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R&D innovation is an important driving force for the long-term development of an enterprise. We have always prioritized and increased R&D investment. In 2021, the total R&D expenditure reached approximately HK$ 2,070.6 million, a year-on-year increase of 38.3%.

Guided by industry development and market demand, we enhance core competitive edges through developing generic drugs and innovative drugs, with a focus on cardiovascular system, respiratory system, anti-tumor, digestive tract and metabolism, central nervous system, immune system, anti-infection, blood, urogenital systems and other R&D areas.

By the end of 2021, we had possessed three nationally certified engineering research centers, four nationally certified enterprise technology centers, and 20 provincial and municipal-level certified research centers, as well as post-doctoral research stations with nearly 1,300 R&D personnel.

By December 31, 2021, we had possessed more than 260 research projects, including more than 70 new drug projects, mainly involving such fields as tumor and immunity, metabolism and endocrinology, respiratory system, blood, cardiovascular, and classic TCM prescription. Intravenous immunoglobulin (10%) and the NIP142, a Class I new drug for non-small cell lung cancer, were approved for clinical trials, of which the approval of clinical trials for NIP142 marked an important milestone in the R&D of the Company's oncology pipeline; 23 products, including tenofovir alafenamide tablets, ibuprofen suspension, urapidil hydrochloride injection, and apremilast tablets, were submitted to the National Medical Products Administration for manufacturing registration applications. In addition, ten products have obtained manufacturing approvals issued by the National Medical Products Administration, including tracer mitoxantrone hydrochloride injection for tracing, medium and long chain fat emulsion injection, linezolid tablets, moxifloxacin hydrochloride ophthalmic solution, dienogest tablets, amlodipine besylate and atorvastatin calcium tablets, and sildenafil citrate tablets, which further enriched our product portfolios.

By December 31, 2021, we had made significant progress in the R&D of several innovative Class I small molecule chemical drugs. NIP142 for non-small cell lung cancer was approved for clinical trials, and the Phase I clinical trials were launched. Currently, NIP142 has been at the forefront of the development progress of similar targets in China, with the potential to be the best among the class. NIP292 for idiopathic pulmonary fibrosis is the second oral ROCK inhibitor in the world to enter clinical research and its global intellectual property right belongs to the Company. NIP292 was certified as an orphan drug by the U.S. FDA, and the project was selected as "National Major Science and Technology Project" and "Beijing Medical and Health Key Innovation and R&D Project". By 2021, the Phase I clinical trials of the single arising dose had been completed with good test results. NIP046 is designed for a variety of autoimmune diseases, with a development progress ahead of that of similar targets in China. The Phase I clinical trials of the single arising dose are on the verge of completion with sound safety and tolerance.

We attach great importance to and coordinately promote the quality and efficacy consistency evaluation for generic drugs. By December 31, 2021, 64 special projects for consistency evaluation had been carried out, and more than 30 projects had been carried out for bioequivalence clinical trials. Specifically, mannitol sodium chloride injection, allopurinol tablets, folic acid tablets, levonorgestrel ttablets/levonorgestrel and other varieties had been declared. Eight products had passed the consistency evaluation, including nifedipine sustained-release tablets (II), irbesartan dispersible tablets, sodium valproate tablets, fluconazole sodium chloride injection, and enalapril maleate tablets. Among them, irbesartan dispersible tablets and zopiclone tablets are the first ones to pass the evaluation in China.