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With the increasing global focus on sustainable and green development, excellent companies are practicing ESG concepts have become a consensus, and ESG ratings have gradually become an important measure in investment evaluation systems. From the recent situation of the China Securities Index ESG rating, more than 250 companies have seen their ESG ratings improve in 2022. As an innovative and research-oriented comprehensive pharmaceutical group, Health Yuan (600380.SH) also recently received a AAA rating from the China Securities Index ESG rating, which has further focused market attention on the company.

Industry insiders pointed out that the China Securities AAA rating signifies that Health Yuan's management capabilities and performance in environmental and social responsibility, as well as corporate governance, have received industry-wide recognition. This helps the company gain confidence and attention from the capital market and promotes its better progress towards sustainable development. At the same time, current ESG construction has become a good link for the A-share market and overseas capital to seek consensus, and strengthening ESG disclosure and improving the evaluation level will also have a significant positive impact on attracting foreign investment and stabilizing the market.

Comprehensive improvement of ESG rating

Strengthen R&D innovation and continuously strengthen corporate governance

It is understood that Health Yuan previously received recognition from the internationally renowned institution MSCI, with its rating upgraded from "BBB" to "AA" last year. According to relevant statistics, as of now, the company's ranking in the MSCI rating has reached 14th in the global pharmaceutical industry and 2nd among Chinese pharmaceutical companies, a leading position in the industry. While scores on several key issues have increased, the company's toxic emissions and waste, corporate governance, and corporate behavior are also better than or essentially on par with the median for AAA-rated companies in this rating system.

Some ESG rating staff said that companies that can obtain high-level ESG ratings often require comprehensive construction in the three dimensions of system environment (E), society (S), and corporate governance (G). Regardless of the assessment method of any mainstream rating agency, higher ratings come from the growth of their own ESG construction level.

Focusing on Health Yuan's ESG construction, it is not difficult to find that in recent years, Health Yuan has invested sufficient energy and resources in ESG construction. The company's continuous investment and output in R&D in corporate governance, and its practice of social responsibility have become key factors in improving its ESG rating.

It is understood that Health Yuan has always maintained a high degree of importance for pharmaceutical technology innovation and actively carries out the development of innovative drugs and high-barrier complex preparations, continuously strengthening the construction of R&D technology platforms such as inhalation administration, antibody technology, and sustained-release microspheres. According to the company's previously released social responsibility report, as of 2022, Health Yuan has launched 7 varieties and 11 specifications of products in the field of inhalation preparations, with more than 30 respiratory products under research and development, successfully achieving coverage of all categories of asthma and COPD inhalation treatment drugs for existing and under-research products. Since 2023, the company's Formoterol Fumarate Inhalation Solution has been successfully approved for marketing; Indacaterol Maleate Inhalation Powder, Salmeterol/Fluticasone Propionate Inhalation Powder, and Fluticasone Propionate Nebulization Suspension have been filed for production. At the same time, the company is also promoting Phase 2

Market analysts said that in terms of R&D investment, as of the first three quarters of this year, the company's 2023 R&D investment has reached 1.212 billion yuan, ranking among the top in the industry. It is expected that significant achievements in product R&D and innovation will help Health Yuan stand out in the fiercely competitive pharmaceutical market and bring long-term and sustainable development to the company. At the same time, the high degree of importance attached to pharmaceutical technology innovation and the coverage of numerous categories of drugs also indirectly indicate that the company has good management and strategic planning. By actively carrying out the development of innovative drugs and high-barrier complex preparations, it will help the company continuously improve product quality and core competitiveness, which will also bring continuous breakthroughs in corporate governance.

Actively practicing social responsibility

“Inclusive Chronic Disease Prevention and Control Public Welfare Project” to support rural revitalization

While promoting R&D innovation and strengthening its own governance, Health Yuan's practice of social responsibility is also constantly improving and deepening.

It is understood that Health Yuan has long been highly concerned about the accessibility, affordability, and rational use of medical products and services, and actively responds to the national medical insurance catalog access and negotiation work, striving to provide patients with high-quality drugs at reasonable prices and continuously promoting the development of the greater health industry.

Specifically, in terms of public welfare undertakings, since The end of 2018, Health Yuan and its holding subsidiary, Lizhu Group, have launched the "Inclusive Chronic Disease Prevention and Control Public Welfare Project" in many regions across the country, providing necessary medicines and other materials to chronic disease patients in remote areas, further improving drug accessibility and supporting the development of rural health undertakings. According to statistics, as of June 2023, this public welfare project has benefited 8 provinces and 2 autonomous regions across the country, providing assistance to more than 17,700 low-income residents. The project has won numerous honors, including the "ESG Exemplary Practice Award," in 2022 and 2023.

Industry insiders pointed out that the practice of public welfare undertakings and social responsibility reflects the company's social responsibility and care. These measures, while enhancing the company's social image and reputation, also enhance the public's recognition and trust in the Health Yuan brand. In the future, with policy guidance and the continuous development and progress of society, the market's attention to the company's ESG performance will only increase, and the public's demands on the company's social responsibility will become increasingly high. Companies that can continuously achieve good performance in ESG and continuously strengthen themselves will be key to whether they can achieve sustainable and benign development.