Shanghai Pharma Unveils Stock Incentive Plans to Accelerate Global Ambition

SHANGHAI, April 15, 2019 /PRNewswire/ -- Shanghai Pharmaceuticals Holdings Co. Ltd. (Shanghai Pharma or "the Company") (601607.SH) (2067.HK), a major Chinese pharmaceutical group, has unveiled stock option incentive plans in a milestone move designed to accelerate restructuring and boost global competitiveness. The Company's historic steps to motivate senior executives using market incentives comes at a time when China's pharmaceutical industry is undergoing seismic shifts, forcing drug makers to step up reforms in the face of competition.

Under Shanghai Pharma's proposed incentive scheme, 28.42 million Chinese A-share options would be granted to eight senior executives and 207 mid-level managers and key employees at a price of RMB 21.54 each. The plan is expected to propel Shanghai Pharma toward its goal of becoming one of the world's top pharmaceutical companies.

For participants, the scheme will "fully encourage the recipients' initiative and creativity, and effectively align their interests with the Company's long-term development," said Chairman Jun Zhou of Shanghai Pharma. "Incentive plans will further optimize corporate governance, prevent the loss of talent, and make the Company's development sustainable."

The scheme would give a boost to Shanghai Pharma's plan to transform itself into a globally-oriented, innovative drug maker and distributor.

In 2018, the company's manufacturing business jumped 30%, and for the first time generated over RMB 1 billion in revenue from a single product. In the distribution segment, Shanghai Pharma's sales ranked second in the industry, aided by the company's leading positions in imports and innovative businesses.

Shanghai Pharma is stepping up investment in R&D and innovative business in a bid to move up the industry value chain, aiming to gradually move from generic drugs to novel drugs, and from providing merely logistic services to establishing a nationally-integrated technology-driven health services platform with international competitiveness.

In 2018, the company's R&D expenses jumped 34.2% from the previous year earlier to RMB 1.061 billion, equivalent to 5.5% of manufacturing revenue. Total R&D investment, including capital expenditure on construction and fixed assets, amounted to RMB 1.4 billion.

To enhance global competitiveness, Shanghai Pharma has set up R&D centers in the United States for the development of novel and high-end generic drugs and has launched in-depth cooperation with world-class scientists.

Shanghai Pharma is also steadily increasing R&D investments aimed at consistency evaluations to fully take advantage of the newly-regulated market and provide high-quality pharmaceutical alternatives to patients. It has built a long list of novel drugs in its pipeline that are undergoing clinical trials.

In distribution, Shanghai Pharma has accelerated its building of a national network through mergers and acquisitions and is steadily improving hospital coverage and operating quality.

Shanghai Pharma's stock incentive plan will help maximize shareholder value and give a boost to the company's ambition to become a leading player in the global pharmaceutical industry.

About Shanghai Pharmaceuticals Holdings Co. Ltd.

Shanghai Pharmaceuticals Holdings Co. Ltd. (SPH) (601607.SH) (2067.HK) is a vertically-integrated and diversified pharmaceutical group that provides leading health care services from R&D, manufacturing, distribution and retail that recorded annual revenue of US$24.03bn in 2018. SPH is one of the few listed pharmaceutical companies with a leading position in both manufacturing and distribution in China. It is included in the constituent stocks of both the SSE 180 and CSI 300 indices and has also been selected into the Hang Seng Composite Index and MSCI.

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