Jacobson Pharma : 2024 / Annual Report

Empowering Growth and Sustainability with a Purpose-driven Business

JACOBSON PHARMA CORPORATION LIMITED

Incorporated under the laws of the Cayman Islands with limited liability

Stock Code : 2633

2023/2024 Annual Report

CONTENTS

1

Corporate Information

2

Financial Highlights

4

Chairman's Statement

6

Corporate Vision and Mission

7

Corporate Profile

8

Management Discussion & Analysis

21

Corporate Governance Report

36

Report of the Directors

54

Independent Auditor's Report

58

Consolidated Statement of Profit or Loss and Other Comprehensive Income

60

Consolidated Statement of Financial Position

61

Consolidated Statement of Changes in Equity

62

Consolidated

Cash Flow Statement

63

Notes to the

Financial Statements

124

Group Properties

125

Five-year Financial Summary

126

Glossary

CORPORATE INFORMATION

BOARD OF DIRECTORS

Executive Directors

Mr. Sum Kwong Yip, Derek

  (Chairman and Chief Executive Officer)

Mr. Yim Chun Leung

Ms. Pun Yue Wai

Non-executive Director

Professor Wong Chi Kei, Ian

Independent Non-executive Directors

Dr. Lam Kwing Tong, Alan

Mr. Young Chun Man, Kenneth Professor Lam Sing Kwong, Simon

AUDIT COMMITTEE

Mr. Young Chun Man, Kenneth (Chairman) Dr. Lam Kwing Tong, Alan Professor Lam Sing Kwong, Simon

REMUNERATION COMMITTEE

Dr. Lam Kwing Tong, Alan (Chairman)

Mr. Young Chun Man, Kenneth

Ms. Pun Yue Wai

NOMINATION COMMITTEE

Mr. Young Chun Man, Kenneth (Chairman)

Dr. Lam Kwing Tong, Alan

Mr. Yim Chun Leung

EXECUTIVE COMMITTEE

Mr. Sum Kwong Yip, Derek (Chairman)

Mr. Yim Chun Leung

Ms. Pun Yue Wai

ENVIRONMENTAL, SOCIAL AND GOVERNANCE COMMITTEE

Professor Lam Sing Kwong, Simon (Chairman)

Mr. Yim Chun Leung

Mr. Yu Chun Kau

AUTHORISED REPRESENTATIVES

Mr. Yim Chun Leung

Ms. Pun Yue Wai

COMPANY SECRETARY

Mr. Yu Chun Kau

REGISTERED OFFICE

Cricket Square

Hutchins Drive

PO Box 2681

Grand Cayman KY1-1111

Cayman Islands

HONG KONG HEADQUARTERS AND PRINCIPAL PLACE OF BUSINESS

Unit 2313-18, 23/F

Tower 1, Millennium City 1

388 Kwun Tong Road

Kwun Tong, Kowloon

Hong Kong

PRINCIPAL SHARE REGISTRAR AND TRANSFER OFFICE

Conyers Trust Company (Cayman) Limited

Cricket Square

Hutchins Drive

PO Box 2681

Grand Cayman KY1-1111

Cayman Islands

HONG KONG BRANCH SHARE REGISTRAR

Tricor Investor Services Limited

17/F, Far East Finance Centre

16 Harcourt Road

Hong Kong

AUDITOR

KPMG

Certified Public Accountant

Public Interest Entity Auditor registered in accordance with

the Accounting and Financial Reporting Council Ordinance

PRINCIPAL BANKERS

(in alphabetical order) Chong Hing Bank Limited Standard Chartered Bank (Hong Kong) Limited

The Hongkong and Shanghai Banking Corporation Limited

PUBLIC RELATIONS CONSULTANT

Strategic Public Relations Group

INVESTOR RELATIONS

Email: [e-mail]

STOCK CODE

2633

COMPANY WEBSITE

www.jacobsonpharma.com

002        JACOBSON PHARMA CORPORATION LIMITED

FINANCIAL HIGHLIGHTS

Revenue
(HK$'000)
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
FY2020	FY2021	FY2022	FY2023	FY2024(1)
Generic Drugs	Branded Healthcare

Adjusted EBITDA

(HK$'000)
600,000
550,000
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
FY2020	FY2021	FY2022	FY2023	FY2024(1)

Net Debts

(HK$'000)
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
FY2020	FY2021	FY2022	FY2023	FY2024(1)

Profit Attributable

to Equity Shareholders

(HK$'000)
300,000
250,000
200,000
150,000
100,000
50,000
0
FY2020	FY2021	FY2022	FY2023	FY2024(1)

Net Assets

(HK$'000)
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
0
FY2020	FY2021	FY2022	FY2023	FY2024(1)

Net Gearing Ratio

0.5
0.4
0.3
0.2
0.1
0.0
FY2020	FY2021	FY2022	FY2023	FY2024(1)

JACOBSON PHARMA CORPORATION LIMITED  |  2023/2024 ANNUAL REPORT        003

	Year ended	Year ended
	31 March 2024	31 March 2023	Change
		(restated) (1)
	HK$'000	HK$'000
Revenue from continuing operations	1,467,798	1,267,598	+ 15.8%
Gross profit	620,475	538,918	+ 15.1%
Gross profit margin (%)	42.3%	42.5%
Profit attributable to equity shareholders of the Company	266,968	251,044	+ 6.3%
Profit margin attributable to equity shareholders of the Company (%)	18.2%	19.8%
Adjusted EBITDA from continuing operations(2)	453,071	444,162	+ 2.0%
Adjusted EBITDA margin from continuing operations (%)(3)	30.9%	35.0%
Return on equity (%)(4)	10.3%	9.1%
	As at	As at
	31 March 2024	31 March 2023	Change
	HK$'000	HK$'000
Total assets	3,486,854	5,380,499	- 35.2%
Total liabilities	1,090,494	2,123,977	- 48.7%
Total equity	2,396,360	3,256,522	- 26.4%

1. The branded healthcare segment has been classified as discontinued operations of the Group for the year ended 31 March 2024. In accordance with Hong Kong Financial Reporting Standard 5, Non-currentAssets Held for Sale and Discontinued Operations, the Group has restated the comparative information for the year ended 31 March 2023 in this regard.
2. Adjusted EBITDA from continuing operations is calculated based on adjusted earnings from continuing operations before interest, taxes, depreciation and amortisation, where "interest" is regarded as including interest income from bank deposits and investments and finance costs. To arrive at adjusted EBITDA from continuing operations, the Group's earnings are further adjusted for share of profits/losses of associates and non- recurring items not attributable to the operations of individual segments.
3. Adjusted EBITDA margin from continuing operations is calculated based on adjusted EBITDA from continuing operations divided by revenue from continuing operations and multiplied by 100%.
4. Return on equity is calculated based on profit for the year divided by the arithmetic mean of the opening and closing balances of total equity in the relevant year and multiplied by 100%.

004        JACOBSON PHARMA CORPORATION LIMITED

CHAIRMAN'S STATEMENT

Dear Shareholders,

"We aim to positively impact people's health as a forward-looking and value-driven company where individuals can thrive, driven by our purpose, dedication, values, and performance culture."

Embracing the Revival

The fiscal year 2024 has unfolded as a season of revival for Hong Kong, akin to the cherished arrival of spring after a stark winter. As our city reclaimed its economic and societal normalcy post-pandemic, a palpable sense of celebration and anticipation for the thriving of all facets of life emerged.

For Jacobson, the past years have been a testament to our resilience, adaptability, and unwavering commitment to delivering quality healthcare solutions as a trusted partner. Amidst the challenges, we seized opportunities to solidify our position as an eminent provider of generic drugs and specialty medicines.

Delivering Strategic Achievements

Our solid performance throughout FY2024, being built upon the momentum established in the first half, underscores our strategic execution and dedication to our mission. The year was characterised by significant achievements and considerable headway in our strategic endeavors, reinforced by a sound financial performance. Our total revenue grew by 15.8% to HK$1,467.8 million, while profit attributable to equity shareholders sustained a moderate growth of 6.3%. Through disciplined cost management, we maintain a strong cash flow position, which enables us to deliver steady dividend payouts and enhance shareholder value.

Our growth strategies are geared towards enriching our product portfolio, thereby strengthening the fundamentals for business growth. Our dedication to expanding our product portfolio, strengthening research and development capabilities, and optimising commercial strategies has yielded tangible results. The launch of several key additions, including Entecavir Tablets, Eplerenone Tablets, Febuxostat Tablets, and Letrozole Tablets, has enriched our offerings and addressed evolving patient needs across diverse therapeutic areas. Furthermore, we have made significant strides within our research and development pipeline, with 12 products successfully submitted for approval, paving the way for future market introductions.

JACOBSON PHARMA CORPORATION LIMITED  |  2023/2024 ANNUAL REPORT        005

Through strategic collaborations, we secured exclusive rights to six high-performing specialised drugs, spanning gastroenterology, cardiovascular health, endocrinology, inflammatory diseases, oncology, and breast cancer therapy. These partnerships not only diversify our product lines and position us for sustained growth but also underscore our dedication to improving patient outcomes.

Commitment to Operational Excellence

Reflecting our commitment to operational excellence, we have made significant progress in improving manufacturing processes, expanding production capacities, and investing in automation. Notably, our liquid dosage form production surged by 26.6% compared to the previous year, showcasing our agility in meeting evolving market demands and ensuring a consistent supply of high-quality medicines.

In today's digital age, the pursuit of operational excellence extends beyond the laboratory and the manufacturing domain. We have embarked on the development of "e-Jacob Pharma2U" - an innovative e-ordering platform tailored specifically for the procurement needs of private clinics. The initial pilot phase of this project yielded promising results, with favorable user feedback and an impressive adoption rate. This digitisation initiative not only enhances our sales and customer service capabilities but also underscores our commitment to leveraging technology for the benefit of our stakeholders.

Pursuing ESG Initiatives

However, our aspirations extend far beyond commercial and financial performance. Through our holistic "5 to Thrive" ESG strategy, we have made meaningful strides in corporate governance, product responsibility, societal engagement, environmental stewardship, and commitment to our employees. Our dedication to ESG principles is evidenced by the receipt of five esteemed awards, including the Good MPF Employer Award and the Partner Employer Award, and solid progress on twelve environmental targets in areas like greenhouse gas emissions, waste management, and resource reduction. Additionally, we prioritised employee engagement by empowering them to shape our culture and collaborating with social enterprises on grassroots projects.

Navigating Evolving Landscape with Optimism

Looking ahead, while we anticipate a gradual post-pandemic recovery, we remain cognisant of the prevailing economic uncertainties influenced by geopolitical tensions and volatility. Recognising these market headwinds, we retain optimism regarding the long-term resilience of our economy and the growth potential of the generic drugs market and the broader healthcare industry. We are committed to cultivating the adaptability and agility of our business within this evolving landscape, fortifying our foundations for sustainable growth.

We aim to positively impact people's health as a forward-looking and value-driven company where individuals can thrive, driven by our purpose, dedication, values, and performance culture. Our strategic focus remains on maximising commercial opportunities, fortifying our pipelines, establishing a robust commercial platform, and expanding our footprint across key markets in Asia.

Appreciation and Acknowledgment

In closing, on behalf of the Board, I wish to extend my gratitude to our employees, partners, and shareholders. Your unwavering support and contributions have been pivotal in our journey towards delivering accessible, quality healthcare solutions and creating sustainable value for all stakeholders.

Sincerely,

Sum Kwong Yip, Derek

Chairman and CEO

JACOBSON PHARMA CORPORATION LIMITED

20 June 2024

006        JACOBSON PHARMA CORPORATION LIMITED

CORPORATE VISION AND MISSION

A VISION	A CULTURE
A MISSION
THAT		THAT		THAT
MATTERS		INSPIRES		ACHIEVES

OUR VISION

At Jacobson, we aspire to be an eminent player in essential medicines, specialty drugs and healthcare solutions in Greater China and Asia.

OUR CULTURE

Three core components i.e. Challenge, Connect, Commit unite our corporate culture and values that define how we act and what we do:

OUR MISSION

We strive to create sustainable values that meet current and future customer needs through carefully-orchestrated investment in R&D.

We enhance the communities in which we operate.

We build shareholder values in all we do.

CHALLENGE

We proactively venture into uncharted turf for exploring opportunities. We go the extra-mile for attaining excellence via innovative solutions.

CONNECT

We work cohesively as "one company one team" to create and share best practices. We connect local knowledge with global resources.

COMMIT

We deliver on what we promise. We do not compromise on quality and integrity.

JACOBSON PHARMA CORPORATION LIMITED  |  2023/2024 ANNUAL REPORT        007

CORPORATE PROFILE

The Group is a leading pharmaceutical company in Hong Kong vertically integrated with the research, development, production, sale and distribution of essential medicines and specialty drugs. As a major provider of generic drugs in Hong Kong, the Group has one of the most extensive sales and distribution coverage for both the Public and Private Sectors in Hong Kong, with an expanding reach into strategically selected Asian markets. Carrying a broad product portfolio and taking a pre-eminent market position in a number of therapeutic categories, the Group operates a host of 9 licensed production facilities for pharmaceutical products in Hong Kong.

The Group has invested significantly in its commercial infrastructure and manages its own warehousing, logistics, regulatory, quality control, and sales and marketing operation. Our SAP powered warehousing complex is located at the hub of Hong Kong, which facilitates a high degree of supply chain efficiency and flexibility in providing logistic solutions to our customers.

COMPETITIVE STRENGTHS

• Leadership in a Diverse Range of Essential and Specialty Drugs in Hong Kong

Over a long and successful track record, we have built a comprehensive product portfolio, including respiratory, cardiovascular, central nervous system, gastrointestinal and oral anti-diabetics, cementing our position as a leader in a number of large and fast growing therapeutic categories in the Hong Kong pharmaceutical market. We continually expand our portfolio to reinforce our leadership position with a strategic focus on specialty drugs and biosimilars to tap the fast growing market segments.

• Leading Research and Development Capabilities That Can Develop Premium Generic Drugs and Healthcare Solutions to Fulfill Unmet Demands

We are a leading pharmaceutical R&D company in Hong Kong among generic drug manufacturers in terms of number of new drugs registered in the past few years. We have been able to identify products with good potential based on our strong relationships with customers and deep market insight. We actively explore collaborations with local and overseas R&D institutions and companies on the development of innovative technologies for pharmaceutical manufacturing.

• Well-EstablishedSales and Distribution Network with Extensive Market Coverage

We have extensive local market penetration, covering substantially all of the Public and Private Sector institutions and registered pharmacies, as well as doctors in private practice. Our deep industry knowledge, extensive sales network and close interactions with market participants enable us to gather significant feedback, relevant market intelligence and data on industry trends for further strengthening our product development strategies and identifying business opportunities. We are also committed to the strategy of expanding our regional presence into strategically selected markets in Asia Pacific.

• Robust Logistics Infrastructure and Specialised Capabilities

Our key strengths stem from a centralised distribution center and a high-capacity fleet of delivery trucks, positioning us to meet substantial volume demands with efficiency. We maintain industry-leading accreditations and adhere to stringent standards, ensuring both quality and regulatory compliance, thereby reinforcing our commitment to excellence. In addition to our robust foundation, we have developed specialised capabilities in vaccine and advanced therapy products logistics. Our effective warehousing practices, powered by advanced IT systems, drive accuracy and efficiency in our operations, establishing a reliable service framework. Beyond infrastructure and compliance, our specialised capabilities in addressing diverse storage and distribution needs position us as a comprehensive logistics provider within the pharmaceutical industry.

008        JACOBSON PHARMA CORPORATION LIMITED  |  MANAGEMENT DISCUSSION & ANALYSIS

MANAGEMENT DISCUSSION & ANALYSIS