit attributable to parent Company amounted as 139 million Yuan a 40.66% up on a y-o-y basis.(ii) Analysis of policy environment

2018 is a year of domestic adjustment and increasing international pressure. On the one hand the domestic

economy has significant resilience characteristics; on the other hand the advance of the US interest rate hike cycle

has led to a tendency of shock upstream of global capital costs. The evolution of trade friction is accompanied by

unexpected changes in the external environment and financial deleverage and other complex external

environment have brought more pressure in business operation.

1. Industry growth rate continued to slow down and the trend of leading concentration ratio remained unchanged

In the first quarter of 2018 the growth of drug distribution and sales increased by 7.9% a decline of 0.5% on a

year-on-year basis; the growth of drug retail and sales increased by 9.1% and an increase of 0.1% on a year-on-

year basis. The growth rate of large pharmaceutical wholesale enterprises slowed down noticeably the main

business income of top 100 wholesale enterprises increased by 8.4% in 2017 a decline of 5.6% on a year-on-year

basis; the top 100 market share was 70.7% a decline of 0.2% on a year-on-year basis; the market share of 4

leading enterprises was 37.6% a rise of 0.2 % on a year-on-year basis.

2. The total number of medical institutions was expanding and the process of rational allocation of medical

resources was accelerating

Under the policy promoting more than 19000 new-level medical and health institutions have been added and the

growth rate of the number of medical treatments and inpatient number has far exceeded that of class hospitals and

the medical resources are constantly leaning toward the basic level.(iii) The main work completed by the Company in the first half of 2018

1. Built new dynamic organizational capability and consolidated the foundation of transformation

In the first half of the year the Company introduced the third-party organizations initiated the research work at

headquarters distribution and Guoda and provided research basis for organizational optimization through

research and analysis. Among them distribution implemented the integration of departments and regions at

different levels through organizational structure optimization and re-design region penetrated deeply and

platform concentrated on profession; retail promoted the organizational structure design of Guoda so as to match

with the business internationalization.

2. Integrated wholesale and retail and dug deep into resource advantages

During the reporting period the Company’s catalogue management of wholesale and retail integration variety

increased from 33 brands to 77 brands and the number of articles increased from 255 to 430. Through the

planning for wholesale and retail integration suppliers seven suppliers were promoted to boost the wholesale and

retail integration project at the same time further promoted the wholesale and retail cooperation project of Guoda

Drugstore.

3. Implemented information technology projects and strengthened new competence of technology

The Company attached great importance to the construction of IT talent team increased recruitment efforts

comprehensively strengthened the “informatization” orientation and established a matching performance

incentive mechanism. During the reporting period the Company optimized the basic management by information

technology created a dual information platform of “Hospital Supply Chain Management” and “Retail ProfessionalSupply Chain Management” and promoted the new business model through the integration of technology:

(1) In terms of business flow the retail direct sales mobile order APP popped up online; the self-owned pharmacy

online prescription APP ensured the prescription to be undertaken; the settlement management completed the

third-party payment platform and the medical insurance settlement docking of five regions; the first-level

inventory management of instrument consumables popped up online.

(2) In terms of logistics the APP of Android version was developed and the non-pharmaceutical system online

implementing of six warehouses in Guangzhou Foshan and Zhuhai were completed; the third-party logistics

construction added six third-party cargo owners.

(3) In terms of the initial introduction of AI intelligence the AGV machine site investigation has been completed

and the system flow and docking plan have been initially confirmed; the vending machine has been put into use in

some areas and would be distributed in other parts of the country in succession; the unmanned pharmacy has

completed the prototype test and would be put into operation as soon as possible.

4. Organized the full docking with Walgreens Boots Alliance and the projects were implemented smoothly

After many times of communication and combining the research on the market the new term of board of directors

of the joint-ventured Guoda Drugstore reached a consensus on the strategic planning for the next 3-5 years and

formed specific strategic measures.

5. Distribution focused on four major directions transformation and innovation for development

(1) Primary care:

The Company actively responded to the “two-vote system” made overall plans made variety planning resource

docking and channel merging; improved the supply chain efficiency by building invoice management system

procurement tax refund process optimization multi-warehouse operation inventory management etc.; in order to

meet the business needs the Company established standardized prepayment and cash deposit operation

procedures to effectively control payment risks.In response to the “GPO” various regions and multiple channels actively proposed suggestions for the GPO

program and signed strategic cooperation framework agreements with Taishan HeYuan Maoming and other

places; actively affected the variety catalogue of Foshan implementation plans and strived to supplement the key

varieties improved the maximum match between the varieties and the implementation catalog; the GPOs in

Shenzhen and Dongguan entered the implementation stage and the Company maintained active communication

and responded well.The Company directly faced the pharmacy custody at various regions actively participated in the bidding of

various custody projects strengthened the front-end business management actively interpreted and responded to

the bidding work formulated the bidding tools and formed the standardization process of the universal template +

customized solution; and insisted on the individualized response in the hospitals in trust integrated the varieties

and business resources adjusted the cooperation models and maintained the share and improved the gross profit.

(2) Retail diagnosis and treatment:

During the reporting period there were 51 retail clinics including 10 ones newly established in Guangdong and

two ones newly established in Guangxi in the first half of the year. Foshan Pharmacy and Foyi Pharmacy became

the specific pharmacies in Foshan City. Shenzhen Pharmacy and Zhaoqing Pharmacy won the first batch of

“Guangdong Provincial Demonstration Pharmacies”.

1) Integrated management synergy and improved profitability

The Company continued to improve the pharmacy system process and standard operation carried through the

foreground-background integrated management in the operation procurement information quality management

logistics and brand; refined and strengthened the daily operation management carried out more than 60 audits in

the first half of the year; the Company enriched the retail categories through commodity negotiations reasonably

planned the varieties on the basis of hospital nature and local disease spectrum and created superior prescription

categories.

2) All regions exerted their strength and innovated the cooperation methods

With the help of the “Internet + Medical” project the Company joined hands with Tencent and has signed the

“Internet + Smart Hospital” framework agreement with the three-level hospitals in Nanning Baise and Guilin;

Sinopharm Group Guangxi and Guangxi Fudi Finance Investment Group signed the “Healthy Baise” Project

Cooperation Agreement and opened a hospital pharmacy.

(3) Retail direct sales:

The B2B platform completed the background upgrade and the online marketing terminal customers reached 789;

docked to Guoda platform integrated the marketing resources of Guoda exported the standardized services and

carried out deep distribution projects to achieve full coverage of network sales.

(4) Instrument consumables:

All regions promoted in an all-round way won the bidding of 10 medical projects newly increased 4 SPD

projects and promoted the project landing of 3 hospitals in the province; promoted the deployment of 4D

services established the top three hospitals in the reagent business; and established a medical joint venture model

for instrument maintenance service in Haizhu District; the disinfection supply business actively carried out

business promotion and gradually put into supply.

6. Guoda Drugstore ensured stock and made increment and elaborately operated new features

(1) Accelerated the distribution speed according to strategic deployment

As of the end of the reporting period the total number of Guoda Drugstore reached 4004 and accumulatively had

a net increase of 169 stores in the first half of the year including 163 direct-sale stores. The distribution points of

advantageous areas were scattered strengthened the regional management formulated the implementation plan of

the store transfer shop model carried out help guidance on the spot and grasped the local policies through

analysis and continued to follow up. Guoda Drugstore pre-judged the policy changes and market trends and

increased the expansion speed of stores around hospitals. In the first half of the year 29 new stores around

hospitals were added and there were totally 332 stores around hospitals as of the end of the reporting period.

(2) Dug the potential benefits of stock stores and created specialized pharmacies with chronic diseases as the core

1) Optimized store management and managed the loss-making stores

Guoda Drugstore concerned and helped regional companies to improve their marketing capabilities formulated

assessment plans and budgets gradually increased the proportion of high-margin sales took measures to control

retail prices monitored the rationality of price adjustments and pricing and corrected errors and carried out daily

monitoring and maintenance to the prices of centralized purchasing varieties throughout the country.

2) Established records and set up warehouses implemented chronic disease services and membership

management

Guoda Drugstore focused on promoting chronic disease work in various regions organized the preparation of

pharmaceutical service manuals and tried out the chronic disease learning cases at online platforms within 17

companies across the country meanwhile the DTP pharmacies upgraded the service models which is centering on

patients.

(3) Implemented the integration strategy of wholesale and retail and strengthened the fine management of

merchandize purchase

Implemented the provincial-level platform construction of Guoda Drugstore step by step docked the project of

wholesale and retail integration implemented the strategic requirements completed the docking with

manufacturers and sought a new cooperation mode; carried through the fine management to merchandize

purchase and sales promoted the application planning guidebook and tapped the potential in inter-regional

benchmarking; focused on the category inside used the benchmarking method of same type of commodity to find

the superior goods and increased the sales quota of superior goods.

(4) Accelerate the exploration of e-commerce business new model

Guoda Drugstore has negotiated cooperation with a number of internet hospitals and reached a nationwide

cooperation agreement with Yaofangyun. At present the cooperation in Ningxia and Xiamen has already been

implemented.The Company is required to comply with the disclosure requirements of the Industry Information Disclosure

Guide of the Shenzhen Stock Exchange No. 8 - Listed Companies Engaged in Retail-Related Businesses.

1. The entity business operations and the business condition of the stores during the reporting period:

As of the end of June 2018 Guoda had 2965 direct-operated stores with sales revenue of 4.04 billion Yuan a

year-on-year growth of 10.6% and the same stores had an increase of 5.0% on a year-on-year basis 1039

franchise stores with distribution revenue of 580 million Yuan an increase of 9.7% on a year-on-year basis.Region

Direct-sale

store

Franchised outlet

Numbers

of the

store

Sales income

(in 10 thousand

Yuan)

y-o-y

Numbersof

the store

Dispatching

income

(10 thousand

Yuan)

y-o-y

North 1369 209772.98 13.52% 305 23545.05 21.97%

East

China

759 95094.95 6.06% 580 27203.89 0.48%

South

China

387 57263.51 7.14% 60 4264.78 8.86%

Central

China

241 21621.69 13.28% 94 2736.92 17.43%

Northwest 209 21043.89 10.18% - - 0.00%

Total 2965 404797.02 10.57% 1039 57750.64 9.73%

Note:

North: Liaoning Shanxi Inner Mongolia Beijing Tianjin Hebei;

East China: Shanghai Jiangsu Anhui Shandong Fujian Zhejiang;

South China: Guangdong Guangxi;

Central China: Henan Hunan;

Northwest: Ningxia Xinjiang.

(1) Top 10 stores in sales

Serial Region Name

Year for

starting

business

Operating

mode

Business

activity

Actual

operating

area (in M2)

Property

belonging

TaiYuan

Shanxi

Province

Zhongli Branch 2002 Direct-sale 5+X 820.00 Rental

Hohhot Inner

Mongolia

Hohhot HQ 2003 Direct-sale 5+X 1689.26 Rental

TaiYuan

Shanxi

Province

Er Yuan

Branch

2011 Direct-sale 5+X 600.00 Rental

Shenzhen

Guangdong

Province

Shenzhen

Exhibition

Hall

2006 Direct-sale

Modern

pharmacy

260.00 Rental

Shijiazhuang

Hebei Province

Le Ren Tang

2010 Direct-sale

TCM

diagnosis

shops

1206.00 Rental

6 Beijing

Jinxiang

Store Xidang

1997 Direct-sale

Modern

pharmacy

773.16 Rental

Shijiazhuang

Hebei Province

Kangning

Store

Lerentang

2000 Direct-sale

TCM

diagnosis

shops

280.00 Rental

Yangzhou

Jiangsu

Province

Baiyulan

Store Jiangsu

1991 Direct-sale

Modern

pharmacy

620.00 Rental

Shenzhen

Guangdong

Province

Zhenxing

Store

2002 Direct-sale

Modern

pharmacy

200.00 Rental

Shenyang

Liaoning

Province

Zhongjie

Store

2002 Direct-sale

TCM

diagnosis

shops

1300.00 Rental

(2) In first half of 2018 new 207 direct-sale shops are operates and 44 shops closed with 163 shops net increased

the operating area has 27462 M2 icnreased and has net increase of almost 200 million Yuan in sales

In M2

Region

Direct-sale store Franchised outlet

Number of store

increased

Total

area

Number of stores shut

down

Number of store

increased

Number of stores shut

down

North 108

15206.

-17 21 -2

East China 36

4522.2

-13 6 -21

South

China

3014.7

-5 7 -5

Central

China

1964.3

-5 13 -13

Northwest 21

2754.4

-4 - -

Total 207

27462.

-44 47 -41

2. In first half of 2018 online sales growth in a steady pace; totally 13 third party platform online one after

another so far. Details are:

In 10 thousand Yuan

Cooperation platform Trading Volume Business revenue

T-Mall (Sinopharm On-line) 10357.06 10357.06

Yaofangwang (www.yaofangwang.com) 810.02 810.02

Yiyaowang (www.111.com.cn) 131.13 131.13

JD daojia (http://daojia.jd.com) 222.34 222.34

800FANG.CN

(www.800pharm.com)

142.21 142.21

Meituan Waimai

(waimai.meituan.com)

36.70 36.70

Yaopin Daojia 0.88 0.88

ele.me (www.ele.me/home) 67.90 67.90

Wanda E-business 1.80 1.80

Baidu takeout 13.53 13.53

BAHEAL Pharmaceutical Easy Referral 25.42 25.42

Other B2B E-business 648.03 648.03

We Chat Mall 89.52 89.52

Total 12546.53 12546.53

3. procurement inventory and supplier from the headquarter: headquarter of the Company has total amount of

4.894 billion Yuan (tax included) for procurement for the first half of 2018 and inventory costs amounted as 960

million Yuan details are:

In 10 thousand Yuan

Category Purchasing Amount (tax included) Inventory cost

Health-care food 20691 4690

Convenience food 4774 763

Kids 11275 2214

Gynecology 14201 2206

Liver and gall 7869 1439

Cold 10031 2324

Personal care 4977 1265

Orthopedics 16893 4895

Respiratory 16942 3398

Household conveniences 1393 329

Family health products 17834 4633

Antipyretic analgesicss 4106 695

Anti-infection 12321 2283

Anti-allergic 4013 779

Temporary coding 818 212

Urination 10221 2248

Endocrine 16970 3092

Other 117208 8970

Clearing heat and detoxitating 16043 3357

Neurology 17822 3151

Drugs for external use 23450 7163

Vitamin-mineral 10500 1966

Five sense organs 15252 3383

Digestion 20473 4867

Heart brain 49824 9368

Chinese herbal pieces 20283 4837

Nourishing food 23258 11458

Total 489441.54 95981.09

Top 5 suppliers:

In 10 thousand Yuan

Ranks Supplier Procurement amount (tax included) Purchase ratio

1 No. 1 8577 12%

2 No. 2 6727 9%

3 No. 3 5808 8%

4 No. 4 5134 7%

5 No. 5 4672 6%

4. Warehousing and logistics:

In the first half of 2018 logistics warehouses of Guoda Drugstore spread over 17 provinces there were 27 large

and small logistics warehouses and the total warehouse area was over 110000 square meters. For the inventory

management of Guoda Drugstore the commodity department is responsible for monitoring the inventory

dynamics of the headquarters and subsidiaries and managing inventory on a monthly basis providing inventory

analysis and management reports and giving suggestions on the optimization of inventory structure while the

operation department is responsible for the inventory turnover index of the monthly tracking business and

providing business inventory assessment data and the purchasing department is responsible for rational

replenishment ensuring smooth and stable supply channels and effectively controlling the inventory turnover of

commodity while ensuring the satisfaction rate of goods and handling and resolving the dead stock and

commodity with expiry date every month. .In M2 (Square Metters)

Province Reginal enterpreise Warehouse area

Liaoning Shenyang 14200

Guangdong

Guangzhou

5300

Shanzhen

Jiangmen 5432

Shanxi

Shanxi Wanmin 5214

Shanxi YiYuan 4350

Jiangsu

Dadesheng 4840

Nanjing 1800

Liyang 3840

Fujian

Fujian 2395

Quanzhou 1100

Hebei Hebei 3772

Shandong Shandong 5800

Ningxia Ningxia 3330

Hunan Hunan 3353

Henan Henan 3500

Inner Mongolia Inner Mongolia 1870

Guangxi Guangxi 1950

Beijing

Beijing Guoda

4943

Beijing Jinxiang

Tianjin Tianjin 1700

Anhui Anhui 1000

Xinjiang Xinjiang 3842

Shanghai

Shanghai Fumei

20000

Shanghai Guoda

Hangzhou 1000

Guoda HQ HQ 8000

Total 112531

5. The commodity suppliers of Guoda Drugstore are mainly external suppliers and also assisted by some

Sinopharm affiliated enterprises and private brands. The sale for the first half of 2018 was as follows:

In 10 thousand Yuan

Private brand Property Category Turnover (tax included) Ratio

1 Group-buying OEM Health-care food 1773 0.31%

2 Group-buying OEM Kids 25 0.00%

3 Group-buying OEM Gynecology 19 0.00%

4 Group-buying OEM Cold 27 0.00%

5 Group-buying OEM Personal care 23 0.00%

6 Group-buying OEM Family health 1754 0.30%

7 Group-buying OEM Anti-infection 117 0.02%

8 Group-buying OEM Anti-allergic&antidinic 35 0.01%

9 Group-buying OEM Clearing heat and detoxitating 160 0.03%

10 Group-buying OEM External use drugs 137 0.02%

11 Group-buying OEM Five sense organs drugs 162 0.03%

12 Group-buying OEM Chinese herbal pieces 1515 0.26%

Total 5745.35 0.99%

II. Main business analysis

Found more in I. Introduction in Discussion and Analysis of Business

Y-o-y changes of main financial data

In RMB

Current period Same period of last year Y-o-y increase/decrease Reasons for changes

Operating revenue 20779166699.67 20524807669.57 1.24% No major changes

Operating costs 18367643723.84 18364034450.83 0.02% No major changes

Sales expenses 1273588756.07 1110446938.17 14.69% No major changes

Administration expenses 351820063.78 340636051.11 3.28% No major changes

Finance expenses 57541544.32 44498778.76 29.31% No major changes

Income tax expenses 164486734.32 160041107.63 2.78% No major changes

R&D input 0.00 0.00 0.00% No major changes

Net cash flow arising

from operating activities

225357709.20 228337431.40 -1.30% No major changes

Net cash flow arising

from investment

activities

-18211602.74 -92279892.06 80.26%

Increased 80.26% on a y-

o-y basis mainly because

medical industry fund

subscription at same

period of last year while

no such amount occurred

in the period

Net cash flow arising

from financing activities

-288243874.04 -262782332.86 -9.69% No major changes

Net increase of cash and

cash equivalent

-80782904.11 -126724793.52 36.25%

Increased 36.25% on a y-

o-y basis mainly because

the net cash flow arising

from investment

activities increased from

a year earlier

Major changes on profit composition or profit resources in reporting period

□ Applicable √ Not applicable

No major changes on profit composition or profit resources occurred in reporting period.

Constitution of main business

In RMB

Operating

revenue

Operating cost Gross profit ratio

Increase or

decrease of

operating revenue

over same period

of last year

Increase or

decrease of

operating cost

over same period

of last year

Increase or

decrease of gross

profit ratio over

same period of

last year

According to industries

Pharmaceutical

wholesale

15430407519.0

14487704805.4

6.11% -0.69% -1.53% 0.81%

Pharmaceutical

retail

5153485000.11 3856696974.63 25.16% 6.99% 6.25% 0.52%

Logistics and

warehousing

services

15527964.86 9313229.39 40.02% 14.36% 21.97% -3.75%

Leasing and other 179746215.65 13928714.41 92.25% 14.36% 3.54% 0.81%

According to products

Drugs

19730368030.4

17408684324.8

11.77% 0.61% -1.34% 1.75%

Apparatus 922013116.87 864692352.96 6.22% 68.50% 70.15% -0.91%

Other 126785552.38 94267046.00 25.65% -65.39% -55.16% -16.97%

According to region

Internal revenue 20779166699.6 18367643723.8 11.61% 1.24% 0.02% 1.08%

7 4

III. Analysis of non-main business

□ Applicable √ Not applicable

IV. Assets and liability

1. Major changes of assets composition

In RMB

End of current period End of last period

Ratio

changes

Notes of major changes

Amount

Ratio in total

assets

Amount

Ratio in total

assets

Monetary fund

3943595560.

16.42%

4191655438.

18.76% -2.34% No major changes

Account

receivable

9441542367.

39.32%

7589412679.

33.97% 5.35% No major changes

Inventory

4245354625.

17.68%

3781858238.

16.93% 0.75% No major changes

Investment

property

149409723.7

0.62% 153678339.11 0.69% -0.07% No major changes

Long-term equity

investment

1756735242.

7.32%

1650619373.

7.39% -0.07% No major changes

Fix assets

550102564.2

2.29% 551710434.02 2.47% -0.18% No major changes

Construction in

process

30805874.11 0.13% 22947258.99 0.10% 0.03%

Mainly due to the ERP system update

from Guoda Drugstore

Short-term loans

2051139651.

8.54%

1561354521.

6.99% 1.55%

Mainly by increase of short-term loans

of Holding Guangzhou

Long-term loans 31600000.00 0.13% 31600000.00 0.14% -0.01% No major changes

2. Assets and liability measured by fair value

√Applicable □Not applicable

In RMB

Item

Opening

amount

Gain/loss of

changes in fair

value in the

period

Cumulative fair

value changes

reckoned into

equity

Impairment

accrual in the

period

Amount

purchased in

the period

Amount for

sold in the

period

Ending amount

Financial assets

3. Financial

assets available

for sale

13685760.00 13685760.00

Total 13685760.00 13685760.00

Financial

liability

0.00 0.00

Whether the main asset measurement attributes has major changes in the period

√Yes □No

Reasons for major changes in the measurement attributes of the Company’s prime assets during the reporting

period and the impact on its operating results and financial status

According to the Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of

Financial Instruments and the Accounting Standards for Business Enterprises No. 37 - Presentation of FinancialInstruments the board of directors of the Company decided to adopt the “financial assets measured at fair valuethrough other comprehensive income ” to confirm this part of the assets.This change had no impact on the Company’s operating results and financial status.

3. Assets right restriction till end of reporting period

Nil

V. Investment

1. Overall situation

During the reporting period the Company paid cash to acquire Sinopharm Holding Guangzhou Huadu Co. Ltd.

(70% shareholding) to achieve the business mergers under non-identical control. The Company has newly

established three-level subsidiaries including Sinopharm Holding Foshan Supply Chain of Medical Consumables

Co. Ltd. (70% shareholding) Sinopharm Holding Supplier Chain Service (Guangxi) Co. Ltd. (30.6%

shareholding) and Sinopharm Holding Baiyi Drugstore Guangxi Co. Ltd. (51% shareholding) the Company also

has newly established four-level subsidiary Shanghai Guoda Pharmacy Co. Ltd. (51% shareholding). For specific

investment please refer to Notes (VIII) of the financial report.

2. The major equity investment obtained in the reporting period

□ Applicable √ Not applicable

3. The major non-equity investment doing in the reporting period

□ Applicable √ Not applicable

4. Financial assets investment

(1) Securities investment

□ Applicable √ Not applicable

The Company had no securities investment in the reporting period.

(2) Derivative investment

□ Applicable √ Not applicable

The Company has no derivatives investment in the Period

VI. Sales of major assets and equity

1. Sales of major assets

□ Applicable √ Not applicable

There are no major assets sell in the period

2. Sales of major equity

□ Applicable √ Not applicable

VII. Analysis of main holding Company and stock-jointly companies

√Applicable □ Not applicable

Particular about main subsidiaries and stock-jointly companies net profit over 10%

In RMB

Company

name

Type Main business

capital

Total assets Net Assets

Operating

revenue

Operating

profit

Net profit

Sinopharm

Holding

Guoda

Drugstore

Co. Ltd.

Subsidiar

Retail and

distribution in

respect of

pharmaceutical

products and

medical apparatus

and instruments

wholesale and

retails of health

products

101000000

0.00

560547861

8.09

209835400

6.83

514360163

6.87

23039341

7.53

172985004.03

Sinopharm

Holding

Guangzhou

Co. Ltd.

Subsidiar

Chinese traditional

patent medicine

chemical

preparations

antibiotics bio-

chemical

medicine

biological

medicine

diagnosis

medicine

biological

medicine with

features of

treatment and

diagnosis shaped

packing food

chemical products

and various

commodity and

technique hold by

self-support and

agency as well as

import & export of

technology

153000000

0.00

633998812

3.82

178738330

9.36

731443969

7.76

98350491

.87

72732408.60

Sinopharm Subsidiar Sales of drugs 500000000. 250418878 727501084. 207675981 76022896 65903710.92

Holding

Guangxi Co.Ltd.y medical apparatus

and instruments

freightage storage

loading and

unloading glass

wares cosmetics

and daily

merchandise;

other business

services other

professional

consultation

various goods

agency and for

self-operation

import & export of

technology houses

leasing

00 6.77 72 4.93 .58

Particular about subsidiaries obtained or disposed in report period

√Applicable □ Not applicable

Company

The method of obtaining and handling

subsidiaries during the report period

The influence to the whole production and

performance

Shanghai Guoda Pharmacy Co. Ltd. Establishment

Expand local medicine retail business

layout and without major influence on

performance of the Company

Sinopharm Holding Foshan Supply Chain

of Medical Consumables Co. Ltd.

Establishment

Further expand the distribution business

for equipment consumables and without

major influence on performance of the

Company

Sinopharm Holding Guangzhou Huadu

Co. Ltd.

Acquisition

Further consolidated the pharmaceutical

distribution business in Guangxi &

Guangdong and without major influence

on performance of the Company

Sinopharm Holding Supplier Chain Sercice

(Guangxi) Co. Ltd.

Establishment

Further expand distribution business and

without major influence on performance of

the Company

Sinopharm Holding Baiyi Drugstore

Guangxi Co. Ltd.

Establishment

Expand local medicine retail business

layout and without major influence on

performance of the Company

Tangshan Le Ren Tang Drugstore Chain

Co. Ltd.

De-registration

Compressed the management hierarchy

and without major influence on

performance of the Company

Notes of main holding Company and stock-jointly companies

VIII. Structured vehicle controlled by the Company

□ Applicable √ Not applicable

IX. Prediction of business performance from January – September 2018

Estimation on accumulative net profit from the beginning of the year to the end of next report period to be loss probably or the

warning of its material change compared with the corresponding period of the last year and explanation on reason

□ Applicable √ Not applicable

X. Risks and countermeasures

1. The management risks in sustainable expansion of marketing network of Guoda Drugstore

The marketing network of Guoda Drugstore has maintained stable growth trend in recent years through newly

opened stores and extended mergers. The expansion of sales area and increase of stores have brought pressure on

the site selection distribution cash management marketing and human resource management of the stores of

Guoda Drugstore. The Company will strengthen the management and construction in merchandise procurement

logistics and distribution marketing and other links and establish corresponding management methods for each

link so as to ensure the unified standards and management quality for store expansion.

2. Risks of intensifying market competition

At present the market concentration ratio of domestic pharmaceutical retail market industry is relatively low and

the national and regional pharmaceutical retail enterprises have fierce market competition. As the country

continues to introduce corresponding policies to encourage the integration of pharmaceutical retail industry the

major pharmaceutical retail enterprises in the industry have accelerated the pace of mergers and acquisitions and

continued to expand the marketing networks improve the logistics center constructions and innovate the business

and profit models so that the sales scale and comprehensive strength continuously strengthen. At the same time

with the upgrading of consumption and the gradual opening of market the foreign pharmaceutical distribution

enterprises with powerful strength are entering the domestic pharmaceutical distribution markets through a variety

of ways so the industry competition is further intensifying. Sinopharm Accord will integrate the existing

resources create a two-wheel drive development model with integration of both wholesale and retail deeply give

full play to synergistic effect directly face the end patients and consumers by varieties complementation capital

cooperation supply chain collaboration internationalization promotion and other measures and achieve brand

globalization through capital operation.

3. Risks of changes in industry policy

The development of pharmaceutical retail industry is regulated and influenced by the relevant national policies.The state has promulgated a series of documents such as Good Supply Practice and Control System for

Prescription Drug and Over-The-Counter Drug (Pilot) which put forward specific requirements to the industry

operation. Along with the gradual increase of management standards for management standard the regulations are

constantly being revised and improved and put forward higher requirements to the business operations. In addition

since the promotion and implementation of the new medical reform in 2009 the state has implemented the

essential medicine system public hospital reform and drug centralized procurement bidding system throughout

the country and repeatedly introduced policies to reduce the drug retail price ceiling in order to reduce the burden

of drug use. If the policies introduced in the process of implementing new medical reform impose restrictions on

the industrial development and the product price of retail drug stores the operation and profitability of Guoda

Drugstore may have to face some challenges.

4. Risks of facing the horizontal competition

In the pharmaceutical retail field Sinopharm Group’s affiliated distribution subsidiaries have also opened some

social retail pharmacies which constitute a certain degree of horizontal competition with the subordinate Guoda

Drugstore. Sinopharm Group and Sinopharm have pledged to take effective measures to resolve the possible

horizontal competition.

5. Risk of goodwill impairments

On June 30 2018 the book value of goodwill in the Group’s consolidated financial statements was RMB

830729152.75 and was allocated to the asset groups of distribution branches and retail branches. The Group

conducts impairment test on goodwill annually in accordance with the provisions of the Accounting Standards for

Business Enterprises. Disclosures relating to the impairments of goodwill are set out in Notes V. 22 and 32 and

Notes VII. 27 of the financial statements

Section V. Important Events

I. In the report period the Company held annual shareholders’ general meeting and

extraordinary shareholders’ general meeting

1. Shareholders’ General Meeting in the report period

Session of meeting Type

Ratio of investor

participation

Date Date of disclosure Index of disclosure

Annual General

Meeting of 2017

AGM 63.00% 2018-04-17 2018-04-18

Juchao Website—

(http://www.cninfo.com.cn) “ResolutionNotice of AGM of

2017 No.: 2018-32

First extraordinary

general meeting of

2018

Extraordinary

general meeting

62.98% 2018-06-15 2018-06-16

Juchao Website—

(http://www.cninfo.com.cn) “ResolutionNotice of First

extraordinary general

meeting of 2018 No.:

2. Request for extraordinary general meeting by preferred stockholders whose voting rights restore

□ Applicable √ Not applicable

II. Profit distribution plan and capitalizing of common reserves plan for the Period

□ Applicable √ Not applicable

The Company has no plans of cash dividend distributed no bonus shares and has no share converted from capital reserve either for

the semi-annual year.III. Commitments completed in Period and those without completed till end of the Period from actual

controller shareholders related parties purchaser and companies

√Applicable □ Not applicable

Commitm

ents

Promise

Type of

commitme

nts

Content of commitments

Commitm

ent date

Commitm

ent term

Implement

ation

Commitm

ents in

report of

acquisition

or equity

change

Sinopharm

Group

Co. Ltd

Commitm

ent of

shareholde

As a large pharmaceutical commercial enterprise whose business

involves pharmaceutical wholesale and retail Sinopharm Holding

may overlap with the Company in geographical segmentation

during its future business development. To avoid the potential

peer competition brought by such geographical overlap

Sinopharm Holding undertakes that upon the transfer of shares ofSinopharm Holding Guangzhou it held to Accord Pharma “1. itwill not newly-establish or broaden within Guangdong any

business operation that actually compete with that of Accord

2005-06-

Long-term

effective

Normally

implement

ing

Pharma or set up any new subsidiaries or subordinate enterprises

who engage in such business. 2. It will enter into business

delineation with Accord Pharma and Sinopharm Holding

Guangzhou thereby giving the three parties clear geographical

areas to carry out pharmaceutical wholesale and retail businesses

so as to avoid potential peer competition. Apart from above

Sinopharm Holding will no longer newly-establish any enterprise

that may compete with Accord Pharma in the production and

R&D of pharmaceutical products.”"

Commitm

ents in

assets

reorganiza

tion

Sinopharm

Group

Co.

Ltd;China

National

Pharmace

utical

Foreign

Trade

Corporatio

Commitm

ent on

restricted

shares“Sinopharm Group and Sinopharm Foreign Trade madecommitments in the Report about China National Accord

Medicines Corporation Ltd. Purchasing Assets and Raising

Supporting Funds and Related Transactions by Asset Sale Stock

Issuance and Cash Payment that the non-public offering of shares

of Sinopharm Accord obtained from this transaction shall not be

transferred within 36 months since the finish date of issuance and

shall be unlocked after 36 months since the date of listing. Within

6 months after the completion of this transaction if the closing

price of the stock of Sinopharm Accord is less than the issue price

in continuous 20 trading days or the closing price at the end of 6

months after the completion of this transaction is less than the

issue price the lockup period of the stock of Sinopharm Group

and Sinopharm Foreign Trade obtained from Sinopharm Accord

by this transaction will automatically prolong at least 6 months.The shares derived from stock dividends allocation and capital

reserve increase transferring of Sinopharm Accord based on the

non-public offering of shares of Sinopharm Accord obtained by

this transaction should also abide by the above stock restrictedarrangements.”

2016-05-

36 months

Normally

implement

ing

Ping’an

Assets

Managem

ent Co.Ltd

Commitm

ent on

restricted

"Ping An Asset Management Co. Ltd. made commitments in the

Report about China National Accord Medicines Corporation Ltd.Purchasing Assets and Raising Supporting Funds and Related

Transactions by Asset Sale Stock Issuance and Cash Payment

that the non-public offering of shares of Sinopharm Accord

obtained from this transaction shall not be transferred within 36

months since the finish date of issuance and shall be unlocked

after 36 months since the date of listing. After placement

completed the shares of the listed Company increased due to

bonus shares and turning to increase capital should pursuit to the

restriction arrangement the above mentioned.

2016-05-

36 months

Normally

implement

ing

Sinopharm

Group

Co. Ltd

Performan

commitme

nt and

compensat

ion

arrangeme

nt“Sinopharm Group made commitments in the Report about ChinaNational Accord Medicines Corporation Ltd. Purchasing Assets

and Raising Supporting Funds and Related Transactions by Asset

Sale Stock Issuance and Cash Payment that the 2016 annual net

profits of Foshan Nanhai Guangdong Uptodate & Special

Medicines and Guoda Drug Store should respectively be no less

than RMB 47385600.00 RMB 19167000.00 and RMB

98466100.00 while the 2017 annual net profits should

respectively be no less than RMB 49394500.00 RMB

20209700.00 and RMB 11099890.00 and the 2018 annual net

profits should respectively be no less than RMB 51148200.00

RMB 21330100.00 and RMB 131275500.00. Net profit refers

to the lower one between the after-tax net profit attributable to the

owners of parent Company planning to invest in the target

Company and the net profit attributable to the owners of parent

Company after deducting the non-recurring gains and losses. If

2016-05-

2018-12-

Normally

implement

ing

the actual net profit of the target Company doesn’t reach the

committed net profit Sinopharm Group will need to compensate

according to the stipulations of the "Profit Forecast Compensation

Agreement for the Stock Issuance and Assets Purchase.”

China

National

Pharmace

utical

Foreign

Trade

Corporatio

Performan

commitme

nt and

compensat

ion

arrangeme

Sinopharm Foreign Trade made commitments in the Report about

China National Accord Medicines Corporation Ltd. Purchasing

Assets and Raising Supporting Funds and Related Transactions

by Asset Sale Stock Issuance and Cash Payment that the 2016

annual net profits of Southern Pharmaceutical Foreign Trade

should be no less than RMB 39880700 while the 2017 annual

net profits should be no less than RMB 47323200 and should

not less than RMB 55364600 in 2018. Net profit refers to the

lower one between the after-tax net profit attributable to the

owners of parent Company planning to invest in the target

Company and the net profit attributable to the owners of parent

Company after deducting the non-recurring gains and losses. If

the actual net profit of the Southern Pharmaceutical Foreign

Trade doesn’t reach the committed net profit Sinopharm Foreign

Trade will need to compensate according to the stipulations of the

"Profit Forecast Compensation Agreement for the Stock Issuanceand Assets Purchase.”

2016-05-

2018-12-

Normally

implement

ing

Jiancheng;

Fu Yuequn

Chaoqun;

Guo

Shu’er;

Huang

Qiufang;

Hongbing;

Liao Zhi;

Lin

Wanqun;

SunWei;

Zhang

Zhaohua;

Zhang

Zhaotang

Performan

commitme

nt and

compensat

ion

arrangeme

“Fu Yuequn and other 10 natural person made commitments inthe Report about China National Accord Medicines Corporation

Ltd. Purchasing Assets and Raising Supporting Funds and

Related Transactions by Asset Sale Stock Issuance and Cash

Payment that the 2016 annual net profits of Southern

Pharmaceutical Foreign Trade should be no less than RMB

39880700 while the 2017 annual net profits should be no less

than RMB 47323200 and should not less than RMB 55364600

in 2018. Net profit refers to the lower one between the after-tax

net profit attributable to the owners of parent Company planning

to invest in the target Company and the net profit attributable to

the owners of parent Company after deducting the non-recurring

gains and losses. If the actual net profit of the Southern

Pharmaceutical Foreign Trade doesn’t reach the committed net

profit Fu Yuequn and other 10 natural person will need to

compensate according to the stipulations of the "Profit Forecast

Compensation Agreement for the Stock Issuance and AssetsPurchase.”

2016-05-

2018-12-

Normally

implement

ing

China

National

Accord

Medicines

Corporatio

n Ltd.Performan

commitme

nt and

compensat

ion

arrangeme

nt“Sinopharm Accord made commitments in the Report about

China National Accord Medicines Corporation Ltd. Purchasing

Assets and Raising Supporting Funds and Related Transactions

by Asset Sale Stock Issuance and Cash Payment that the net

profits attributable to the owners of parent Company after

deducting the non-recurring gains and losses committed by

Zhijun Pharmaceutical in 2016 2017 and 2018 should be

respectively no less than RMB 222671700.00 RMB

232561600.00 and RMB 241878700.00; the net profits

attributable to the owners of parent Company after deducting the

non-recurring gains and losses committed by Zhijun Pharmacy

Trade in 2016 2017 and 2018 should be respectively no less than

RMB 2379600.00 RMB 2335100.00 and RMB 2345600.00;

the net profits attributable to the owners of parent Company after

deducting the non-recurring gains and losses committed by

Pingshan Pharmaceutical in 2016 2017 and 2018 should be

respectively no less than RMB 39716300.00 RMB

43033500.00 and RMB 50325500.00. If the actual net profits

attributable to the owners of parent Company after deducting the

non-recurring gains and losses of Zhijun Pharmaceutical / Zhijun

Pharmacy Trade / Pingshan Pharmaceutical don’t reach the

committed net profits attributable to the owners of parent

Company after deducting the non-recurring gains and losses

Sinopharm Accord should compensate in accordance with the

stipulations of the Profit Forecast Compensation Agreement for

2016-05-

2018-12-

Normally

implement

ing

31the Stock Issuance and Assets Purchase.”

China

National

Accord

Medicines

Corporatio

n Ltd.;

Sinopharm

Group

Co.

Ltd;Sinop

harm

Other

commitme

nts“The listed Company controlling shareholders the actualcontrollers made commitments in the Report about China

National Accord Medicines Corporation Ltd. Purchasing Assets

and Raising Supporting Funds and Related Transactions by Asset

Sale Stock Issuance and Cash Payment that the Company shall

not violate the relevant regulations of Article 16 in Securities

Issuance and Underwriting Management Approach and directly

or indirectly providing financial assistance or compensation for

the subscription objects and its shareholders / partners / clients (if

any) of this non-public offering does not exist and will not occurin the future.”

2016-05-

Long-term

effective

Normally

implement

ing

Ping’an

Assets

Managem

ent Co.Ltd

Other

commitme

nts“Ping An Asset Management Co. Ltd. has made commitmentsthat the unit intends to utilize Ping An Asset Xinxiang No.3 asset

management product and Ping An Asset Xinxiang No.7 asset

management product to fund and subscribe some non-public

offering of shares of Sinopharm Accord in this major asset

restructuring process and has the ability to subscribe the shares

the relevant capital sources are legitimate there is no hierarchical

income and other structured arrangements and there is no use of

leveraged funds. The unit does not receive financial assistance or

compensation from Sinopharm Accord and its controlling

shareholders or the actual controllers. The investors’ structure of

above-mentioned products does not change from the issue date of

the commitment letter to the end date of the lockup period of thestock that the unit subscribes from Sinopharm Accord.”

2016-03-

Long-term

effective

Normally

implement

ing

China

National

Pharmace

utical

Group

Corporatio

Increase

holding

commitme

nt“Sinopharm made commitments in the Report about ChinaNational Accord Medicines Corporation Ltd. Purchasing Assets

and Raising Supporting Funds and Related Transactions by Asset

Sale Stock Issuance and Cash Payment that 1. if the stock

intraday price of Sinopharm Accord on any trading day of the 30

trading days after the listing of newly increased shares in this

transaction is less than the issue price of newly increased shares

in this transaction Sinopharm will accumulatively invest no more

than RMB 150 million in these 30 trading days to increase the

holding by the stock trading system of the Shenzhen Stock

Exchange (this increase of holding) until the earlier one of below

two situations occurs: (1) the above-mentioned funds are use up;

(2) the intraday price of Sinopharm Accord is no less than the

issue price of newly increased shares in this transaction. 2.Sinopharm shall not sell the shares obtained from this increase ofholding within 3 years after the end of this increase of holding.”

2017-01-

Three

years from

the end of

increase

holding (if

applicable

)

There is

no need

for actual

controllers

to increase

holdings

Sinopharm

Group

Co. Ltd

Commitm

ents on

horizontal

competitio

n relation

transaction

and capital

occupation“Sinopharm Group made commitments in the Report about ChinaNational Accord Medicines Corporation Ltd. Purchasing Assets

and Raising Supporting Funds and Related Transactions by Asset

Sale Stock Issuance and Cash Payment that the Company shall

be the controlling shareholder of China National Accord

Medicines Corporation Ltd. (hereinafter referred to as Sinopharm

Accord) up to the issue date of this commitment letter after the

completion of this major assets reorganization (hereinafter

referred to as “this reorganization”) Sinopharm Accord shall no

longer hold shares or operate relevant businesses of

pharmaceutical industry the main business will become the

national pharmaceutical retail and pharmaceutical distribution

business in Guangdong and Guangxi. In order to support the

business development of Sinopharm Accord and avoid horizontal

competition with Sinopharm Accord and its controlling

enterprises the Company made following irrevocable

commitments and promises:1 after the completion of this

reorganization as for the social retail drugstore assets except for

Sinopharm Holding Guoda Drugstore Co. Ltd. and its

subsidiaries and branches owned or controlled by the Company

the Company promised to take appropriate measures to solve the

horizontal competition problem in the pharmaceutical retail

business between the Company and Sinopharm Accord within 5

2016-12-

Long-term

effective

Normally

implement

ing

years since the completion date of this reorganization. 2. The

Company's way of resolving horizontal competition problems

includes and is not limited to purchasing the social retail

drugstore assets subordinated to the Company by Sinopharm

Accord taking the entrusted operation leasing or contracting

operation by Sinopharm Accord and its controlling enterprises in

accordance with the methods permitted bu national laws to hold

or control the social retail drugstore assets or transferring the

controlling stake of the social retail drugstore assets by the

Company. 3. If the shareholders of the social retail drugstore

assets (hereinafter referred to as "the third party") of the

Company or the enterprises controlled by the Company have or

are going to perform the preemptive rights under the same

conditions in accordance with relevant laws and corresponding

Articles of Association then the above commitment will not be

applicable but in this case the Company should try its utmost to

urge the third party to waive its preemptive rights. If the

Company is unable to urge the third party to give up the

preemptive rights the Company will urge the enterprises

controlled by the Company to transfer the social retail drugstore

assets to the third party to solve the horizontal competition

problem. 4. The pharmaceutical distribution assets currently

owned or controlled by the Company are distributed outside

Guangdong and Guangxi regions there is no horizontal

competition with Sinopharm Accord the Company will not

engage in the same or similar operation businesses to Sinopharm

Accord in Guangdong and Guangxi in the future if the Company

and its holding enterprises obtain the new business opportunities

constituting substantial horizontal competition (hereinafter

referred to as competitive new business) within the

pharmaceutical distribution business scope of Sinopharm Accord

in Guangdong and Guangxi the Company will send written

notice to Sinopharm Accord and try its utmost to firstly provide

the new business opportunities to Sinopharm Accord or its

holding enterprises according to the reasonable and fair terms and

conditions so as to avoid the horizontal competition with

Sinopharm Accord and its holding enterprises. 5. Since the issue

date of this commitment letter the Company promises to

indemnify Sinopharm Accord for all actual losses damages and

expenses caused by the Company in violation of any

commitments under this commitment letter. 6. This commitment

letter terminates when following circumstances occur (subject to

the earlier one): (1) the Company is no longer the controlling

shareholder of Sinopharm Accord; or (2) the shares of Sinopharm

Accord terminate the listing at the stock exchange.”

China

National

Pharmace

utical

Group

Corporatio

Commitm

ents on

horizontal

competitio

n relation

transaction

and capital

occupation“Sinopharm made commitments in the Report about ChinaNational Accord Medicines Corporation Ltd. Purchasing Assets

and Raising Supporting Funds and Related Transactions by Asset

Sale Stock Issuance and Cash Payment that the Company shall

be the actual controller of China National Accord Medicines

Corporation Ltd. (hereinafter referred to as Sinopharm Accord)

up to the issue date of this commitment letter after the

completion of this major assets reorganization (hereinafter

referred to as “this reorganization”) Sinopharm Accord shall no

longer hold shares or operate relevant businesses of

pharmaceutical industry the main business will become the

national pharmaceutical retail and pharmaceutical distribution

business in Guangdong and Guangxi. In order to support the

business development of Sinopharm Accord and avoid horizontal

competition with Sinopharm Accord and its controlling

enterprises the Company made following irrevocable

commitments and promises:1 after the completion of this

reorganization as for the social retail drugstore assets except for

Sinopharm Group Guoda Pharmacy Co. Ltd. and its subsidiaries

and branches owned or controlled by the Company the Company

promised to take appropriate measures to solve the horizontal

2016-12-

Long-term

effective

Normally

implement

ing

competition problem in the pharmaceutical retail business

between the Company and Sinopharm Accord within 5 years

since the completion date of this reorganization. 2. The