March 2020

Annua l Resu l t s

2019

All for Health

Health for All

Contents

Chapter 3 Business Highlights and Future Strategies

Chapter 1 Annual Results Review

Chapter 2 Macro Economy and Industrial Policies

Q & A

Annual Results Review

Coordinated Development and Rapid Growth of Three Principal Businesses

78.18%

4.59%

16.06%1.17% Pharmaceutical Distribution

Pharmaceutical RetailMedical DevicesOthers

2019

Net Profit Operating Cash Flow

80.41%

4.24%

14.16% 1.19%

2018

Business Revenue

Percentage of Business Revenue

23.44% 413.91%

Unit: RMB (million)

344,525.82425,272.73

2018 2019

9,404.48

10,620.07

2018 2019

12.93%

3,653.74

18,777.10

2018 2019

RMB (million) 2019 2018 Change

Gross margin 8.83% 9.06% -0.23 p.pNet profit margin 2.50% 2.73% -0.23 p.pProfit margin attributable to equity holders 1.47% 1.69% -0.22 p.pEPS 2.11 1.97 7.11 %

Sale and administrative expenses ratio 4.58% 4.61% -0.03 p.pFinance costs ratio 0.74% 0.81% -0.07 p.pTotal expenses ratio 5.32% 5.42% -0.10 p.p

Trade receivables turnover days 98 99 -1Inventory turnover days 36 38 -2Trade payables turnover days 85 90 -5Cash collection days 49 47 2

Net cash from operating activities 18,777.10 3,653.74 15,123.36 Net cash from investing activities -6,795.97 -5,907.62 -888.35 Net cash from financing activities -13,084.57 10,318.52 -23,403.09

Closing gearing ratio 71.49% 71.04% 0.45 p.pCapital expenditure 4,867.89 3,865.87 25.92 %

Key Profitability Indicators and Operating Indicators

Macro Economy and Industrial

Policies

In 2019, China’s economy entered a stage of structuraltransformation and upgrade. The general slowdown in thegrowth of the global economy and international trade, andthe gradual escalation of China-US trade friction haveaffected China’s “three drivers” of the economic growth,i.e. consumption, investment, and net exports.

China’s economy continued to develop healthily with gradual progress of industrial structure adjustment and remarkable results of transformation and upgrade. China’s

GDP maintained a steady growth of more than 6% in 2019.

Faced with practical issues of structural transformation of the

industries and slowing growth of economy.

Stable macro economy with transformation of economic structure

Ongoing pharmaceutical reform with intensive

transformation of distribution industry

Pharmaceutical distribution industry underwent intensive transformation, further underscoring the

competitive advantages of leading enterprises

Medical demand for wholesale-retail integration and integrated medicine and medical devices

increased, promoting business optimization and high-quality development of distribution enterprises

Concentration of the

pharmaceutical distribution

industry heightened,

accelerating elimination of in-

competent players;

Structure of pharmaceutical

distribution business continued

to improve to achieve

reasonable allocation of

resources;

Market demand transformed

and upgraded, bringing

development opportunities for

distribution companies.

Expansion and second round of

bidding of “Centralized Drug

Procurement”

“Diagnosis-Related Groups

(DRGs)”

“Centralized Procurement of

Medical Devices”

“2019 Negotiation for the

Medical Insurance Catalog”

Reform pharmaceutical

industry’s pricing mechanism

Optimize the medical

insurance payment structure

Improve the health-care

security system

Enhance the ability of ensuring

provision of basic medical

products

Policy Analysis Policy ImpactsIndustry Policies

Business Highlights and

Future Strategies

Seized the historical opportunity of structural reform in the distribution industry to comprehensively improve the

operational efficiency and service capabilities of the distribution business and enhance the leading national

distribution network, achieving rapid growth of the distribution segment and continuous increase in market share.

In 2019, the sales revenue of the distribution business reached RMB 337,316.63 million, representing a year-

on-year increase of 20.02 %.

77.17%

13.93%

8.90%

76.65%

12.85%

10.51%Direct sales to hospitalsand medical institutionsDirect sales to retailpharmaciesProvincial and nationaldistribution

Pharmaceutical Distribution Segment Grew Rapidly with Continuous Increase in Market Share

2019 2018

Revenue Proportion of Each Business of The Pharmaceutical Distribution Segment

Market share continuously increasing while maintaining solid advantages as leader in the distribution business

Further expand the leading advantage of the pharmaceutical distribution networks to strengthen influence in core regions

Further promoted penetration of the distribution network to strengthen the coverage and ability of serving medical terminals in lower-tier cities;

Successfully acquired Anhui Pharmaceutical (Group) Co., Ltd. (安徽省医药(集团)股份有限公司) and GuizhouYitong Pharmaceutical Co., Ltd. (贵州意通医药股份有限公司) in 2019, achieving leaps in market share in the two provinces.

Integrated Resource Allocation to Improve The Operating Efficiency of Distribution Business

Continued to Tap the Advantages of Integrated Operations and Business Coordination Capabilities to Fully Promote Business Optimization and Reform

Implemented transformation and upgrade of the information system

Continuously promoted the improvement and optimization of the logistics system

Strengthened the development and layout of innovative products to build the core

competitiveness of innovative services

Built a unified national business management and service platform

The Results of The First-Round Centralized Procurement Further Reflected The Advantages of The Group's Distribution Network

Obtained distribution rights in all 11 pilot cities

Obtained exclusive distribution rights in each pilot city

Market share and distribution volume significantly increased

Guided by the “wholesale-retail integration” strategy, the Group seized new market opportunities and overcame

challenges in the retail business to promote the sustained and rapid development of the pharmaceutical retail

business.

In 2019, the sales revenue of the pharmaceutical retail business reached RMB 19,803.29 million, representing a

year-on-year increase of 33.77 % .

8,729.37 10,238.5112,392.21

14,803.90

19,803.29

2015 2 0 1 6 2017 2018 2019

Sales Growth of Retail Business

4,275 5,021

9081,183

2018 2019

Professionalpharmacies

Guoda retailpharmacies

Number of Retail Stores

Unit: RMB (million)

Retail Segment Continued to Grow at a High Speed, With A Significant Increase in Business Percentage

In 2019, the Group followed the industrial policy trends and scientifically responded to changes to achieve

optimization and strengthening of the retail segment layout as well as coordinated development of traditional

pharmacies and professional pharmacies. The group’s network scale continued to lead the industry.

Professional pharmacies rapidly developing under optimization and reinforcement of retail layout

As at the end of 2019, the network of traditional pharmacy stores has

covered 19 provinces, municipalities and autonomous regions across

China. The group will continue to expand the traditional retail layout;

Propelled the construction of provincial platforms and facilitated the

upgrade of retail brands;

Increased cooperation with WBA to introduce internationally

advanced brand management and technology and experience.

As at the end of 2019, the network of professional pharmacy

stores has covered 30 provinces, municipalities and autonomous

regions across China;

Built a leading professional pharmacy system, formulated

complete personnel training system, and strengthen the service

capabilities and business coverage of pharmaceutical terminals.

The Group took advantage of the rapid development of the medical devices industry to drive the rapid

development of the medical devices distribution business.

In 2019, the medical devices segment achieved sales revenue of RMB 69,293.54 million, representing an

increase of 40.06 % compared with the same period last year.

Unit: RMB (million)

Sales Growth of Medical Devices Business

Medical Devices Business Developed Rapidly with Secure Leading Position

49,473.75

69,293.54

2018 2019

40.06%

Strengthened strategic cooperation with

upstream and downstream enterprises;

Explored professional integrated service

solutions to enhance the supply chain

management for medical consumables;

Propelled the growth of other medical

innovative services.

Propelled business

development of the Group,

secured its leading position in

the medical devices industry,

and transformed and

upgraded to a comprehensive

medical service provider.

Policy Trend in The

Medical Devices Industry

After the successful acquisition

of CSIMC, the Group

proceeded with resource

integration to enhance the

layout of medical devices.

The promulgation of policies such as

"Unified Coding of Medical Consumables”,

"Centralized Procurement of Medical

Devices" and “Two-Invoice System for

Medical Devices " in 2019 indicated that the

regulatory policies for medical devices

distribution will follow the regulatory

direction of the pharmaceutical industry, and

will impose similar challenges and changes.

Medical Devices Business continuously Promoted Integration and Strengthen Resource Coordination

Core Actions of the Group

Resolutely Shouldered Corporate Social Responsibility to Defend the Front Line of Epidemic Prevention and Control

As a leading enterprise in the pharmaceutical and health-care

industry, the Group proactively ensured the anti-epidemic drugs and

provision of medical consumables and promptly fulfilled medical

needs and delivery tasks of various regions and key epidemic-stricken

areas.

Overcame the temporary impact of the epidemic and fully supported

the government and medical institutes to win the tough battle against

the epidemic, showcasing the corporate mission and responsibility

commitment of Sinopharm Group as a leader in the medical industry. The Group has always considered social responsibility

indicators such as strategic mission, operational safety,

quality system, customer satisfaction, energy conservation

and environmental protection as its important goals and

development direction.

Used innovative and efficient working methods and

conscientiously carried out the operations and back-office

support work to ensure the operations of the Company's

businesses is carried out in an orderly manner while fully

ensuring the provision of strategic emergency consumables.

Enhance business collaboration and resource allocation to

improve operating efficiency;

Accelerate the development of innovative services;

Facilitate penetration of the distribution network to explore

the demands of markets in lower-tier cities.

Consolidating leading position in distribution business and making all-out effort to increase market share

Enhancing layout of retail business and promoting optimization and innovation of online business

Promoting the transformation and upgrade of service capabilities and enhancing the synergetic advantage of medical device business

Continuously to improving governance capabilities and enhancing business operation efficiency

Speed up the expansion of medical device networks and focus

on exploring business innovation and the replication and

application promotion thereof;

Promote "drug-device synergic development " and enhance

lean management

Expand equipment OEM and manufacturing business to

accelerate industrial layout.

Promote integrated construction and digital transformation,

and enhance management capability and operating

efficiency;

Strengthen risk management and control;

Seize the opportunity to enhance the profitability of core

business and market competitiveness.

Future Strategy

At the beginning of 2020, the Group will proactively devise development planning for the “next five year”, continue

to strengthen the management and control of business processes, properly carry out production and operation,

enhance the profitability and market competitiveness of core businesses, and endeavor to minimize the negative impact

of the epidemic on the Group, so as to achieve high-quality and sustainable development of the Company.

Continue to implement the "wholesale-retail integration" strategy

and build an provincial retail platform;

Strengthen cooperation with WBA to promote the transformation

and upgrade of traditional pharmacies;

Expand the layout of professional pharmacy network to promote the

coordinated development of traditional and professional pharmacies;

Promote the innovation of the “Internet + medical service” model

to seek new market space for the rapid development of the retail

business.

Your questions are welcomed. Thank you!

This report may contain forward-looking statements that involve risks and uncertainties. These statements are generallyexpressed in predictive terms, such as believe, expect, anticipate, estimate, plan, forecast, target, may, will, or other similarexpressions, to express expected or possible future actions or actions or the results thereof. You should not place unduereliance on these forward-looking statements, which apply only on the date of this report, to make judge for future actions.

Disclaimer