Grand Pharma Acquired 100% Equity of Hubei Bafeng, Further Expanding the Strategic Plan on High-quality Amino Acid Industry

• Hubei Bafeng is one of the national pharmaceutical amino acid industrialization bases in China, with over 20 drug approval numbers;
• After the acquisition is completed, Grand Pharma will become the pharmaceutical company with the most registration numbers of amino acid APIs in China;
• Grand Pharma’s amino acid industry has leading technological advantages, and its products are sold to more than 140 countries and regions around the world.

HONG KONG SAR – Media OutReach – 8 August 2022 – Grand Pharmaceutical Group Limited (Grand Pharma, 0512.HK) announced that it has recently entered into an equity acquisition agreement with Hubei Provincial Bafeng Pharmaceuticals and Chemicals Share Co., Ltd., pursuant to which Grand Pharma will acquire 100% equity interests of Hubei Bafeng with RMB 270 million after the relevant conditions as agreed in the Acquisition Agreement are fulfilled.

The acquisition of Hubei Bafeng marks another strategic plan of Grand Pharma in the field of amino acid following its acquisition of Cangzhou Huachen BioTech Co., Ltd. in 2021. After the acquisition is completed, Grand Pharma will become the pharmaceutical company with the most registration numbers of amino acid Active Pharmaceutical Ingredients (APIs) in China, which will tremendously expand the Company’s high-quality amino acid product portfolio, further enhance and improve the Company’s market comprehensive competitiveness in the field of amino acid, and drive the sustained and rapid growth of amino acid business.

Founded in 1997, Hubei Bafeng mainly engages in the R&D, production and operation of amino acid APIs and preparations. It is one of the national pharmaceutical amino acid industrialization bases in China. Hubei Bafeng is GMP certificated, with over 20 drug approval numbers, among which, Compound Amino Acid Oral Solution (14AA) and Glutamic Acid, Alanine Acid Glycine Acid Tablets are exclusive preparation products. Hubei Bafeng has an annual production capacity of 3,000 tons of amino acid APIs, 20 million units of amino acid oral solutions and 750 million tablets (granules, bags) of amino acid preparations. It exports API products to over 20 countries and regions. After the transaction is completed, Grand Pharma will have 24 registration numbers of amino acid APIs, accounting for more than 70% of the registration numbers in the same segment, making it the pharmaceutical company with the most registration numbers for amino acid APIs in China. This will further reinforce Grand Pharma’s leading position in the high-quality amino acid segment.

Grand Pharma has been deeply engaged in amino acid industry for more than 20 years and has been upholding the spirit of technological innovation. With synthetic biology as the core, it first pioneered a world-leading innovative technology in China based on biological method to produce various amino acids, which filled the gap in the industry. The Company’s core product cysteine series ranked first in the world in terms of both market share and production capacity, and the production capacity of taurine ranked second in the world. Benefiting from the strategy of further expanding international business and big health business, Grand Pharma achieved sustained rapid growth in the field of amino acid in recent years. In 2021, its annual revenue was around RMB 1.82 billion, representing an increase of approximately 54.5% compared with the same period in 2020.

Grand Pharma always adheres to the core business concept of “new technology, high quality, full industry chain, and internationalization”, continuously enhancing the expansion in amino acid industry, and taking advantage of its industrial superiority based on pharmaceutical grade amino acids to extend into diversified amino acids.

New Technology:

With synthetic biology as the core and after years of scientific research, Grand Pharma has established eight technological platforms including enzyme engineering, fermentation engineering, process engineering, quality research and application conversion, etc., forming unique technical advantages in the construction and optimization of strains, regulation of metabolic pathways, control of fermentation, separation and purification as well as product application and development. Some of the its techniques have filled the domestic gap.

Through integrated innovation in multiple technological sectors, the Company has established an integrated collaboration system combining new product development, new technology engineering and industrialization as well as application solutions, offering robust support to continuous technological innovation and industrial localization. Among them, the fermentation production process with strain construction and optimization as the core and the enzymatic production process with immobilized enzyme as the core are not only capable of replacing traditional synthetic process, but can also greatly reduce carbon dioxide emission during the production process. It abundantly implements the concepts of “carbon peak” and “carbon neutrality” for energy saving, emission reduction, and green development, showcasing great economic and environmental benefits. By constant optimization of fermentation, separation and purification processes, it has achieved a leading position in the industry in key indicators such as output and yield. Through the technology which integrated fermentation and enzymatic methods (the production of industrial enzymes through the fermentation of industrial microorganisms), it uses the patented technology of immobilized enzymes to significantly shortens the time for enzymatic transformation, tremendously improves the yield and reduces product unit cost. By replacing the dangerous procedures in traditional synthetic process with biological enzymatic method, it significantly reduces the overall cost and improves production safety. The industry technological expressway established by Grand Pharma in the field of amino acid has already taken shape, and will gradually enter into the best period for returns. It has laid a solid foundation for original technological innovation and product industrialization.

Grand Pharma highly values the R&D team building and the integration of production and research. In the field of amino acid, it has a core technical team led by talents in the Hubei Province Hundred Talents Program. The Company has also established long-term strategic partnerships with many scientific research institutions including Tsinghua University, Wuhan University and Tianjin University of Science and Technology, etc. The Company now has more than 300 R&D and technical personnel, all of whom are from interdisciplinary backgrounds such as microbiology, applied chemistry, biochemical engineering, pharmacy and food science, etc. An innovation model integrated production, education, research and application, and the technological innovation talent echelon with clear division of responsibilities and complementary advantages in this field have already delivered fruitful outcomes. With 64 patents, it takes a leading position in the industry in terms of the quantity of invention patents. Core subsidiaries in this field have won multiple honors including the National and Provincial Specialized, Refinement, Differential and Innovation Enterprise, the National Intellectual Property Advanced Enterprise, China Light Industry Sulfur-containing Amino Acid Green Manufacturing Engineering Technology Research Center, China Export Leading Indicator (ELI) Sample Enterprise and Provincial Hidden Champion Enterprise, etc.

High Quality:

Grand Pharma’s amino acid products have obtained comprehensive quality certifications from home and abroad. Multiple products have been certified and registered within the food and drug administration system of many countries and regions including the European Union, the United States, Japan, Southeast Asia and China. Certifications the Company has obtained include EU GMP certification, Accreditation Certificate of Foreign Drug Manufacturer in Japan, KFDA Registration in Korea, MAPA certification in Brazil, Free Sale Certificate Attestation in Argentina; as well as ISO quality management system certification, FSSC22000 food system certification, GRAS certification in the U.S., HALAL certification, KOSHER certification, etc. The comprehensive certifications and registrations that Grand Pharma has obtained demonstrates its strong competitiveness in business expansion in overseas market.

Full Industry Chain:

After the completion of this transaction, Grand Pharma will have nearly 50 kinds of amino acids and derivative products including cysteine series, arginine series and taurine, as well as 24 registration numbers for amino acid APIs, accounting for more than 70% of the registration numbers in the same segment, making it the pharmaceutical company with the most registration numbers for amino acid APIs in China. Rich amino acid portfolio can better address the customized needs of the downstream market, as well as provide multi-variety and multi-standard one-stop service to enhance customer loyalty in the high-end application market. In addition to APIs, Grand Pharma is also actively expanding its preparations portfolio. Two functional dietary nutritional supplements developed by the Company, Citrulline Taurine Preparations patented in the U.S. for improving sports endurance, and Acetylcysteine Preparations for protecting respiratory health and boosting immunity, have both obtained FDA certification and were officially commercialized in the U.S. in 2021.

Internationalization:

The amino acid sales network of Grand Pharma covers more than 140 countries and regions around the world, including mainstream markets such as the EU, the U.S., Japan, Southeast Asia and China, with overseas business accounts for more than 50% of the total revenue, and some of the amino acid products rank among the top three in terms of market share. Based on technological break throughs and cost advantages, the Company has been supplying its core products to high-quality customers at home and abroad, including Fortune Global 500 enterprises such as Zambon, Sanofi and Nestle, etc. on a long-term basis, and has established stable cooperation relationships with both upstream and downstream customers. It has established a high level of brand recognition and market reputation around the globe.

Grand Pharma commented, In the future, the Company will continue to leverage its world-leading innovative process based on biological method in the field of high-quality amino acids, and its solid industrial foundation, industrial accumulation, rich amino acid product portfolio, high-standard quality certification system, powerful international registration and commercialization capacity to focus on the strategic plan on drug-related high value-added sectors including high-end parenteral nutrition preparations, innovative peptide medicines and cell culture media, etc., as well as big health consumer sectors including functional dietary nutrition supplements for sports protection, special medical and infant food, beauty and pet foods, etc. The broad downstream market space along with its great development potential will provide continuous and strong momentum for the Company in the field of amino acid.

For further information, please refer to Grand Pharma’s website at http://grandpharm.com/

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