Executive Summary

Tianda Pharmaceuticals Limited has released its Annual Report for the year ended 31 December 2025, outlining a year of strategic transformation, operational focus, and ongoing innovation. The company has successfully transitioned from a traditional generic drug manufacturer to a comprehensive pharmaceutical and healthcare enterprise. This transformation, coupled with a series of strategic initiatives, is highly relevant for investors as it positions the company for future growth in core markets and emerging sectors.

Key Strategic and Operational Developments

• Strategic Realignment: The Group has essentially completed its transformation into a comprehensive pharmaceutical and healthcare entity, with dedicated efforts in three development strategies:
  • Development of Chinese medicine as a foundational business
  • Development of innovative drugs and medical technologies
  • Expansion of high-quality medical and healthcare services
• Product Portfolio Expansion: Several generic drugs targeting cardiovascular, pediatric, and respiratory conditions were successfully launched in 2025, strengthening the company’s presence in niche markets.
• R&D and M&A: Pipeline products advanced steadily with a focus on core therapeutic areas. The company leveraged mergers and acquisitions to introduce synergies and strengthen research and development capabilities.
• Cost Control and Efficiency: Enhanced efforts in cost reduction and operational efficiency have been implemented, further consolidating the Group’s competitive advantage.
• Chinese Medicine Full Industry Chain: The company deepened its involvement in the entire Chinese medicine value chain, supporting long-term scalability and growth.

Financial Performance and Position

• Financial Results: The Group’s five-year financial summary is provided, with detailed financial statements audited by Ernst & Young. As of 31 December 2025, distributable reserves stood at HK\$241.4 million.
• Loss Position: The Group reported a total comprehensive loss of HK\$49.45 million for the year, compared to a loss of HK\$80.69 million in 2024. This narrowing of the loss signals progress in operational efficiency and revenue generation, but continued losses may affect investor sentiment and the share price.
• Liquidity and Solvency: At year-end, the Group had bank borrowings of HK\$124.2 million, with a gearing ratio of 27.2%, up from 24.1% in 2024. Available unutilised credit facilities of RMB13 million and additional secured land in Zhuhai provide flexibility and support going concern assumptions.
• No Dividend Commitment: While a dividend policy is in place, there is no pre-determined payout ratio or commitment to declare dividends. Dividends will depend on operational results, cash flow, and other relevant factors. No dividend was declared for the year, which could be a concern for income-focused investors.
• Donations: No charitable donations were made during the year, reflecting a focus on core business operations.

Corporate Governance and Risk Management

• Board Structure: The two Executive Directors are responsible for day-to-day business, with the Board supported by Remuneration, Nomination, Risk Management, and Audit Committees.
• Auditor’s Report: Ernst & Young issued an unqualified opinion on the consolidated financial statements, confirming they present a true and fair view. No material uncertainties were identified that would cast significant doubt on the Group’s ability to continue as a going concern.
• Risk Management: The Board maintains robust risk management and internal control systems, reviewed at least annually. No major concerns were identified during the year, but the Group remains committed to continuous improvement.
• Whistleblowing and Anti-Corruption: Policies remain in place for whistleblowing and anti-money laundering, with dedicated channels for reporting improprieties and breaches of regulation.
• Model Code Compliance: All directors confirmed compliance with the Model Code for Securities Transactions by Directors.

Investor Relations, Transparency, and Shareholder Rights

• Communication: The Board emphasizes transparent and timely information disclosure through annual/interim reports, announcements, and a dedicated investor relations function. The AGM remains a key platform for shareholder engagement.
• Public Float: The company maintained the required public float throughout 2025.
• Share Option Scheme: The Group operates a share option scheme with a 10% cap of issued shares, incentivizing key personnel and aligning interests with shareholders.
• No Purchase/Sale/Redemption of Securities: The Group did not buy back, sell, or redeem any listed securities during the year.
• Related Party Transactions: Several connected transactions were conducted with the ultimate holding company and fellow subsidiaries, including sales and purchases of healthcare and consumer goods, and packaging/materials. All such transactions were confirmed by the INEDs to be fair, reasonable, and in the best interests of the Company and shareholders. Auditor’s assurance was also obtained.

Key Risks and Price-Sensitive Issues for Shareholders

• Ongoing Losses: Despite operational improvements, the Group remains in a loss position. Prolonged losses could affect the Group’s valuation and market confidence.
• No Dividend Declared: The absence of a dividend may disappoint some shareholders and impact the share price, especially among yield-focused investors.
• Liquidity and Gearing: An increase in the gearing ratio and reliance on bank borrowings may raise concerns over leverage and financial risk if not matched by earnings growth.
• Future Standards Impact: The Group is monitoring upcoming changes in accounting standards (notably HKFRS 18 and 19), which may impact presentation and disclosure in future years.
• No Significant Post-Year Events: No material events occurred after 31 December 2025 that would impact the current financial statements or outlook.

Outlook

Tianda Pharmaceuticals is well-positioned in its chosen niches, with a broadened product pipeline and a strong focus on innovation and efficiency. The company is leveraging its strategic transformation to drive long-term value, but must demonstrate the ability to return to profitability and deliver sustainable shareholder returns. The absence of a dividend and ongoing losses are primary risks investors should monitor closely.