THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a stockbroker, a licensed securities dealer or other registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Simcere Pharmaceutical Group Limited (the “ Company ”), you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, stockbroker, licensed securities dealer, registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

This circular is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

==> picture [44 x 34] intentionally omitted <==

Simcere Pharmaceutical Group Limited 先聲藥業集團有限公司

(Incorporated in Hong Kong with limited liability)

(Stock code: 2096)

CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED GRANT OF RSUS TO THE CONNECTED GRANTEES AND NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

ALTUS CAPITAL LIMITED

A letter from the Board is set out on pages 7 to 25 of this circular. A letter from the Independent Board Committee containing its advice to the Independent Shareholders is set out on pages 26 to 27 of this circular. A letter from Altus Capital Limited, the Independent Financial Adviser, containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 28 to 48 of this circular.

A notice convening the EGM to be held at No. 699-18, Xuanwu Road, Xuanwu District, Nanjing, Jiangsu, PRC on Monday, November 1, 2021 at 9:00 a.m. is set out on pages 57 to 60 of this circular.

A form of proxy for use by the Independent Shareholders at the EGM is enclosed with this circular. Whether or not you are able to attend the meeting, you are requested to complete the proxy form in accordance with the instructions printed thereon and return the same to the share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours (excluding any part of a day that is a public holiday in Hong Kong, i.e. 9:00 a.m. on Friday, October 29, 2021) before the time appointed for holding of the EGM or any adjournment thereof (as the case may be). Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM and any adjournment thereof (as the case may be) should you so wish.

PRECAUTIONARY MEASURES FOR THE EXTRAORDINARY GENERAL MEETING

In view of the ongoing COVID-19 epidemic, the Company will implement the following prevention and control measures targeting COVID-19 at the EGM to protect Shareholders from the risk of infection:

(i) Compulsory body temperature check will be conducted, and any person with a body temperature of over 37.0 degree Celsius will be denied entry into the venue;

(ii) Every Shareholder or authorized representative must wear a surgical mask throughout the EGM;

(iii) No refreshment will be served; and

(iv) The Company will maintain appropriate distance and space in the venue.

The Company strongly recommends Shareholders, who intend to attend the EGM, to submit the proxy form for voting instead of attending the EGM in person. The proxy form has been dispatched to Shareholders and is available to download on the Company’s website ( http://www.simcere.com ) or the Stock Exchange’s website ( www.hkexnews.hk ).

October 12, 2021

			Page
Definitions	. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from	the Board . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Letter from	the Independent Board Committee .	. . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Letter from	the Independent Financial Adviser	. . . . . . . . . . . . . . . . . . . . . . . . . . .	28
Appendix	— General Information . . . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . .	49
Notice of Extraordinary General Meeting . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . .	57
_This circular _	is prepared in both English and Chinese.

In the event of inconsistency, the English text of this circular will prevail.

– i –

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

“2021 RSU Scheme”

the restricted share unit scheme of the Company approved by the Board on May 20, 2021 (after trading hours) for adoption, in its present form or as amended from time to time in accordance with the rules of the 2021 RSU Scheme

“Articles”
the articles of association as adopted by a special resolution passed on October 8, 2020 with effect on October 12, 2020, as amended from time to time
“associate(s)”
has the meaning ascribed thereto under the Listing Rules
“BCY Pharm”
BCY Pharm Co., Ltd. (江蘇博創園生物醫藥科技有限公司), a limited liability company established in the PRC on October 28, 2011 and a subsidiary of the Company
“Board”
the board of Directors
“Business Day”

any day on which the Stock Exchange is open for the business of dealing in securities listed thereon

“close associate(s)”
has the meaning ascribed thereto in the Listing Rules
“Company”

Simcere Pharmaceutical Group Limited (先聲藥業集團有限公司), a company incorporated in Hong Kong on November 30, 2015 with limited liability, whose shares are listed on the Main Board of the Stock Exchange (stock code: 2096)

“Connected Grantee(s)”

the Grantee(s) who are connected person(s) of the Company, namely Mr. Wan Yushan, Mr. Tang Renhong, Mr. Shi Ruiwen, Mr. Cheng Xianghua, Mr. Lu Jianxue, Ms. Wang Xi, Mr. Wang Feng, Ms. Ma Yan, Ms. Chen Yanqiong, Mr. Yu Qingzhu, Ms. Chen Qianjie, Ms. Cong Yuehua, Mr. Peng Shaoping, Mr. Zhang Rong

“connected person(s)”

has the meaning ascribed thereto in the Listing Rules

“core connected person(s)”

has the meaning ascribed thereto in the Listing Rules

“Director(s)”
the director(s) of the Company

– 1 –

DEFINITIONS

“EGM”
the extraordinary general meeting of the Company to be held at No. 699-18, Xuanwu Road, Xuanwu District, Nanjing, Jiangsu, PRC on Monday, November 1, 2021 at 9:00 a.m., to consider and, if appropriate, to approve the resolutions contained in the notice of the EGM set out on pages 57 to 60 of this circular or any adjournment thereof (as the case may be)
“Excel Management” Excel Management Company Limited, an exempted company incorporated under of laws of Bermuda on July 13, 2015 and a Shareholder of the Company as the employee incentive platform
“General Mandate”
the general mandate granted to the Directors by the Shareholders to allot, issue and deal with up to 521,728,323 Shares pursuant to an ordinary resolution passed at the annual general meeting of the Company held on June 25, 2021
“Group”
the Company and its subsidiaries
“Hainan Simcere”
Hainan Simcere Pharmaceutical Co., Ltd. (海南先聲藥業有限公司) (formerly known as Sanya Haifu Pharmaceutical Co., Ltd. (三亞海富製藥有限公司), Hainan Haifu Pharmaceutical Co., Ltd. (海南海富製藥有限公司) and Simcere Pharmaceutical Co., Ltd. (先聲藥業有限公司)), a limited liability company established in the PRC on April 28, 1993 and a subsidiary of the Company
“Hainan Yaozhen”
Hainan Yaozhen Biomedical Technology Co., Ltd. (海南耀臻生物醫藥科技有限公司), a limited liability company established in the PRC on December 3, 2020 and a subsidiary of the Company
“HK$”
Hong Kong dollar(s), the lawful currency of Hong Kong
“Hong Kong”
the Hong Kong Special Administrative Region of the PRC

– 2 –

DEFINITIONS

“Independent Board Committee”
“Independent Financial Advisor”
“Independent Shareholders”
“Jiangsu Simcere”
“Latest Practicable Date”
“Listing Rules”
“Nanjing BioSciKin”
“Other Connected Grantee(s)”
“PRC”
the independent committee of the Board comprising all the independent non-executive Directors, namely Mr. Song Ruilin, Mr. Wang Jianguo and Mr. Wang Xinhua, established to advise the Independent Shareholders in relation to the Proposed RSU Grants
Altus Capital Limited, a corporation licensed to conduct Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO, being the independent financial advisor appointed to advise the Independent Board Committee and the Independent Shareholders in relation to the Proposed RSU Grants
the Shareholders who are not required under the Listing Rules to abstain from voting at the EGM to approve the Proposed RSU Grants
Jiangsu Simcere Pharmaceutical Co., Ltd. (江蘇先聲藥業有限公司), a limited liability company established in the PRC on March 28, 1995 and a subsidiary of the Company
October 7, 2021, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained herein
the Rules Governing the Listing of Securities on the Stock Exchange
Nanjing BioSciKin Biotechnology Development Co., Ltd. (南京百家匯生物科技發展有限公司), a limited liability company established in the PRC on December 13, 2018 and a subsidiary of the Company
the connected grantee(s) other than the Directors of the Company, namely, Mr. Shi Ruiwen, Mr. Cheng Xianghua, Mr. Lu Jianxue, Ms. Wang Xi, Mr. Wang Feng, Ms. Ma Yan, Ms. Chen Yanqiong, Mr. Yu Qingzhu, Ms. Chen Qianjie, Ms. Cong Yuehua, Mr. Peng Shaoping, Mr. Zhang Rong

the People’s Republic of China which, for the purpose of this circular, excludes Hong Kong, Macao Special Administrative Region and Taiwan

– 3 –

DEFINITIONS

“Proposed RSU Grant(s)”
“Register of Members”
“RMB”
“RSU(s)”
“RSU Grant Announcement”
“Selected Person(s)”
“SFO”
“Shandong Simcere”
“Shanghai Simcere”
“Share(s)”
“Shareholder(s)”
the proposed grant of a total of 8,712,000 RSUs to the Connected Grantees pursuant to the 2021 RSU Scheme
the register of members of the Company
Renminbi, the lawful currency of the PRC
restricted share units may be granted under the 2021 RSU Scheme, each of which represents one underlying Share, and represent a conditional right granted to any Selected Person under the 2021 RSU Scheme to obtain the corresponding economic value of the underlying Shares, less any tax, stamp duty and other charges applicable, as determined by the Board in its absolute discretion
the announcement of the Company dated August 27, 2021 in relation to, among others, the proposed grant of RSUs to the Connected Grantees and the appointment of the Independent Financial Advisor
person(s) eligible to receive RSUs under the 2021 RSU Scheme, who are existing or incoming employees, directors (whether executive or non-executive) or officers of the Company or any member of the Group, selected by the Board to be granted RSUs under the 2021 RSU Scheme at its discretion
the Securities and Futures Ordinance of Hong Kong, (Chapter 571 of the Laws of Hong Kong) as amended, supplemented or otherwise modified from time to time
Shandong Simcere Biopharmaceutical Co., Ltd. (山東先聲生物製藥有限公司), a limited liability company established in the PRC on June 30, 1999 and a subsidiary of the Company
Shanghai Simcere Pharmaceutical Co., Ltd. (上海先聲藥業有限公司), a limited liability company established in the PRC on July 20, 2000 and a subsidiary of the Company
the ordinary share(s) of the Company
the holder(s) of the Share(s)

– 4 –

DEFINITIONS

“Simcere Biology”
“Simnogen Biotech”
“Simcere Europe”
“Simcere Pharmaceutical”
“Simcere Shanghai Pharmaceutical”
“Simcere UK”
“Stock Exchange”
“Takeovers Code”
“Trustee”
“Ultimate Controlling Shareholders”
“Underlying Shares”
Simcere Biology Medical Technology Co., Ltd. (先聲生物醫藥科技有限公司), a limited liability company established in the PRC on March 14, 2012 and a subsidiary of the Company
Simnogen Biotech Ltd. (南京先合津生物科技有限公司), a limited liability company established in the PRC held by Shandong Simcere as to 51%
Oy Simcere Europe Ltd., a limited company incorporated under the laws of the Republic of Finland on September 14, 2007 and a subsidiary of the Company
Simcere Pharmaceutical Co., Ltd. (先聲藥業有限公司), a limited liability company established in the PRC on September 10, 1998 and a subsidiary of the Company
Simcere (Shanghai) Pharmaceutical Co., Ltd. (先聲
（上海）醫藥有限公司), a limited liability company established in the PRC on December 16, 2011 and a subsidiary of the Company
Simcere UK Limited, a private company limited by shares incorporated under the Companies Act 2006 of the United Kingdom on December 20, 2017 and a subsidiary of the Company
The Stock Exchange of Hong Kong Limited
the Codes on Takeovers and Mergers and Share Buy-backs issued by the Securities and Futures Commission in Hong Kong, as amended from time to time
the trustee for the time being of the 2021 RSU Scheme, being FUTU TRUSTEE LIMITED
Simcere Investments Group Limited, P&H Holdings Group Ltd., Right Wealth Holdings Limited, Mr. Ren Jinsheng, Mr. Ren Yong, Ms. Li Shimeng, Mr. Ren Weidong, Ms. Ren Zhen and Ms. Peng Suqin
8,712,000 new Shares to be issued and allotted by the Company to the Trustee underlying the Proposed RSU Grants

– 5 –

DEFINITIONS

“Wuhu Simcere” Wuhu Simcere Zhongren Pharmaceutical Co., Ltd. (蕪湖先聲中人藥業有限公司), a limited liability company established in the PRC on September 19, 2008 and a subsidiary of the Company “%” per cent

In this circular, the terms “close associate”, “core connected person”, “controlling shareholder”, “subsidiary” and “substantial shareholder” shall have the meanings given to such terms in the Listing Rules, unless the context otherwise requires.

– 6 –

LETTER FROM THE BOARD

==> picture [44 x 34] intentionally omitted <==

Simcere Pharmaceutical Group Limited 先聲藥業集團有限公司

(Incorporated in Hong Kong with limited liability)

(Stock code: 2096)

Executive Directors: Mr. REN Jinsheng (Chairman) Mr. WAN Yushan Mr. TANG Renhong

Non-executive Director: Mr. ZHAO John Huan

Independent non-executive Directors: Mr. SONG Ruilin Mr. WANG Jianguo Mr. WANG Xinhua

Registered office: 43/F, AIA Tower 183 Electric Road North Point Hong Kong

Headquarters in the PRC: No. 699-18, Xuanwu Road Xuanwu District, Nanjing Jiangsu PRC

October 12, 2021

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED GRANT OF RSUS TO THE CONNECTED GRANTEES AND NOTICE OF EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

The purpose of this circular is to give you with information in respect of the resolutions to be proposed at the EGM including, among other matters, (i) connected transactions in relation to the proposed grant of RSUs to the Connected Grantees; and (ii) to give you notice of the EGM at which resolutions will be proposed for the Shareholders to consider and, if thought fit, approve the aforesaid matter.

A notice convening the EGM is set out on pages 57 to 60 of this circular.

– 7 –

LETTER FROM THE BOARD

2. CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED GRANT OF RSUS TO THE CONNECTED GRANTEES

Reference is made to the announcement of the Company dated August 27, 2021 in relation to, among others, the proposed grant of RSUs to the Connected Grantees and the appointment of the Independent Financial Advisor.

On August 27, 2021, the Board has resolved to grant a total of 8,712,000 RSUs to the Connected Grantees under the 2021 RSU Scheme, subject to the Independent Shareholders’ approval at the EGM. The Proposed RSU Grants shall be satisfied by the issue and allotment of the Underlying Shares at the price of HK$6.3 per Share to the Trustee pursuant to the General Mandate and in accordance with the terms of the 2021 RSU Scheme.

Upon the issue and allotment of the Underlying Shares, the Underlying Shares will be held by the Trustee for the Connected Grantees and be transferred to the Connected Grantees at nil consideration at the end of each vesting period subject to the satisfaction of the relevant vesting conditions as may be specified by the Board at the time of making such grant. The vesting schedule and vesting conditions of the RSUs to be granted to the Connected Grantees are set out as below:

No. of the RSUs	Vesting Date	Vesting Conditions	Vesting Conditions
One third of the	August 27, 2022	(i)	the aggregate amount of profit for the year and
RSUs			research and development costs for the year ending
			December 31, 2021 has an increment of no less than
			15% as compared with that for the year ended
			December 31, 2020; and
		(ii)	the results of individual performance assessments
			carried out by the Group’s human resources
			committee in accordance with each department’s
			function and target.
One third of the	August 27, 2023	(i)	the aggregate amount of profit for the year and
RSUs			research and development costs for the year ending
			December 31, 2022 has an increment of no less than
			32% as compared with that for the year ended
			December 31, 2020 and achieves positive growth as
			compared with that for the year ending December
			31, 2021; and
		(ii)	the results of individual performance assessments
			carried out by the Group’s human resources
			committee in accordance with each department’s
			function and target.

– 8 –

LETTER FROM THE BOARD

No. of the RSUs Vesting Date Vesting Conditions One third of the August 27, 2024 (i) the aggregate amount of profit for the year and RSUs research and development costs for the year ending December 31, 2023 has an increment of no less than 52% as compared with that for the year ended December 31, 2020 and achieves positive growth as compared with that for the year ending December 31, 2021; and
(ii) the results of individual performance assessments carried out by the Group’s human resources committee in accordance with each department’s function and target.

The following table sets out the details of the RSUs to be granted to the Connected Grantees:

Name of Connected Grantee *Directors of the Company* Mr. Wan Yushan Mr. Tang Renhong Sub-total	Number of RSUs granted 2,025,000 3,000,000 5,025,000	Number of Underlying Shares to be issued 2,025,000 3,000,000 5,025,000	Approximate market value of the Underlying Shares as of the Latest Practicable Date(1) 13,992,750 20,730,000 34,722,750	Approximate percentage of total number of Shares in issue as of the Latest Practicable Date 0.077% 0.115%
				0.192%

– 9 –

LETTER FROM THE BOARD

Name of Connected Grantee *Other Connected Grantees* Mr. Shi Ruiwen Mr. Cheng Xianghua Mr. Lu Jianxue Ms. Wang Xi Mr. Wang Feng Ms. Ma Yan Ms. Chen Yanqiong Mr. Yu Qingzhu Ms. Chen Qianjie Ms. Cong Yuehua Mr. Peng Shaoping Mr. Zhang Rong Sub-total Total	Number of RSUs granted 411,000 615,000 615,000 492,000 492,000 306,000 165,000 129,000 63,000 96,000 225,000 78,000 3,687,000 8,712,000	Number of Underlying Shares to be issued 411,000 615,000 615,000 492,000 492,000 306,000 165,000 129,000 63,000 96,000 225,000 78,000 3,687,000 8,712,000	Approximate market value of the Underlying Shares as of the Latest Practicable Date(1) 2,840,010 4,249,650 4,249,650 3,399,720 3,399,720 2,114,460 1,140,150 891,390 435,330 663,360 1,554,750 538,980 25,477,170 60,199,920	Approximate percentage of total number of Shares in issue as of the Latest Practicable Date 0.016% 0.023% 0.023% 0.019% 0.019% 0.012% 0.006% 0.005% 0.002% 0.004% 0.009% 0.003%
				0.141%
				0.333%

Note:

The market value of the Underlying Shares to be issued to the Connected Grantees is calculated based on the closing market price of HK$6.91 per Share as of the Latest Practicable Date.

The number of RSUs proposed to be granted to each of the Connected Grantees is primarily determined by the Board with reference to, among other things, their respective roles, responsibilities, work experience, contributions and remuneration packages, as well as the market value of the awarded shares or restricted share units granted to the directors and/or senior management of comparable companies (the “ Comparable Companies ”). The Comparable Companies are selected based on the following criteria: (i) companies that are listed on the Main Board of the Stock Exchange; (ii) companies which recorded a total revenue of more than RMB500 million in the first half of 2021 with more than 50% of such revenue generated from innovative pharmaceuticals business; and (iii) companies which had announced the grant of share awards or restricted share units to directors and/or senior management of such companies during the twelve months prior to August 27, 2021, being the date on which the Proposed RSU Grants were approved by the Board. The Board has identified, to the best of its knowledge and ability, 6 Comparable Companies which it considers to be an exhaustive list of the comparable companies based on the abovementioned criteria, including 3S Bio Inc. (stock code: 1530.HK), Wuxi Biologics (Cayman) Inc. (stock code: 2269.HK), WuXi AppTec Co., Ltd. (stock code:

– 10 –

LETTER FROM THE BOARD

2359.HK), Shanghai Junshi Biosciences Co., Ltd. (stock code: 1877.HK), BeiGene, Ltd. (stock code: 6160.HK) and Innovent Biologics, Inc. (stock code: 1801.HK).

The following table sets out the positions and responsibilities in the Group of each of the Connected Grantees:

Name of the Connected
Grantee	Position	Responsibility
*Directors of the Company*
Mr. Wan Yushan	Executive Director and chief	Responsible for supervising the
	financial officer	financial and legal management
		and formulating financial
		strategies of the Group
Mr. Tang Renhong	Executive Director and executive	Responsible for the overall
	vice president	management of Shanghai R&D
		Center and management of the
		pre-clinical R&D of innovative
		pharmaceuticals of the Group
*Other Connected Grantees*
Mr. Cheng Xianghua	Vice president of the Company,	Responsible for the management of
	director of Simcere	commercial sales and marketing
	Pharmaceutical, director and	operations of the Group
	general manager of Hainan
	Simcere, director of Wuhu
	Simcere, director and general
	manager of Shanghai Simcere,
	director of Hainan Yaozhen
	and director of Simcere Europe
Mr. Lu Jianxue	Vice president of the Company,	Responsible for the management of
	director of Hainan Simcere,	strategic account department
	director and general manager
	of Jiangsu Simcere
Ms. Wang Xi(1)	Vice president of the Company	Responsible for the management of
		non-hospital marketing, online
		sales business, procurement and
		supply chain business
Mr. Wang Feng	Vice president of the Company,	Responsible for marketing
	director of Hainan Simcere and	department, medical department,
	director of Simcere Biology	regulatory affairs and registration
		business, and the party committee
		work

– 11 –

LETTER FROM THE BOARD

Name of the Connected
Grantee	Position	Responsibility
Mr. Shi Ruiwen	Vice president of the Company,	Responsible for the pharmaceutical
	general manager of Simcere	business and the preparation of
	Pharmaceutical, director of	Hainan Research Institute
	Wuhu Simcere, director of
	Shandong Simcere, general
	manager of Simcere Biology
	and director of Simcere Europe
Ms. Ma Yan	Executive manager of the	Responsible for the investment and
	Company, general manager of	cooperation business in mainland
	Nanjing BioSciKin, director of	China and alliance management
	Simnogen Biotech and director
	of BCY Pharm
Mr. Peng Shaoping	Executive manager of the	Responsible for the research and
	Company, director of Hainan	development of innovative drugs
	Simcere and Hainan Yaozhen	and CMC business of Nanjing
		Research Institute and EHS
		management of the Group
Ms. Chen Yanqiong	Senior manager of the Company,	Responsible for the business-related
	director of Hainan Yaozhen	financial support of the Company
Mr. Yu Qingzhu	Chief executive of Chengmai	Responsible for the operation and
	Branch of Hainan Simcere	management of various businesses
		of Hainan Simcere
Ms. Cong Yuehua	Executive manager of the	Responsible for the Group’s
	Company, director of Simcere	business development in Europe
	UK
Mr. Zhang Rong	Managing officer of the	Responsible for the management of
	Company, director of BCY	certain areas of clinical
	Pharm	pharmacology
Ms. Chen Qianjie	General manager of Shandong	Responsible for the operation and
	Simcere	management of various businesses
		of Shandong Simcere

Note:

Ms. Wang Xi is the spouse of Mr. Ren Jinsheng, who is an executive Director and the chief executive officer of the Company, and one of the controlling shareholders of the Company.

– 12 –

LETTER FROM THE BOARD

Issue and Allotment of the Underlying Shares

The issue and allotment of the Underlying Shares shall be subject to (i) the approval by the Independent Shareholders at the EGM in respect of the Proposed RSU Grants; and (ii) the Listing Committee of the Stock Exchange having granted the approval for the listing of, and permission to deal in the Underlying Shares.

Pursuant to the 2021 RSU Scheme, the Company shall cause to be paid the subscription money for the Underlying Shares from the Company’s internal resources, and the Trustee shall subscribe for the Underlying Shares in cash. As such, no fund will be raised by the Company as a result of the issue and allotment of the Underlying Shares.

The Underlying Shares, being 8,712,000 new Shares, to be issued and allotted by the Company represent (i) approximately 0.333% of the total number of Shares in issue as of the Latest Practicable Date; and (ii) approximately 0.331% of the total number of Shares in issue as enlarged by the issue and allotment of the Underlying Shares (assuming there is no other change in the issued share capital of the Company).

Market Value

Based on the closing price of HK$6.91 per Share as quoted on the Stock Exchange as of the Latest Practicable Date (i.e. October 7, 2021), the market value of the Underlying Shares amounts to approximately HK$60,199,920.

General Mandate

Pursuant to the General Mandate, the Directors are authorised to allot, issue and deal with up to 521,728,323 Shares pursuant to an ordinary resolution passed at the annual general meeting of the Company held on June 25, 2021. As of the Latest Practicable Date, 10,937,000 Shares have been allotted and issued under the General Mandate.

Application for Listing

Application will be made by the Company to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, the Underlying Shares.

– 13 –

LETTER FROM THE BOARD

Impact on the Shareholding Structure of the Company

The following table sets out the shareholding structure of the Company as of the Latest Practicable Date and immediately after the issue and allotment of the Underlying Shares to the Trustee (assuming no other change in the issued share capital of the Company):

Name of Shareholder *Directors* Mr. REN Jinsheng(1) Mr. ZHAO John Huan(2) Mr. Tang Renhong Mr. Wan Yushan Sub-total for Directors *Other Connected Grantees* Mr. Cheng Xianghua Mr. Lu Jianxue Ms. Wang Xi Mr. Wang Feng Mr. Shi Ruiwen Ms. Ma Yan Mr. Peng Shaoping Ms. Chen Yanqiong Mr. Yu Qingzhu Ms. Cong Yuehua Mr. Zhang Rong Ms. Chen Qianjie Sub-total for Other Connected Grantees *Other core connected persons* Excel Management(3) Trustee(4) Sub-total for other core connected persons Public Shareholders Total	As of the Latest Practicable Date Number of Shares held % 2,035,922,965 77.719% 107,065,613 4.087% – – – – 2,142,988,578 81.807% – – – – – – – – – – – – – – – – – – – – – – – – – – 54,719,407 2.089% 10,937,000 0.418% 65,656,407 2.506% 410,933,633 15.687% 2,619,578,618 100%	Immediately after the issue and allotment of the Underlying Shares to the Trustee (assuming no other change in the issued share capital of the Company) Number of Shares held % 2,035,922,965 77.462% 107,065,613 4.074% – – – – 2,142,988,578 81.535% – – – – – – – – – – – – – – – – – – – – – – – – – – 54,719,407 2.082% 19,649,000 0.748% 74,368,407 2.830% 410,933,633 15.635% 2,628,290,618 100%	Immediately after the full vesting of the Proposed RSU Grants (assuming no other change in the issued share capital of the Company) Number of Shares held % 2,035,922,965 77.462% 107,065,613 4.074% 3,000,000 0.114% 2,025,000 0.077% 2,148,013,578 81.727% 615,000 0.023% 615,000 0.023% 492,000 0.019% 492,000 0.019% 411,000 0.016% 306,000 0.012% 225,000 0.009% 165,000 0.006% 129,000 0.005% 96,000 0.004% 78,000 0.003% 63,000 0.002% 3,687,000 0.140% 54,719,407 2.082% 10,937,000 0.416% 74,368,407 2.830% 410,933,633 15.635% 2,628,290,618 100%	Immediately after the full vesting of the Proposed RSU Grants (assuming no other change in the issued share capital of the Company) Number of Shares held % 2,035,922,965 77.462% 107,065,613 4.074% 3,000,000 0.114% 2,025,000 0.077% 2,148,013,578 81.727% 615,000 0.023% 615,000 0.023% 492,000 0.019% 492,000 0.019% 411,000 0.016% 306,000 0.012% 225,000 0.009% 165,000 0.006% 129,000 0.005% 96,000 0.004% 78,000 0.003% 63,000 0.002% 3,687,000 0.140% 54,719,407 2.082% 10,937,000 0.416% 74,368,407 2.830% 410,933,633 15.635% 2,628,290,618 100%
				81.727%
				0.023% 0.023% 0.019% 0.019% 0.016% 0.012% 0.009% 0.006% 0.005% 0.004% 0.003% 0.002%
				0.140%
				2.082% 0.416%
				2.830%
				15.635%
				100%

– 14 –

LETTER FROM THE BOARD

Notes:

Mr. Ren Jinsheng, together with the other Ultimate Controlling Shareholders collectively and indirectly hold 2,035,922,965 Shares, including (i) 606,810,031 Shares and 1,196,009,986 Shares directly held by Artking Global Limited and Simcere Pharmaceutical Holding Limited, respectively, both of which are companies controlled by the Ultimate Controlling Shareholders; and (ii) 112,141,578 Shares and 120,961,370 Shares directly held by Simcere Investments Group Limited and Fortune Fountain Investment Limited, respectively, both of which are companies controlled by Mr. Ren Jinsheng. By virtue of the SFO, as the Ultimate Controlling Shareholders are deemed to be persons acting in concert under the Takeovers Code, each of them is deemed to be interested in the Shares held by each other.
Premier Praise Limited (尚嘉有限公司) (the “ Premier Praise ”) directly holds 107,065,613 Shares. Premier Praise is held as to 82.22% by Hony Capital Fund V, L.P. The general partner of Hony Capital Fund V, L.P. is Hony Capital Fund V GP, L.P., whose general partner is Hony Capital Fund V GP Limited. Hony Capital Fund V GP Limited is wholly owned by Hony Group Management Limited, 80% equity interest of which is held by Hony Managing Partners Limited, which in turn is wholly owned by Exponential Fortune Group Limited. Exponential Fortune Group Limited is held as to 49% by Mr. Zhao John Huan and as to 51% by two other individuals who are Independent Third Parties, respectively. Therefore, Mr. Zhao John Huan is deemed to be interested in the Shares held by Premier Praise by virtue of the SFO.
Excel Management is an employee incentive platform for the purpose of the Pre-IPO Share Incentive Scheme.
Since the Trustee will hold the Underlying Shares for the benefit of the Connected Grantees, the Trustee will become a close associate of the Connected Grantees and therefore a core connected person for the purpose of Rule 8.24 of the Listing Rules. In addition, the Trustee does not exercise any voting rights in respect of any Shares held by the Trustee for the purpose of the 2021 RSU Scheme.
In accordance with Rule 8.08(1)(d) of the Listing Rules, the Stock Exchange has granted the Company a waiver and accepted a lower public float of 15.45% of the Company’s issued share capital.

Information about the Company

The Company is a company engaged in the R&D, production and commercialization of pharmaceuticals with the national key laboratory of translational medicine and innovative pharmaceuticals. The Company has a diversified product portfolio in strategically focused therapeutic areas, including, (i) oncology, (ii) central nervous system diseases and (iii) autoimmune diseases, with leading positions in their respective therapeutic segments and/or established track record. The Company continues to source innovative therapies globally and established extensive strategic partnership with several multinational companies.

Reasons for and Benefits of the Proposed RSU Grants

The 2021 RSU Scheme forms part of the incentive schemes of the Group. The Board considers that the Proposed RSU Grants are to (i) recognize and reward the Connected Grantees for their the contributions to the Group; (ii) encourage, motivate and retain the Connected Grantees, whose contributions are beneficial to the continual operation, development and long-term growth of the Group; and (iii) provide additional incentive for the Connected Grantees to achieve performance goals, with a view to achieving the objectives of increasing the value of the Group and aligning the interests of the Connected

– 15 –

LETTER FROM THE BOARD

Grantees to the Shareholders through ownership of Shares. The Proposed RSU Grants recognizes their past contributions to the Group’s business performance and aims to secure their long-term support and commitment to the Group which are vital to the future development of the Group. As the Group’s business is undergoing rapid expansion, the Company believes that the Proposed RSU Grants serves as an important incentive to motivate them to bring a higher return to the Company.

The Board is of the view that the Proposed RSU Grants are in line with the Company’s remuneration policy, which includes basic salary, performance-based bonus and long-term incentives, such as the 2021 RSU Scheme. The Proposed RSU Grants align the interests of the Connected Grantees directly with the interests of the Shareholders through ownership of the Shares and helps to further encourage them to devote their efforts to the Group’s development.

In addition to the granting of the RSUs, the Board also considered the grant of share options to the Connected Grantees as an alternative to provide incentives to the Connected Grantees, but given the Connected Grantees would be required to pay the exercise price upon exercise of the share options and as such significantly higher number of share options would need to be granted to the Connected Grantees to provide the comparable incentives as the grant of the RSUs, thereby resulting in higher dilution impact on the shareholding interests of the other Shareholders, the Board considers the grant of share options to be a less desirable alternative compared to the grant of the RSUs.

Furthermore, the dilutive effect of the Proposed RSU Grants to the interests of the existing public Shareholders is insignificant and there will be no substantial cash outflow by the Company under the Proposed RSU Grants.

Proposed grant of RSUs to the executive Directors of the Company

The proposed grant of RSUs to the executive Directors of the Company, namely Mr. Wan Yushan and Mr. Tang Renhong, forms part of their remuneration package for their services provided to the Group. The proposed grant of RSUs to the executive Directors of the Company aims to provide sufficient incentive to attract, retain and motivate Mr. Wan Yushan and Mr. Tang Renhong to participate in the formulation of strategy and long-term development of the Company and to recognise their contributions to the growth of the Company.

Details of the professional expertise, experience and contributions to the Group of each of Mr. Wan Yushan and Mr. Tang Renhong are set out below:

Mr. Wan Yushan is an executive Director and the chief financial officer of the Company. He is primarily responsible for the financial and legal management and formulating financial strategies of the Group. Mr. Wan has 20 years of experience with the Group where he has accumulated knowledge and skills required in the financial management of the Group. Mr. Wan joined the Group in May 2000 and has assumed various positions successively since then, including the financial controller, general manager of financial department, vice president and chief financial officer. On November 19, 2019, Mr. Wan was officially appointed as an executive Director and the chief financial

– 16 –

LETTER FROM THE BOARD

officer of the Company. He has also been the director of several subsidiaries of the Company including, among others, Hainan Simcere since July 2011, Shandong Simcere since August 2017 and Simcere Pharmaceutical since July 2017. Mr. Wan Yushan has made irreplaceable contributions to the finance, legal affairs, management process optimization and informatization of the Group. Under his leadership, the Company was successfully listed on the Stock Exchange in October 2020.

Mr. Tang Renhong is an executive Director and the executive vice president of the Company. He is primarily responsible for the overall management of Shanghai R&D Center and management of the pre-clinical R&D of innovative pharmaceuticals of the Group. Mr. Tang has more than 12 years of experience in pharmaceutical research and development and management of pharmaceutical companies. Mr. Tang joined the Group acting as the vice president in May 2019. He was officially appointed as an executive Director and the vice president of the Company on November 19, 2019 and further appointed as the senior vice president and the executive vice president of the Company on June 1, 2020 and March 31, 2021, respectively. Prior to that, he served as the vice general manager of Shanghai Shengdi Pharmaceutical Co., Ltd. (上海盛迪醫藥有限公司) from September 2017 to May 2019. From September 2013 to August 2017, Mr. Tang worked as the associate director of China Innovation Center of Astrazeneca Investment (China) Co., Ltd. (阿斯利康投資（中國）有限公司). Before that, he worked at the Novo Nordisk Research Centre China (諾和諾德中國研究發展中心) from June 2009 to September 2013 with the last position there being the head of department. At the beginning of his career, he was a postdoctoral researcher at the University of California, San Francisco from April 2007 to May 2009. Mr. Tang has made useful contributions to the strategy formulation and long-term development of the Group. Under his leadership and management, the Group has made rapid progress in innovation and R&D-driven transformation. The innovative drug pipelines at the early stage and at clinical stage in 2020 achieved a significant increase as compared with those in 2019, and the advancement of the projects was in line with the Group’s expectations. As at 31 December 2020, the Group had more than 50 innovative product candidates in its R&D pipeline, with over 20 new projects established as compared to the beginning of the year. During 2020, the Group had also obtained six IND approvals, had one IND application accepted for approval and 11 projects at clinical development stage. At the same time, the Shanghai Innovation Center led by Mr. Tang has become the main engine of the Group’s innovative pharmaceutical research and development. Currently, the Group has nearly 60 innovative pharmaceutical projects in its R&D pipeline, and 11 innovative pharmaceutical products in the clinical research stage. In the first half of 2021, 5 new pivotal registrations and phase III clinical trials and 1 phase I clinical trial were added, 7 drug clinical trial approval notices were obtained, and 7 subjects in the first case achieved clinical enrollment. The Group currently has 6 pivotal registrations and phase III clinical trials under research, 2 phase II clinical trials, and 5 phase I clinical trials.

After considering (i) Mr. Wan Yushan’s indispensable role as the chief financial officer the Company and his irreplaceable contributions to the finance, legal affairs, management process optimization and informatization of the Group; and (ii) Mr. Tang Renhong’s indispensable role as the executive vice president of the Company and his useful contributions to the strategy formulation and long-term development of the Group, the Board proposed to remunerate Mr. Wan Yushan and Mr. Tang Renhong with the

– 17 –

LETTER FROM THE BOARD

proposed grant of RSUs. The proposed grant of RSUs will provide Mr. Wan Yushan and Mr. Tang Renhong with certainty of monetary benefits regardless of the share price performance. Such grant that can be realized and is readily available at the end of the vesting period is akin to payment of a deferred bonus and hence an effective incentive. In addition, the proposed grant of RSUs to Mr. Wan Yushan and Mr. Tang Renhong will further align the interests of Mr. Wan Yushan and Mr. Tang Renhong with the long-term interests of the Shareholders, ensuring a better linkage between the Company’s long-term strategic and financial goals and executive compensation.

The number of RSUs proposed to be granted to each of Mr. Wan Yushan and Mr. Tang Renhong was determined by the Board after taking into account all of the aforementioned factors and the market value of the awarded shares or restricted share units granted to the executive directors of the Comparable Companies as at the date of grant, which ranged from approximately HK$2.7 million to HK$133.2 million, with an average of approximately HK$42.3 million. Calculated based on the closing market price of HK$6.91 per Share as of the Latest Practicable Date, the market value of the Shares underlying the RSUs proposed to be granted to each of Mr. Wan Yushan and Mr. Tang Renhong amounted to approximately HK$14.0 million and HK$20.7 million, respectively, which falls within the abovementioned range, and is below the average market value of the awarded shares or restricted share units granted to the executive directors of the Comparable Companies.

Proposed grant of RSUs to the Other Connected Grantees

The proposed grant of RSUs to the Other Connected Grantees, namely, Mr. Cheng Xianghua, Mr. Lu Jianxue, Ms. Wang Xi, Mr. Wang Feng, Mr. Shi Ruiwen, Ms. Ma Yan, Mr. Peng Shaoping, Ms. Chen Yanqiong, Mr. Yu Qingzhu, Ms. Cong Yuehua, Mr. Zhang Rong and Ms. Chen Qianjie, forms part of their remuneration package for their services provided to the Group. The proposed grant of RSUs to the Other Connected Grantees aims to provide sufficient incentive to attract, retain and motivate the Other Connected Grantees, thus promote an alignment of interests between the Shareholders and the Other Connected Grantees by further enhancing the value of the Company.

Details of the professional expertise, experience and contributions to the Group of each of the Other Connected Grantees are set out below:

Mr. CHENG Xianghua (程向華) is a vice president of the Company. He is responsible for commercial sales and marketing operation management of the Group. Mr. Cheng also concurrently serves as a director of Simcere Pharmaceutical, a director and general manager of Hainan Simcere, a director of Wuhu Simcere, a director and general manager of Shanghai Simcere, a director of Hainan Yaozhen and a director of Simcere Europe. Mr. Cheng joined the Group in June 2000 and has successively held various positions, including the sales manager, business director, general manager of business department, assistant to president and vice president, and has accumulated rich experience of management in the industry. Mr. Cheng has played an important management role in continuously expanding the marketing team of the Group and improving professional marketing capabilities, etc. As of June 30, 2021, the Group has approximately 4,000 salespersons in total.

– 18 –

LETTER FROM THE BOARD

Mr. LU Jianxue (陸劍雪) is a vice president of the Company. He is responsible for strategic account department. Mr. Lu also concurrently serves as a director of Hainan Simcere, a director and general manager of Jiangsu Simcere. Mr. Lu joined the Group in July 2001 and gained rich experience of management in the pharmaceutical industry. Under the joint efforts made by the Group and Mr. Lu, on December 28, 2020, Sanbexin, which was approved for sale on July 29, 2020, has been approved to be included into the “Drugs Catalogue for the National Basic Medical Insurance, Work-related Injury Insurance and Maternity Insurance (2020)” issued in the corresponding period.

Ms. WANG Xi (王熙) is a vice president of the Company. She is responsible for the management of non-hospital marketing, online sales business, procurement and supply chain business. Ms. Wang joined the Group in May 2020. Under the general environment of COVID-19 outbreak in domestic in 2020, performance achieved in the non-hospital sales business managed by Ms. Wang remained a year-on-year growth of 2%, of which the sales from retail pharmacy business achieved a year-on-year growth of 22%, which significantly increased the market share of the Group’s products in retail pharmacies.

Mr. WANG Feng (王峰) is a vice president of the Company. He is responsible for the marketing department, medical department, regulations science and registration business as well as affairs of the CPC Committee of the Group. Mr. Wang also concurrently serves as a director of Hainan Simcere and a director of Simcere Biology. Mr. Wang joined the Group in June 2007, and he gained rich experience in the field of medicine, marketing, regulations and registration. Under the major efforts made by Mr. Wang, during the year ended December 31, 2020, the Group obtained six approvals for IND application and production approvals for two innovative drugs, i.e. Sanbexin and Orencia. Meanwhile, the Group also submitted marketing applications for six generic drugs, including nifedipine controlled-release tablets, palbociclib capsules, apremilast tablets, bendamustine hydrochloride for injection, mycophenolate mofetil capsules and Tenofovir Alafenamide Fumarate tablets and filed the application for and completed four consistency evaluation cases regarding pemetrexed disodium for injection, bortezomib for injection, nedaplatin for injection and amoxicillin and clavulanate potassium tablets. During the year ended December 31, 2020, the Group had 89 new patent applications (including domestic and overseas unpublished patents applications): 78 invention patent applications, 7 utility model patent applications and 4 appearance design patent applications. As of December 31, 2020, the Group has accumulatively obtained 168 licensed invention patents, 63 licensed utility model patents and 15 licensed appearance design patents.

Mr. SHI Ruiwen (史瑞文) is a vice president of the Company. He is responsible for the pharmaceutical business of the Group and the preparation of the Hainan Research Institute. Mr. Shi also concurrently serves as a general manager of Simcere Pharmaceutical, a general manager of Simcere Biology, a director of Wuhu Simcere, a director of Shandong Simcere and a director of Simcere Europe. Mr. Shi joined the Group in November 2017. Mr. Shi has nearly 15 years of experience in the field of pharmaceutical science and management in various pharmaceutical companies. Under the management of Mr. Shi, the Group’s pharmaceutical system adheres to the concept of “The Best Products, the Pursuit of Excellence”, continues to manufacture high-quality products and provides a strong supply chain. The existing five pharmaceutical production facilities have

– 19 –

LETTER FROM THE BOARD

achieved significant development. On March 19, 2020, the workshop for oral solid dosage forms of Nanjing production facility of the Group passed the on-site inspection of the U.S. FDA with zero defect. On November 16, 2020, Jiangsu Simcere Biological Pharmaceutical Co., Ltd. (江蘇先聲生物製藥有限公司), the antibody production arm of the Group, obtained the Pharmaceutical Manufacturing Permit issued by the NMPA.

Ms. MA Yan (馬妍) is an executive director of the Company. She is responsible for BD in Mainland China and investment in Mainland China as well as alliance management business. Ms. Ma also concurrently serves as a general manager of Nanjing BioSciKin, a director of Simnogen Biotech and a director of BCY Pharm. Ms. Ma Yan joined the Group in March 2008. Under the joint efforts made by the Group and Ms. Ma, in March 2020, the Company entered into collaboration agreements with Jiangsu Alphamab Biopharmaceuticals Co., Ltd. (江蘇康寧傑瑞生物製藥有限公司) and 3D Medicines (Beijing) Co., Ltd. (思路迪（北京）醫藥科技有限公司), pursuant to which the Group was granted an exclusive right to promote Envafolimab (KN035) for all oncology indications in China, potentially the first subcutaneously injectable anti-PD-L1 domain antibody worldwide. On December 17, 2020, the NMPA accepted the biologic license application for Envafolimab in the treatment of advanced solid tumors with microsatellite instability-high phenotype/mismatch-repair deficiency, and included the product into the list of priority review in January 2021. The U.S. FDA also rewarded the product with orphan drug designation in treating advanced biliary tract cancer on January 18, 2020.

Mr. PENG Shaoping (彭少平) is the executive director of the Company, responsible for CMC business of small molecule innovative drugs, generic drugs R&D of Nanjing Research Institute (南京研究院) and EHS management of the Group. Mr. Peng is also a director of Hainan Simcere and Hainan Yaozhen. Mr. Peng joined the Group in February 2019. In 2020, Mr. Peng promoted the innovation and transformation of Nanjing Research Institute, completed its innovative integration with Shanghai Innovation Center, Beijing Innovation Center and a national key laboratory of translational medicine and innovative pharmaceuticals (轉化醫學與創新藥物國家重點實驗室), established a small molecule innovative drugs CMC platform, was responsible for the development and transfer of the innovative drugs of the Group, promoted the completion of four CMC technology packages (NTRK/AER/URC/CKBA) according to the nodes, and completed SERD toxicology approval ahead of schedule. Meanwhile, Mr. Peng promoted multiple external cooperation, led two small molecule projects, two improved new drug projects and one OTC pharmaceutical project, and assisted in promoting two projects of Beijing Innovation Center. Since his management of Nanjing Research Institute, Mr. Peng also promoted the approval of 7 generic drugs/consistency projects and 6 application projects. Hainan Yaozhen is an important part of the Group’s future strategic layout. It is a scientific and technological innovation company that takes small molecule drugs from preclinical to early clinical full coverage of scientific research capacity, takes oncology, anti-infective and fibrosis as the main disease fields, and builds a new PROTAC platform in technology to develop degradable targets.

Ms. CHEN Yanqiong (陳燕瓊) is the senior director of the Company, responsible for the Company’s business-related financial support. Ms. Chen also serves as a director of Hainan Yaozhen. Ms. Chen joined the Group in April 2013. In 2020, Ms. Chen provided important professional support for the follow-up reorganization of the cell therapy sector and a number of successful signed/proposed BD projects (G1/Hightechbio/Envafolimab, etc.).

– 20 –

LETTER FROM THE BOARD

Mr. YU Qingzhu (余慶祝) is the executive deputy general manager of Hainan Simcere and the chief executive of Hainan Simcere Chengmai Branch, responsible for the operation and management of various businesses of Hainan Simcere. Mr. Yu joined the Group in March 2002 and has been responsible for the pharmaceutical business of the Group for nearly 20 years. He has accumulated rich experience in production management. Under the management of Mr. Yu, Hainan Simcere experienced a decrease of 7% in its production cost in 2020, obtained the Pharmaceutical Operation Permit, and ensured the production of anti-epidemic drugs during the epidemic period. Hainan Simcere is located in the Pharmaceutical Valley Industrial Park of Haikou High-tech Zone and the Economic Development Zone of Chengmai, among which, the Haikou factory covers an area of 152,000 m[2] and the Chengmai factory covers an area of 259,000 m[2] . It has built workshops for oral solid preparations, oral antibiotic preparations and powders, some workshops have received EU GMP certification, and all laboratories and quality management systems have passed the U.S. FDA inspection. Hainan Simcere has long facilitated the Group’s products with high quality and strong supply capacity, benefiting patients all over the world.

Ms. CONG Yuehua (叢越華) joined the Group in October 2017 as the executive director of the Company, responsible for the business development of the Group in Europe. Ms. Cong also serves as a director of Simcere UK. Simcere UK is located in the United Kingdom. As the cornerstone of the Group’s European network, Simcere UK continues to work with many European countries to seek highly innovative drug molecules to meet the needs of patients, and continuously meet the Group’s growing product pipeline demand.

Mr. ZHANG Rong (張榮) joined the Group in November 2016. He serves as a director of the Company and is responsible for the management of certain areas of clinical pharmacology. Mr. Zhang also concurrently serves as a director of BCY Pharm. BCY Pharm is a clinically staged enterprise within the Group, which focuses on the research and development of innovative drugs in the field of autoimmune diseases.

Ms. CHEN Qianjie (陳倩潔) serves as a general manager of Shandong Simcere and is responsible for the operation and management of various businesses of Shandong Simcere. Ms. Chen joined the Group in June 1999, has more than 20 years of experience in the production of biologics and gained rich experience in production and management. Led by Ms. Chen, costs per unit of Endostar have continued to decline for six consecutive years. Based on a 11% drop in costs per unit of Endostar in 2019, the costs per unit of Endostar in 2020 continued to decrease by 4% as compared to that in 2019. Endostar’s life cycle research and the introduction of new projects have achieved breakthrough progress. The research and development on the project of recombinant protein R04B000 for the treatment of stroke under the national major pre-research project has been initiated.

After considering the contributions of the Other Connected Grantees to the business development of the Group and the strategic importance of the relevant subsidiaries in which they hold management positions to the business of the Group, the Board intended to remunerate the Other Connected Grantees with the proposed grant of RSUs. The proposed grant of RSUs will provide certain pecuniary benefits to the Other Connected Grantees, regardless of the share price performance. Such grant can be realized and available at any time at the end of the vesting period, similar to the payment of deferred

– 21 –

LETTER FROM THE BOARD

bonuses, so it is an effective incentive measure. In addition, the proposed grant of RSUs to the Other Connected Grantees will further align the interests of the Other Connected Grantees with the long-term interests of the Shareholders, ensuring a better linkage between the Company’s long-term strategic and financial goals and executive compensation.

The number of RSUs proposed to be granted to each of the Other Connected Grantees was determined by the Board after taking into account all of the aforementioned factors and the market value of the awarded shares or restricted share units granted to the senior management (excluding the executive directors) of the Comparable Companies as at the date of grant, which ranged from approximately HK$0.2 million to HK$84.4 million, with an average of approximately HK$11.0 million. Calculated based on the closing market price of HK$6.91 per Share as of the Latest Practicable Date, the market value of the Shares underlying the RSUs proposed to be granted to each of Mr. Shi Ruiwen, Mr. Cheng Xianghua, Mr. Lu Jianxue, Ms. Wang Xi, Mr. Wang Feng, Ms. Ma Yan, Ms. Chen Yanqiong, Mr. Yu Qingzhu, Ms. Chen Qianjie, Ms. Cong Yuehua, Mr. Peng Shaoping, Mr. Zhang Rong amounted to approximately HK$2.8 million, HK$4.2 million, HK$4.2 million, HK$3.4 million, HK$3.4 million, HK$2.1 million, HK$1.1 million, HK$0.9 million, HK$0.4 million, HK$0.7 million, HK$1.6 million and HK$0.5 million, respectively, which falls within the abovementioned range, and is below the average market value of the awarded shares or restricted share units granted to the senior management (excluding the executive directors) of the Comparable Companies.

Accordingly, the Directors (including the independent non-executive Directors, but excluding (i) Mr. Ren Jinsheng in respect of the RSUs proposed to be granted to Ms. Wang Xi; and (ii) each of Mr. Ren Jinsheng and Mr. Zhao John Huan in respect of the RSUs proposed to be granted to himself) consider that the Proposed RSU Grants are carried out on normal commercial terms and in the ordinary course of business of the Group, the terms of the Proposed RSU Grants are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

Listing Rules Implications

The Connected Grantees, being two executive Directors, certain directors and chief executives of subsidiaries of the Company and a senior management of the Company who is also an associate of an executive Director, are connected persons of the Company pursuant to Rule 14A.07 of the Listing Rules. Therefore, the Proposed RSU Grants under the 2021 RSU Scheme constitute connected transactions of the Company under Chapter 14A of the Listing Rules and shall be subject to the reporting, announcement, circular and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Mr. Ren Jinsheng (being the spouse of Ms. Wang Xi) has abstained from voting on the Board resolution in relation to the proposed grant of RSUs to Ms. Wang Xi, and each of Mr. Wan Yushan and Mr. Tang Renhong (being the Connected Grantees themselves) has abstained from voting on the Board resolution in relation to the proposed grant of RSUs to themselves. Save as disclosed above, none of the other Directors had any interest in the Proposed RSU Grants and therefore, no other Director is required to abstain from voting on the relevant Board resolutions.

– 22 –

LETTER FROM THE BOARD

Pursuant to the Listing Rules, Mr. Ren Jinsheng (the spouse of Ms. Wang Xi) and his associates are required to abstain from voting on the resolution to be proposed at the EGM in relation to the proposed grant of RSUs to Ms. Wang Xi. As of the Latest Practicable Date, Mr. Ren Jinsheng and his associates were interested in 2,035,922,965 Shares, representing approximately 77.72% of the total issued share capital of the Company. To the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, other than Mr. Ren Jinsheng and his associates, no other Shareholder is required to abstain from voting on the resolutions to be proposed at the EGM in relation to the Proposed RSU Grants.

Independent Board Committee and Independent Financial Adviser

The Independent Board Committee, comprising Mr. Song Ruilin, Mr. Wang Jianguo and Mr. Wang Xinhua, all being the independent non-executive Directors, had been formed to advise the Independent Shareholders as to the fairness and reasonableness of the terms of the Proposed RSU Grants. Altus Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, considers that the Proposed RSU Grants are carried out on normal commercial terms and in the ordinary course of business of the Group, the terms of the Proposed RSU Grants are fair and reasonable and in the interests of the Company and its Shareholders as a whole so far as the Independent Shareholders are concerned. Accordingly, the Independent Board Committee recommends the Independent Shareholders to vote in favour of the ordinary resolutions to be proposed at the EGM.

The letter from the Independent Board Committee to the Independent Shareholders is set out on pages 26 to 27 of this circular. The letter from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders is set out on pages 28 to 48 of this circular.

3. CLOSURE OF REGISTER OF MEMBERS

The Register of Members will be closed from Wednesday, October 27, 2021 to Monday, November 1, 2021 (both days inclusive), for the purpose of determining the entitlement to attend and vote at the EGM scheduled to be held on Monday, November 1, 2021. The record date will be Monday, November 1, 2021. In order to be eligible to attend and vote at the EGM, all transfer forms accompanied by the relevant share certificates must be lodged with the Company’s share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not later than 4:30 p.m. on Tuesday, October 26, 2021.

4. EXTRAORDINARY GENERAL MEETING

Set out on pages 57 to 60 of this circular is a notice convening the EGM at which, inter alia, ordinary resolutions will be proposed to Shareholders to consider and approve, among other matters, the Proposed RSU Grants.

– 23 –

LETTER FROM THE BOARD

Enclosed with this circular is a proxy form for use at the EGM. Whether or not you are able to attend the meeting, you are requested to complete the proxy form in accordance with the instructions printed thereon and return the same to the share registrar of the Company in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not less than 48 hours (excluding any part of a day that is a public holiday in Hong Kong, i.e. 9:00 a.m. on Friday, October 29, 2021) before the time appointed for holding of the EGM or any adjournment thereof (as the case may be). Completion and return of the proxy form will not preclude you from attending and voting in person at the EGM and any adjournment thereof (as the case may be) should you so wish. In the event that a Shareholder having lodged a proxy form attends and votes at the EGM, his/her/its proxy form will be deemed to have been revoked.

All the resolutions set out in the notice of the EGM would be decided by poll in accordance with the Listing Rules and the Articles. The chairman will explain the detailed procedures for conducting a poll at the commencement of the EGM.

On a poll, every Shareholder present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy will have one vote for every fully paid Share held. A Shareholder present in person (or, in the case of a Shareholder being a corporation, by its duly authorised representative) or by proxy who is entitled to more than one vote need not use all his/her/its votes or cast all his/her/its votes in the same way.

In view of the ongoing COVID-19 epidemic, the Company will implement the following prevention and control measures targeting COVID-19 at the EGM to protect Shareholders from the risk of infection:

(i) Compulsory body temperature check will be conducted, and any person with a body temperature of over 37.0 degree Celsius will be denied entry into the venue;
(ii) Every Shareholder or authorized representative must wear a surgical mask throughout the EGM;
(iii) No refreshment will be served; and
(iv) The Company will maintain appropriate distance and space in the venue.

The Company strongly recommends Shareholders, who intend to attend the EGM, to submit the proxy form for voting instead of attending the EGM in person. The proxy form has been dispatched to Shareholders and is available to download on the Company’s website ( http://www.simcere.com ) or the Stock Exchange’s website ( www.hkexnews.hk ).

After the conclusion of the EGM, the poll results will be published on the websites of the Stock Exchange ( www.hkexnews.hk ) and the Company ( www.simcere.com ) in the manner prescribed under Rule 13.39(5) of the Listing Rules.

– 24 –

LETTER FROM THE BOARD

5. RECOMMENDATION

The Directors consider that the Proposed RSU Grants are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that the Shareholders to vote in favor of all the resolutions proposed at the EGM.

6. GENERAL

Your attention is drawn to the additional information set out in the appendix to this circular.

7. MISCELLANEOUS

The English text of this circular shall prevail over the Chinese text for the purpose of interpretation.

Yours faithfully By order of the Board

Simcere Pharmaceutical Group Limited Mr. Ren Jinsheng Chairman and Chief Executive Officer

– 25 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [44 x 34] intentionally omitted <==

Simcere Pharmaceutical Group Limited 先聲藥業集團有限公司

(Incorporated in Hong Kong with limited liability)

(Stock code: 2096)

October 12, 2021

To the Independent Shareholders

Dear Sir/Madam,

CONNECTED TRANSACTIONS IN RELATION TO PROPOSED GRANT OF RSUS TO THE CONNECTED GRANTEES

We refer to the circular of the Company dated October 12, 2021 (the “ Circular ”) to its Shareholders of which this letter forms part. Capitalized terms defined in the Circular shall have the same meanings in this letter unless the context otherwise requires.

We have been appointed by the Board as the Independent Board Committee to advise you in relation to the Proposed RSU Grants; whether the Proposed RSU Grants are carried out on normal commercial terms and in the ordinary course of business of the Group and whether the terms of the Proposed RSU Grants are fair and reasonable and in the interests of the Company and its Shareholders as a whole; and how to vote on the resolutions regarding the Proposed RSU Grants, taking into account the recommendations from the Independent Financial Adviser.

Altus Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders as to whether the Proposed RSU Grants are carried out on normal commercial terms and in the ordinary course of business of the Group and whether the terms of the Proposed RSU Grants are fair and reasonable and in the interests of the Company and its Shareholders as a whole and to advise the Independent Shareholders on how to vote on the relevant resolutions.

Your attention is drawn to:

(a) the letter from the Board set out on pages 7 to 25 of this circular which contains its recommendation to the Independent Shareholders and the additional information set out in the Appendix to this circular; and

– 26 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

(b) the letter from the Independent Financial Adviser set out on pages 28 to 48 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders, together with the principal factors and reasons taken into consideration in arriving at such advice.

Having considered the advice from the Independent Financial Adviser, we are of the view that the Proposed RSU Grants are carried out on normal commercial terms and in the ordinary course of business of the Group, the terms of the Proposed RSU Grants are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolutions in relation to the Proposed RSU Grants to be presented at the EGM.

Yours faithfully,

For and on behalf of the Board

Mr. Song Ruilin, Mr. Wang Jianguo and Mr. Wang Xinhua Independent Non-Executive Directors

– 27 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of a letter of advice from Altus Capital Limited, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the connected transactions in relation to the proposed grant of RSUs to the Connected Grantees, which have been prepared for the purpose of incorporation in this circular.

==> picture [134 x 30] intentionally omitted <==

Altus Capital Limited 21 Wing Wo Street Central Hong Kong

12 October 2021

To Independent Board Committee and the Independent Shareholders

Simcere Pharmaceutical Group Limited

43/F, AIA Tower 183 Electric Road North Point Hong Kong

Dear Sirs,

CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED GRANT OF RSUS TO THE CONNECTED GRANTEES

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the connected transactions in relation to the proposed grant of RSUs to the Connected Grantees, details of which are set out in the “Letter from the Board” contained in the circular of the Company dated 12 October 2021 (the “ Circular ”). Terms used in this letter shall have the same meanings as those defined in the Circular unless the context requires otherwise.

Reference is made to the Company’s announcement dated 27 August 2021 in relation to, among others, the proposed grant of RSUs to the Connected Grantees. The Company proposed to grant a total of 8,712,000 RSUs to the Connected Grantees under the 2021 RSU Scheme. The Proposed RSU Grants shall be satisfied by the issue and allotment of the Underlying Shares to the Trustee pursuant to the General Mandate and in accordance with the terms of 2021 RSU Scheme.

– 28 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

LISTING RULES IMPLICATIONS

THE INDEPENDENT BOARD COMMITTEE

The Independent Board Committee comprising all the independent non-executive Directors, namely Mr. Song Ruilin, Mr. Wang Jianguo and Mr. Wang Xinhua, has been established to advise the Independent Shareholders on (i) whether the terms of the Proposed RSU Grants are fair and reasonable and in the interests of the Company and the Shareholders as a whole; (ii) whether the Proposed RSU Grants are on normal commercial terms and in the ordinary and usual course of business of the Group; and (iii) how the Independent Shareholders should vote in respect of the ordinary resolutions to be proposed at the EGM in relation to the Proposed RSU Grants, taking into account the recommendations from the Independent Financial Adviser.

THE INDEPENDENT FINANCIAL ADVISER

As the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, our role is to give an independent opinion to the Independent Board Committee and the Independent Shareholders as to (i) whether the terms of the Proposed RSU Grants are fair and reasonable and in the interests of the Company and the Shareholders as a whole; (ii) whether the Proposed RSU Grants are on normal commercial terms and in the ordinary and usual course of business of the Group; and (iii) how the Independent Shareholders should vote in respect of the ordinary resolutions to be proposed at the EGM in relation to the Proposed RSU Grants.

We have not acted as independent financial adviser in relation to any transactions of the Company in the last two years prior to the date of the Circular. Pursuant to Rule 13.84 of the Listing Rules, and given that remuneration for our engagement to opine on the connected transactions in respect of the Proposed RSU Grants is at market level and not conditional upon successful passing of the resolutions to be proposed at the EGM, and that our engagement is on normal commercial terms, we are independent of and not associated with the Company, its controlling shareholder(s) or connected person(s).

BASIS OF OUR ADVICE

In formulating our opinion, we have reviewed, amongst others (i) the terms and conditions of the 2021 RSU Scheme; (ii) the annual report of the Company for the year ended 31 December 2020 (the “ 2020 Annual Report ”); (iii) the interim report of the Company for the six months ended 30 June 2021 (the “ 2021 Interim Report ”); (iv) the

– 29 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

announcement of the Company dated 21 May 2021 in relation to, among other things, the adoption of the 2021 RSU Scheme; (v) the prospectus of the Company dated 13 October 2020 (the “ Prospectus ”); and (vi) other information set out in the Circular.

We have also relied on the statements, information, opinions and representations contained or referred to in the Circular and/or provided to us by the Group, the Directors and the management of the Group (the “ Management ”). We have assumed that all the statements, information, opinions and representations for matters relating to the Group contained or referred to in the Circular and/or provided to us by the Group, the Directors and the Management were reasonably made after due and careful enquiry and were true, accurate and complete in all material aspects at the time they were made and continued to be so as at the date of the Circular. The Directors collectively and individually accept full responsibility, including particulars given in compliance with the Listing Rules for the purpose of giving information with regards to the Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief, the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other facts the omission of which would make any statement in the Circular misleading.

We have no reason to believe that any such statements, information, opinions or representations we relied on in forming our opinion are untrue, inaccurate or misleading, nor are we aware of any material facts the omission of which would render them untrue, inaccurate or misleading. We have relied on such statements, information, opinions and representations. We consider that we have been provided with and have reviewed sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent investigation into the business, financial conditions and affairs or the future prospects of the Group.

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background information of the Group

1.1 Principal business of the Group

The Company is a company engaged in the R&D, production and commercialisation of pharmaceuticals with the national key laboratory of translational medicine and innovative pharmaceuticals. The Company has a diversified product portfolio in strategically focused therapeutic areas, including, (i) oncology, (ii) central nervous system diseases and (iii) autoimmune diseases, with leading positions in their respective therapeutic segments and/or established track record. The Company continues to source innovative therapies globally and established extensive strategic partnership with several multinational companies.

– 30 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

1.2 Financial information of the Group

Set out below is a table summarising key financial information of the Group for the years ended 31 December 2019 (“ FY2019 ”) and 2020 (“ FY2020 ”) extracted from the 2020 Annual Report, and for the six months ended 30 June 2020 (“ 1H 2020 ”) and 2021 (“ 1H 2021 ”) extracted from the 2021 Interim Report.

Revenue Research and development costs Profit for the year/period Total equity (net assets)	For the six months ended 30 June For the year ended 31 December 2021 2020 2020 2019 RMB’000 RMB’000 RMB’000 RMB’000 2,120,002 1,925,413 4,508,720 5,036,658 (626,803) (454,091) (1,141,996) (716,412) 554,895 184,835 664,287 1,003,624 As at 30 June 2021 As at 31 December 2020 As at 31 December 2019 RMB’000 RMB’000 RMB’000 5,672,336 5,335,724 1,480,464	For the six months ended 30 June For the year ended 31 December 2021 2020 2020 2019 RMB’000 RMB’000 RMB’000 RMB’000 2,120,002 1,925,413 4,508,720 5,036,658 (626,803) (454,091) (1,141,996) (716,412) 554,895 184,835 664,287 1,003,624 As at 30 June 2021 As at 31 December 2020 As at 31 December 2019 RMB’000 RMB’000 RMB’000 5,672,336 5,335,724 1,480,464

		As at 31 December 2019 RMB’000 1,480,464

FY2020 compared to FY2019

The Group’s revenue was generated from sales of pharmaceutical products, which concentrated on oncology diseases, central nervous system diseases and autoimmune diseases. The revenue of the Group decreased from approximately RMB5.0 billion for FY2019 to approximately RMB4.5 billion for FY2020, representing a decrease of approximately 10.5%. Such decrease was mainly due to the decrease in sales revenue of Bicun (edaravone injection) for failing to be included in the Drugs Catalogue for the National Basic Medical Insurance, Work-related Injury Insurance and Maternity Insurance (2020) (the “ NRDL ”) issued in August 2019 and coming into effect in January 2020.

During FY2020, research and development costs of the Group amounted to approximately RMB1.1 billion, accounting for approximately 25.3% of the Group’s revenue. Research and development costs during FY2020 increased by approximately 59.4% as compared with FY2019, mainly due to investment increase in independent research and development during FY2020, including the construction of innovative pharmaceutical R&D platform and clinical trial expenditure.

The Group’s profit for the year decreased from RMB1,003.6 million for FY2019 to approximately RMB664.3 million for FY2020, representing a decrease of approximately 33.8%. Such decrease was primarily attributable to the increase of research and development costs in FY2020.

– 31 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Net assets of the Group increased from approximately RMB1.5 billion as at 31 December 2019 to approximately RMB5.3 billion as at 31 December 2020, which was primarily attributable to net proceeds from the listing of the Company on 27 October 2020 (the “ Listing Date ”) of approximately RMB3.0 billion.

1H 2021 compared to 1H 2020

The Group’s revenue for 1H 2021 was approximately RMB2.1 billion, representing an increase from approximately RMB1.9 billion for 1H 2020. Such increase was mainly driven by the rapid increase in revenue from Sanbexin® (edaravone and dexborneol concentrated solution for injection) launched in July 2020. In particular, the revenue from innovative pharmaceuticals is becoming the main source of revenue for the Group, and amounted to approximately RMB1.2 billion, representing a significant increase of approximately 56.8% as compared to the revenue of RMB778 million from innovative pharmaceuticals for the same period of 2020.

During 1H 2021, the research and development cost of the Group amounted to approximately RMB626.8 million, accounting for approximately 29.6% of the Group’s revenue, and increased by approximately 38.0% as compared to 1H 2020. Such increase in the Group’s research and development cost is in line with the Group’s focus on the research and development of innovative pharmaceutical, as demonstrated in the increase in the innovative pharmaceutical revenue source as described above.

The Group’s profit for 1H 2021 amounted to approximately RMB554.9 million, representing an increase of approximately 200.2% as compared with that for 1H 2020. Such increase was mainly attributable to a gain of approximately RMB399.3 million recorded by the Group from the disposal of its entire equity interest in Simgene Group Limited, a subsidiary engaged in cell therapy business, on 15 April 2021 (for further details, please refer to the announcement of the Company dated 15 April 2021).

Net assets of the Group increased slightly from approximately RMB5.3 billion as at 31 December 2020 to approximately RMB5.7 billion as at 30 June 2021, which was primarily attributable to the operating results of the Group.

1.3 Pre-IPO Share Incentive Scheme

A pre-IPO share incentive scheme (the “ Pre-IPO Share Incentive Scheme ”) was adopted on 31 July 2014 with a view to recognise the contributions of the Group’s employees and to incentivise them to further promote the Group’s development.

There were in aggregate 111,572,260 shares allotted and issued under the Pre-IPO Share Incentive Scheme as at the Latest Practicable Date. All the shares under the Pre-IPO Share Incentive Scheme were granted on or before the Listing Date and no further shares will be granted under the Pre-IPO Share Incentive Scheme after the Listing Date.

– 32 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

We noted that it is the Group’s normal practice to utilise Share-based employee incentive schemes to recognise the contributions of its employees and to incentivise them to further promote the development of the Group. As such, we are of the view that the Proposed RSU Grants are in the ordinary and usual course of business of the Group.

1.4 Recent development and outlook of the Group

In the post-pandemic era, the Management believes that the in-depth health-care reform, accelerated registration and expansion of NRDL will continue to boost the prosperous development of innovative pharmaceutical business and bring more clinically favourable products.

The Management believes that China’s pharmaceutical industry has entered the dramatic reform stage. Pharmaceutical enterprises will need to build comprehensive ability to pursue both product innovation and commercialisation breakthrough, so that they can bring drugs with better efficacy to clinical patients on a continuous basis, and outperform their peers in competition.

To this end, the Group shall continue on the strategic direction of rapid transformation towards innovation, fully utilising its own understanding of patient needs and quality innovation, to attract more outstanding scientists and core talents to join the Group, and to increase the investment of innovation capital.

The Group will also strengthen its core competitiveness in terms of strategy execution, establishment of innovative pharmaceutical projects, clinical project advancement, collaborative development and commercialisation, increasing the clinical value of its products, so that more effective pharmaceuticals can be delivered to patients as soon as possible. The Group will also continue to enrich its pipeline of innovative pharmaceuticals and continue to grow its R&D and commercialisation capabilities.

As revenue from innovative pharmaceuticals made greater contribution and the R&D pipeline of innovative pharmaceuticals was advanced rapidly during 1H 2021, the Company has become a pharmaceutical company focused on innovative pharmaceutical business. In the second half of 2021, the Group will continue to invest in the R&D of innovative pharmaceuticals with a firm determination, enhance the talent density, improve the efficiency of R&D and management, and adhere to the strategy of open innovation and collaborative efforts, so as to provide today’s patients with medicines of the future under the guidance of the huge unmet clinical demands.

2. Reasons for and benefits of the Proposed RSU Grants

The 2021 RSU Scheme forms part of the incentive schemes of the Group. The Board considers that the Proposed RSU Grants are to (i) recognise and reward the Connected Grantees for their the contributions to the Group; (ii) encourage, motivate and retain the Connected Grantees, whose contributions are beneficial to the continual operation, development and long-term growth of the Group; and (iii) the performance targets of the Proposed RSU Grants shall provide additional incentive for the Connected Grantees to achieve performance goals, with a view to achieving the objectives of increasing the value

– 33 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

of the Group and aligning the interests of the Connected Grantees to the Shareholders through ownership of Shares. The Proposed RSU Grants recognise their past contributions to the Group’s business performance and aims to secure their long-term support and commitment to the Group which are vital to the future development of the Group. As the Group’s business is undergoing rapid expansion, the Company believes that the Proposed RSU Grants serve as an important incentive to motivate them to bring a higher return to the Company.

The Board is of the view that the Proposed RSU Grants are in line with the Company’s remuneration policy, which includes basic salary, performance-based bonus and long-term incentives, such as the Proposed RSU Grants. The Proposed RSU Grants align the interests of the Connected Grantees directly with the interests of the Shareholders through ownership of the Shares and help to further encourage them to devote their efforts to the Group’s development.

As compared with traditional share options, the Proposed RSU Grants will provide the Connected Grantees with certainty of monetary benefits regardless of the share price performance. Such grant that can be realised and is readily available at the end of the vesting period is akin to payment of a deferred bonus and hence an effective incentive. Furthermore, the Proposed RSU Grants do not necessitate a cash outflow for the Company compared to cash remuneration. In addition, the Proposed RSU Grants will further align the interests of Connected Grantees and the long-term interests of the Shareholders, promoting a better linkage between the Company’s long-term strategic and financial goals and management remuneration. As such, we believe the use of RSU is in the interest of the Company and Shareholders as a whole.

Considering the rapid changing market environment and the importance of innovation to the continued development of the Group’s business, the Management believes, and we concur, that talent recruitment and retention is critical to the Group’s growth going forward. As such, we are of the view that the Proposed RSU Grants are in the interests of the Company and Shareholders as a whole.

3. Principal terms of the Proposed RSU Grants

On 27 August 2021, the Board has resolved to grant a total of 8,712,000 RSUs to the Connected Grantees under the 2021 RSU Scheme, subject to the Independent Shareholders’ approval at the EGM. The Proposed RSU Grants shall be satisfied by the issue and allotment of the Underlying Shares at the price of HK$6.3 per Share to the Trustee pursuant to the General Mandate and in accordance with the terms of the 2021 RSU Scheme.

Upon the issue and allotment of the Underlying Shares, the Underlying Shares will be held by the Trustee for the Connected Grantees and be transferred to the Connected Grantees at nil consideration at the end of each vesting period subject to the satisfaction of the relevant vesting conditions as may be specified by the Board at the time of making such grant. Such vesting conditions include financial performance targets for the Group including the profit for the year and research and development costs of the Group during the vesting periods, as well as the results of individual performance assessments carried

– 34 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

out by the Group’s human resources committee in accordance with each department’s function and target. The vesting schedule and vesting conditions of the RSUs to be granted to the Connected Grantees are set out as below:

No. of the RSUs	Vesting Date	Vesting Conditions	Vesting Conditions
One third of the	August 27, 2022	(i)	the aggregate amount of profit for the year and
RSUs			research and development costs for the year ending
			December 31, 2021 has an increment of no less than
			15% as compared with that for the year ended
			December 31, 2020; and
		(ii)	the results of individual performance assessments
			carried out by the Group’s human resources
			committee in accordance with each department’s
			function and target.
One third of the	August 27, 2023	(i)	the aggregate amount of profit for the year and
RSUs			research and development costs for the year ending
			December 31, 2022 has an increment of no less than
			32% as compared with that for the year ended
			December 31, 2020 and achieves positive growth as
			compared with that for the year ending December
			31, 2021; and
		(ii)	the results of individual performance assessments
			carried out by the Group’s human resources
			committee in accordance with each department’s
			function and target.
One third of the	August 27, 2024	(i)	the aggregate amount of profit for the year and
RSUs			research and development costs for the year ending
			December 31, 2023 has an increment of no less than
			52% as compared with that for the year ended
			December 31, 2020 and achieves positive growth as
			compared with that for the year ending December
			31, 2021; and
		(ii)	the results of individual performance assessments
			carried out by the Group’s human resources
			committee in accordance with each department’s
			function and target.

– 35 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following table sets out the details of the RSUs to be granted to the Connected Grantees:

Name of Connected Grantee *Directors of the Company* Mr. Wan Yushan Mr. Tang Renhong *Sub-total* *Other Connected Grantees* Mr. Shi Ruiwen Mr. Cheng Xianghua Mr. Lu Jianxue Ms. Wang Xi Mr. Wang Feng Ms. Ma Yan Ms. Chen Yanqiong Mr. Yu Qingzhu Ms. Chen Qianjie Ms. Cong Yuehua Mr. Peng Shaoping Mr. Zhang Rong *Sub-total* Total	Number of RSUs granted 2,025,000 3,000,000 5,025,000 411,000 615,000 615,000 492,000 492,000 306,000 165,000 129,000 63,000 96,000 225,000 78,000 3,687,000 8,712,000	Number of Underlying Shares to be issued 2,025,000 3,000,000 5,025,000 411,000 615,000 615,000 492,000 492,000 306,000 165,000 129,000 63,000 96,000 225,000 78,000 3,687,000 8,712,000	Approximate market value of the Underlying Shares as at the date of grant (Note) (HK$) 15,349,500 22,740,000 38,089,500 3,115,380 4,661,700 4,661,700 3,729,360 3,729,360 2,319,480 1,250,700 977,820 477,540 727,680 1,705,500 591,240 27,947,460 66,036,960	Approximate percentage of total number of Shares in issue as at the Latest Practicable Date 0.077% 0.115%
				0.192%
				0.016% 0.023% 0.023% 0.019% 0.019% 0.012% 0.006% 0.005% 0.002% 0.004% 0.009% 0.003%
				0.141%
				0.333%

Note: The market value of the Underlying Shares to be issued to the Connected Grantees is calculated based on the closing market price of HK$7.58 per Share as at the date of grant.

– 36 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

innovative pharmaceuticals business; and (iii) companies which had announced the grant of share awards or restricted share units to directors and/or senior management of such companies during the twelve months prior to August 27, 2021, being the date on which the Proposed RSU Grants were approved by the Board. The Board has identified, to the best of its knowledge and ability, 6 Comparable Companies which it considers to be an exhaustive list of the comparable companies based on the abovementioned criteria, including 3S Bio Inc (stock code: 1530.HK), Wuxi Biologics (Cayman) Inc. (stock code: 2269.HK), WuXi AppTec Co., Ltd. (stock code: 2359.HK), Shanghai Junshi Biosciences Co., Ltd. (stock code: 1877.HK), BeiGene, Ltd. (stock code: 6160.HK) and Innovent Biologics, Inc. (stock code: 1801.HK).

Based on the closing price of HK$7.58 per Share as quoted on the Stock Exchange as at the date of grant (i.e. 27 August 2021), the market value of the Underlying Shares amounts to approximately HK$66,036,960.

4. Background information of the Connected Grantees

Mr. Wan Yushan and Mr. Tang Renhong are the executive Directors of the Company. The Other Connected Grantees, namely Mr. Shi Ruiwen, Mr. Cheng Xianghua, Mr. Lu Jianxue, Ms. Wang Xi, Mr. Wang Feng, Ms. Ma Yan, Ms. Chen Yanqiong, Mr. Yu Qingzhu, Ms. Chen Qianjie, Ms. Cong Yuehua, Mr. Peng Shaoping, Mr. Zhang Rong, are directors and/or chief executives of the subsidiaries of the Company.

For the detailed biographies of the Connected Grantees, please refer to the section headed “Reasons for and Benefits of the Proposed RSU Grants” in the Letter from the Board in the Circular.

Proposed grant of RSUs to the executive Directors of the Company

As disclosed under the paragraph headed “Reasons for and Benefits of the Proposed RSU Grants” in the Letter from the Board in the Circular, the proposed grant of RSUs to the executive Directors of the Company, namely Mr. Wan Yushan and Mr. Tang Renhong, forms part of their remuneration package for their services provided to the Group. The proposed grant of RSUs to the executive Directors of the Company aims to provide sufficient incentive to attract, retain and motivate Mr. Wan Yushan and Mr. Tang Renhong to participate in the formulation of strategy and long-term development of the Company and to recognise their contributions to the growth of the Company.

Based on the profiles of Mr. Wan Yushan and Mr. Tang Renhong, each of them specialises in different fields with relevant qualifications and many years of experience, including financial management, corporate governance, pharmaceutical research and innovation, which are the key areas to the Company’s business and growth. Both Mr. Wan Yushan and Mr. Tang Renhong are the executive Directors who led the Company to achieve various remarkable milestones both before and after its listing in 2020.

– 37 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Mr. Wan joined the Group in May 2000 and has assumed various positions successively since then, including the financial controller, general manager of financial department, vice president and chief financial officer. On November 19, 2019, Mr. Wan was officially appointed as an executive Director and the chief financial officer of the Company. He has also been the director of several subsidiaries of the Company including, among others, Hainan Simcere since July 2011, Shandong Simcere since August 2017 and Simcere Pharmaceutical since July 2017. Mr. Wan Yushan has made irreplaceable contributions to the finance, legal affairs, management process optimization and informatisation of the Group. Under his leadership, the Company was successfully listed on the Stock Exchange in October 2020.

Mr. Tang Renhong joined the Group acting as the vice president in May 2019, and currently is an executive Director and the executive vice president of the Company. He is primarily responsible for the overall management of Shanghai R&D Center and management of the pre-clinical R&D of innovative pharmaceuticals of the Group.

Mr. Tang has made useful contributions to the strategy formulation and long-term development of the Group. Under his leadership and management, the Group has made rapid progress in innovation and R&D-driven transformation. The innovative drug pipelines at the early stage and at clinical stage in 2020 achieved a significant increase as compared with those in 2019, and the advancement of the projects was in line with the Group’s expectations. As at 31 December 2020, the Group had more than 50 innovative product candidates in its R&D pipeline, with over 20 new projects established as compared to the beginning of the year. During 2020, the Group had also obtained six IND approvals, had one IND application accepted for approval and 11 projects at clinical development stage. At the same time, the Shanghai Innovation Center led by Mr. Tang has become the main engine of the Group’s innovative pharmaceutical research and development. Currently, the Group has nearly 60 innovative pharmaceutical projects in its R&D pipeline, and 11 innovative pharmaceutical products in the clinical research stage. In the first half of 2021, 5 new key registrations and phase III clinical trials and 1 phase I clinical trial were added, 7 drug clinical trial approval notices were obtained, and 7 subjects in the first case achieved clinical enrollment. The Group currently has 6 key registrations and phase III clinical trials under research, 2 phase II clinical trials, and 5 phase I clinical trials.

After considering (i) Mr. Wan Yushan’s indispensable role as the chief financial officer of the Company and his irreplaceable contributions to the finance, legal affairs, management process optimization and informatisation of the Group; and (ii) Mr. Tang Renhong’s indispensable role as the executive vice president of the Company and his useful contributions to the strategy formulation and long-term development of the Group, the Board proposed to remunerate Mr. Wan Yushan and Mr. Tang Renhong with the proposed grant of RSUs after considering the benefits of granting RSUs. The proposed grant of RSUs will provide Mr. Wan Yushan and Mr. Tang Renhong with certainty of monetary benefits. Such grant that can be realised and is readily available at the end of the vesting period is akin to payment of a deferred bonus and hence an effective incentive. In addition, the proposed grant of RSUs to Mr. Wan Yushan and Mr. Tang Renhong will further align the interests of Mr. Wan Yushan and Mr. Tang Renhong and the long-term interests of the Shareholders, ensuring a better linkage between the Company’s long-term strategic and financial goals and executive compensation.

– 38 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Therefore, the Management considers, and we concur that, having Mr. Wan Yushan and Mr. Tang Renhong as executive Directors are beneficial to the Group’s business and development, and it is fair and reasonable for the Group to provide incentives to retain and motivate them to contribute to the long-term development of the Group by way of Proposed RSU Grants.

Proposed grant of RSUs to the Other Connected Grantees

The proposed grant of RSUs to Other Connected Grantees, namely Mr. Cheng Xianghua, Mr. Lu Jianxue, Ms. Wang Xi, Mr. Wang Feng, Mr. Shi Ruiwen, Ms. Ma Yan, Mr. Peng Shaoping, Ms. Chen Yanqiong, Mr. Yu Qingzhu, Ms. Cong Yuehua, Mr. Zhang Rong and Ms. Chen Qianjie, forms part of their remuneration package for their services provided to the Group. The proposed grant of RSUs to the Other Connected Grantees aims to provide sufficient incentive to attract, retain and motivate Other Connected Grantees, thus promote an alignment of interests between the Shareholders and the Other Connected Grantees by further enhancing the value of the Company.

Each of the Other Connected Grantees led the relevant subsidiaries to achieve significant growth and development. The subsidiaries that they currently working at possess strategic importance to the business of the Group.

In order to effectively motivate the Connected Grantees of Subsidiaries to promote the business development of the abovementioned fast-growing subsidiaries and businesses, the Board has decided to remunerate the Other Connected Grantees with the proposed grant of RSUs after considering the benefits of granting the RSUs.

Based on the profiles of the Other Connected Grantees as discussed under the paragraph headed “Reasons for and Benefits of the Proposed RSU Grants” in the Letter from the Board, their contribution to the growth of the Group, and the continuous achievements and recent performance of the Group, the Management considers, and we concur that, retaining the Other Connected Grantees is beneficial to the Group’s business and development, and it is fair and reasonable for the Group to provide incentives to retain and motivate them to contribute to the long-term development of the Group by way of Proposed RSU Grants.

5. Comparable analysis

In order to assess the fairness and reasonableness of the terms of the Proposed RSU Grants, we have reviewed recent comparable transactions and conducted a market comparable analysis. The market comparables which we selected are companies that (i) are listed on the Main Board of the Stock Exchange; (ii) are principally engaged in the development of pharmaceutical, biopharmaceuticals, drugs and/or biologics; and (iii) had announced connected transactions in relation to the granting of share awards or restricted share units to grantees who are directors or senior management of the company, since 27 August 2020 (twelve months immediately prior to the date of the RSU Grant Announcement) and up to the Latest Practicable Date (the “ Review Period ”). On such basis, we have identified 74 comparable grants (the “ Comparable Grants ”) made by ten comparable companies (the “ Comparable Companies ”) which we consider to be an

– 39 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

exhaustive list of relevant comparable grants based on the abovementioned criteria and a fair and representative list of sample for our analysis. We are of the view that a period of most recent twelve months before the date of grant of the Proposed RSU Grants is adequate to conduct a reasonable comparison between the Proposed RSU Grants and the Comparable Grants. Therefore, the Review Period is fair and representative period for the purpose of our analysis.

It should be noted that these comparable companies have different principal activities, revenue, market capitalisation, profitability and financial position as compared with those of the Company. Circumstances leading to the Comparable Grants may not be identical to those of the Company. The analysis is therefore meant to be used as a general reference to similar types of transactions in Hong Kong to reflect recent market practice.

We have compared the Proposed RSU Grants with the Comparable Grants in terms of the size, vesting period and conditions as follows:

5.1 Size of grant

The number of RSUs to be granted to each of the Connected Grantees ranged from 63,000 to 3,000,000, representing approximately 0.002% to 0.115% of the total issued share capital of the Company as at the Latest Practicable Date.

Set out below is the table summarising the size of share awards or restricted shares granted by the comparable companies to their respective directors or senior management members during the Review Period.

					Percentage of
					awarded shares/
					restricted shares	Market value of
			Market		to total issued	the awarded
			capitalisation		share capital of	shares or
			as at the		the company as at	restricted share
	Stock	Date of	date of		date of relevant	units as at the
Company name	code	announcement	announcement	Position(s) of grantees	announcement	date of grant
			(approximate			(approximate
			HK$ billion)		(%)	HK$’000)
3S Bio Inc.	1530	8 September	21.9	Senior management (director of a subsidiary)	0.3932	84,400
		2020
Shanghai Junshi	1877	30 September	8.8	Executive director (Chairman) and legal	0.09	54,612
Biosciences Co., Ltd.		2020		representative
				Executive director, chief executive officer and	0.18	103,896
				general manager
				Executive director, core technical staff	0.09	54,612
				Executive director, deputy general manager,	0.23	133,200
				core technical staff
				Executive director, deputy general manager,	0.09	54,612
				core technical staff

– 40 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

					Percentage of
					awarded shares/
					restricted shares	Market value of
			Market		to total issued	the awarded
			capitalisation		share capital of	shares or
			as at the		the company as at	restricted share
	Stock	Date of	date of		date of relevant	units as at the
Company name	code	announcement	announcement	Position(s) of grantees	announcement	date of grant
			(approximate			(approximate
			HK$ billion)		(%)	HK$’000)
WuXi AppTec Co., Ltd.	2359	16 December	34.0	Executive director, chairman and chief	0.0044	11,992
		2020		executive officer
				Executive director, vice chairman and global	0.0022	5,996
				chief investment officer
				Executive director, co-chief executive officer	0.0022	5,996
				Executive director, vice president	0.001	2,665
				Executive director, vice president	0.001	2,665
				Senior management (chief financial officer)	0.001	2,665
				Senior management (vice president, director of	0.0015	3,997
				a principal subsidiary)
				Senior management (vice president, chief	0.0015	3,997
				scientific officer and director of a principal
				subsidiary)
				Senior management (chairman of the	0.0003	888
				supervisory committee)
				Senior management (employee representative	0.0001	296
				supervisor)
				Senior management (senior director of human	0.0002	592
				resources)
				Senior management (supervisor of a principal	0.0001	175
				subsidiary)
Shanghai Fosun	2196	14 March	18.1	Executive director	0.0094	651
Pharmaceutical		2021		Senior management (senior assistant to chief	0.0051	352
(Group) Co., Ltd.				executive officer)
				Senior management (co-president)	0.0051	352
				Senior management (co-president)	0.0051	352
				Senior management (executive president and	0.0051	352
				chief financial officer)
				Senior management (senior vice president)	0.0034	235
				Senior management (senior vice president)	0.0034	235
				Senior management (senior vice president)	0.0007	47
				Senior management (vice president)	0.0017	117
				Senior management (vice president)	0.0026	176
				Senior management (assistant to president)	0.0014	94
				Senior management (executive general manager	0.0007	47
				of human resources department)
Wuxi Biologics	2269	24 March	370.3	Executive director	0.0228	83,130
(Cayman) Inc.		2021		Executive director	0.0063	23,191
				Senior management (subsidiary director)	0.0038	13,738
				Senior management (subsidiary director)	0.0024	8,646
				Senior management (subsidiary director)	0.0004	1,532
				Independent non-executive director	0.0001	217
				Independent non-executive director	0.0001	434
				Independent non-executive director	0.0001	434

– 41 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

					Percentage of
					awarded shares/
					restricted shares	Market value of
			Market		to total issued	the awarded
			capitalisation		share capital of	shares or
			as at the		the company as at	restricted share
	Stock	Date of	date of		date of relevant	units as at the
Company name	code	announcement	announcement	Position(s) of grantees	announcement	date of grant
			(approximate			(approximate
			HK$ billion)		(%)	HK$’000)
Innovent Biologics,	1801	30 March	113.8	Executive director, chairman of the board and	0.0498	56,695
Inc.		2021		chief executive officer
				Executive director, chief financial officer	0.011	12,512
				Independent non-executive director	0.0001	144
				Independent non-executive director	0.0001	144
				Independent non-executive director	0.0001	144
Shanghai	1349	6 April 2021	1.5	Executive director (chairman), general manager,	0.1	10,740
Fudan-Zhangjiang				core technical staff
Bio-Pharmaceutical				Executive director, deputy general manager,	0.12	12,888
Co., Ltd.				core technical staff
				Executive director, deputy general manager	0.12	12,888
				Senior management (deputy general manager)	0.12	12,781
Beigene, Ltd.	6160	20 April 2021	217.9	Executive director, chairman	0.01	29,138
				Non-executive director, chairman of the	0.004	7,770
				scientific advisory board
				Non-executive director	0.001	1,554
				Independent non-executive director	0.001	1,554
				Independent non-executive director	0.001	1,554
				Independent non-executive director	0.001	1,554
				Independent non-executive director	0.001	1,554
				Independent non-executive director	0.001	1,554
				Independent non-executive director	0.001	1,554
				Independent non-executive director	0.001	1,554
				Independent non-executive director	0.001	1,554
Ascentage Pharma	6855	21 May 2021	12.1	Senior management (chief commercial officer)	0.02	2,416
Group International				Independent non-executive director	0.004	466
				Independent non-executive director	0.004	466
				Independent non-executive director	0.004	466
				Independent non-executive director	0.004	466
Ocumension	1477	2 July 2021	16.4	Executive director, chief executive officer	2.06_(Note 1)_	338,702_(Note 1)_
Therapeutics				Executive director, chief development officer	0.02	3,908

– 42 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

					Percentage of
					awarded shares/
					restricted shares	Market value of
			Market		to total issued	the awarded
			capitalisation		share capital of	shares or
			as at the		the company as at	restricted share
	Stock	Date of	date of		date of relevant	units as at the
Company name	code	announcement	announcement	Position(s) of grantees	announcement	date of grant
			(approximate			(approximate
			HK$ billion)		(%)	HK$’000)
Everest Medicines	1952	15 July 2021	20.5	Executive director, chief executive officer	0.2151	45,269
Limited				Executive director, chief financial officer	0.0559	11,759
				Executive director, chief operating officer	0.0559	11,759
				Senior management (subsidiary director)	0.0472_(Note 2)_	9,928_(Note 2)_
				Senior management (subsidiary director)	0.0472_(Note 2)_	9,928_(Note 2)_
				Senior management (subsidiary director)	0.0472_(Note 2)_	9,928_(Note 2)_
				Senior management (subsidiary director)	0.0472_(Note 2)_	9,928_(Note 2)_
				Senior management (subsidiary director)	0.0472_(Note 2)_	9,928_(Note 2)_
				Senior management (subsidiary director)	0.0472_(Note 2)_	9,928_(Note 2)_
				Average 0.033		13,261
				Maximum 0.393		133,200
				Minimum 0.0001		47
					Comparable Grants to executive directors
				Average 0.065		32,381
				Maximum 0.230		133,200
				Minimum 0.001		651
					Comparable Grants to senior management
					(excluding executive directors)
				Average 0.029		6,602
				Maximum 0.393		84,400
				Minimum 0.0001		47

Notes:

We consider such grant as an outlier which has been excluded in our analysis, given the awarded shares represent a significantly large percentage of total issued share capital of the company and market value as compared with all other Comparable Grants. Such exclusion does not affect out view on the fairness and reasonableness of the Proposed RSU Grants as detailed under sections 5.1.1 and 5.1.2 below.

2. The amount for each of these six senior management members was calculated based on the average of 842,542 awarded shares granted to them in total.

5.1.1. Proposed grant of RSUs to the executive Directors of the Company

To analyse whether the size of the Proposed RSU Grants to each of Mr. Wan Yushan and Mr. Tang Renhong (the “ Executive Directors Grants ”) are fair and reasonable, we have compared the Executive Directors Grants with the Comparable Grants to executive directors of the Comparable Companies.

The sizes, in terms of the percentage of the number of awarded shares or restricted share units to the total issued capital of companies as at the date on which the proposed grants were announced, of the Executive Directors Grants to each of Mr. Wan Yushan and

– 43 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Mr. Tang Renhong, were approximately 0.077% and 0.115% respectively. Such sizes are slightly larger than the average size of Comparable Grants to the executive directors of the Comparable Companies of approximately 0.060%, but are within their range from approximately 0.001% to 0.230%.

For further analysis, we have also reviewed the market value of the awarded shares or restricted share units of the grants as at the date of grant by the Comparable Companies. The market value of the Comparable Grants to executive directors of the Comparable Companies ranged from approximately HK$0.7 million to HK$133.2 million, with an average of approximately HK$29.5 million.

Based on the above, the sizes of Executive Directors Grants in terms of percentage of total share capital of companies, to each of Mr. Wan Yushan and Mr. Tang Renhong, though within range, are larger than the average size of the Comparable Grants to executive directors of the Comparable Companies. Additionally, the market value of the RSUs proposed to be granted to each of Mr. Wan Yushan and Mr. Tang Renhong as at the date of proposed grant, which amounted to approximately HK$15.3 million and HK$22.7 million, falls within the range, and are below the average market value of the Comparable Grants to executive directors of the Comparable Companies.

In addition, if we consider all Comparable Grants to directors and senior management, the Executive Directors Grants though higher than the average, are within the range of the Comparable Grants in terms of both the percentage of total share capital of companies and market value of the RSUs proposed to be granted.

Considering the above, we are of the view that the sizes of Executive Directors Grants to each of Mr. Wan Yushan and Mr. Tang Renhong are on normal commercial terms and are fair and reasonable.

5.1.2. Proposed grant of RSUs to the Other Connected Grantees

To analyse whether the size of the Proposed RSU Grants to Other Connected Grantees (the “ Senior Management Grants ”) are fair and reasonable, we have compared the Senior Management Grants with the Comparable Grants to the senior management of the Comparable Companies.

On this basis, it is noted that the average size, in terms of percentage of the number of awarded shares or restricted share units to the total issued capital of companies, of the Senior Management Grants of approximately 0.012%, falls within the range of the Comparable Grants to senior management of the Comparable Companies of approximately 0.0001% to 0.393%, and is lower than their average of approximately 0.029%.

For further analysis, we have also reviewed the market value of the awarded shares or restricted share units as at the date of grant of the Comparable Grants to senior management of the Comparable Companies, and noted that the amounts ranged from approximately HK$47,000 to HK$84.4 million, with an average of approximately HK$6.6 million. Therefore, the average market value of the Senior Management Grants as at the

– 44 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

date of proposed grant, which amounted to approximately HK$2.3 million, is within the range and lower than the average of the Comparable Grants to senior management of the Comparable Companies.

In addition, if we consider all Comparable Grants to directors and senior management, the Senior Management Grants are on average within the range and lower than the average of the Comparable Grants in terms of both the percentage of total share capital of companies and market value of the RSUs proposed to be granted.

Considering the above, we are of the view that the sizes of the Senior Management Grants are on normal commercial terms and are fair and reasonable.

5.2 Vesting period and conditions

Based on our review of the vesting schedules of the 2021 RSU Scheme provided by the Company, we noted that the vesting schedules of the Proposed RSU Grants are as follows:

Vesting date	Vesting proportion
27 August 2022	One third
27 August 2023	One third
27 August 2024	One third

We noted that the vesting schedules of the RSUs proposed to be granted to the Connected Grantees are in line with the RSUs granted to other independent selected persons under the 2021 RSU Scheme.

Apart from the vesting schedule above, the Proposed RSU Grants are also subject to the satisfaction of the relevant vesting conditions as may be specified by the Board at the time of making such grant. Such vesting conditions include financial performance targets for the Group including the profit for the year and research and development costs of the Group during the vesting periods, as well as the results of individual performance assessments carried out by the Group’s human resources committee in accordance with each department’s function and target. For details, please refer to the section headed “3. Principal terms of the Proposed RSU Grants” of this letter.

For further analysis, we have also compared with the vesting or unlocking periods and other vesting conditions of the Comparable Grants. Set out below is the summary on the vesting periods and vesting conditions of the Comparable Grants.

			Vesting or unlocking
	Stock		period (years from the	Other vesting
Company name	code	Grantee’s position	date of grant)	conditions
3S Bio Inc.	1530	1 senior management	Upon date of grant	N/A
Shanghai Junshi	1877	5 executive directors	Up to 4 years	Individual and company
Biosciences Co., Ltd.				performance

– 45 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

			Vesting or unlocking
	Stock		period (years from the	Other vesting
Company name	code	Grantee’s position	date of grant)	conditions
WuXi AppTec Co., Ltd.	2359	5 executive directors and	Up to 5 years	Individual performance
		7 senior management
Shanghai Fosun	2196	1 executive director and	Up to 3 years	Individual and company
Pharmaceutical (Group)		11 senior management		performance
Co., Ltd.
Wuxi Biologics (Cayman)	2269	2 executive directors,	Up to 5 years	N/A
Inc.		3 senior management
		and 3 independent
		non-executive
		directors
Innovent Biologics, Inc.	1801	2 executive directors and	Up to 4 years	Individual performance
		3 independent	1 year	N/A
		non-executive
		directors
Shanghai	1349	3 executive directors and	Up to 4 years	Individual and company
Fudan-Zhangjiang		1 senior management		performance
Bio-Pharmaceutical
Co., Ltd.
Beigene, Ltd.	6160	1 executive director and	Up to 4 years	N/A
		1 non-executive
		director
		1 non-executive director	Up to 1 year	N/A
		and 8 independent
		non-executive
		directors
Ascentage Pharma Group	6855	4 independent	Up to 4 years	N/A
International		non-executive
		directors and 1 senior
		management
Ocumension Therapeutics	1477	2 executive directors	Not disclosed	Not disclosed
Everest Medicines Limited	1952	3 executive directors and	Not disclosed	Not disclosed
		6 senior management

As shown above, the vesting or unlocking periods of the Comparable Grants was up to five years and a majority of them ranged from three to five years, and therefore the vesting period of the Proposed RSU Grants of up to approximately three years from the date of proposed grant is within the range of the Comparable Grants.

As regard to the vesting conditions, we noted that certain Comparable Grants to executive directors and senior management are also subject to individual and company performance.

– 46 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on the above, we are of the view that the Proposed RSU Grants are on normal commercial terms and are fair and reasonable in terms of vesting period and conditions.

5.3 Section summary

Having considered the factors mentioned above, we concur with the Management’s view that the Proposed RSU Grants are on normal commercial terms, the terms of the Proposed RSU Grants are fair and reasonable and in the interests of the Company and Independent Shareholders as a whole.

6. Potential impact of the Proposed RSU Grants

6.1 Potential financial impact

According to the 2020 Annual Report, the fair value of share-based payment awards (i.e. restricted shares) granted to employees is recognised as an employee cost with a corresponding increase in a capital reserve within equity. The fair value of the restricted shares is measured at date of grant by reference to the market price or the valuer’s valuation of the underlying shares. Where the employees have to meet vesting conditions before becoming unconditionally entitled to the restricted shares, the total estimated fair value of the restricted shares is spread over the vesting period, taking into account the probability that the restricted shares will vest. The Proposed RSU Grants shall have no effect on the cash flow of the Group. The Management expects that there will be no material impact on the earnings and net asset value of the Company following the Proposed RSU Grants.

6.2 Potential shareholding impact

As at the Latest Practicable Date, the Company had 2,619,578,618 Shares in issue. The Underlying Shares, being 8,712,000 new Shares, to be issued and allotted by the Company represent (i) approximately 0.333% of the total number of Shares in issue as at the Latest Practicable Date; and (ii) approximately 0.331% of the total number of Shares in issue as enlarged by the issue and allotment of the Underlying Shares (assuming there is no other change to the issued share capital of the Company). As such, the potential shareholding impact and dilution to the Independent Shareholders’ shareholding is insignificant.

– 47 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having considered the above principal factors, we are of the view that the terms of the Proposed RSU Grants are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and the Proposed RSU Grants are on normal commercial terms and in the ordinary and usual course of business of the Group. Accordingly, we recommend the Independent Shareholders, as well as the Independent Board Committee to advise the Independent Shareholders, to vote in favour of the relevant resolution to be proposed at the EGM.

Yours faithfully, For and on behalf of Altus Capital Limited

Jeanny Leung

Executive Director

Leo Tam

Executive Director

Ms. Jeanny Leung (“ Ms. Leung ”) is a Responsible Officer of Altus Capital licensed to carry on Type 6 (advising on corporate finance) regulated activity under the SFO and permitted to undertake work as a sponsor. She is also a Responsible Officer of Altus Investments Limited licensed to carry on Type 1 (dealing in securities) regulated activity under the SFO. Ms. Leung has over 30 years of experience in corporate finance advisory and commercial field in Greater China, in particular, she has participated in sponsorship work for initial public offerings and acted as financial adviser or independent financial adviser in various corporate finance transactions.

Mr. Leo Tam (“ Mr. Tam ”) is a Responsible Officer of Altus Capital Limited licensed to carry on Type 6 (advising on corporate finance) regulated activity under the SFO and permitted to undertake work as a sponsor. He has over six years of experience in corporate finance and advisory in Hong Kong, in particular, he has participated in sponsorship work for initial public offerings and acted as financial adviser or independent financial adviser in various corporate finance transactions. Mr. Tam is a certified public accountant of the Hong Kong Institute of Certified Public Accountants.

– 48 –

APPENDIX

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable inquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As of the Latest Practicable Date, the interest or short position of the Directors or chief executive of the Company in the Shares, underlying shares and debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO) which were (i) required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interest or short positions which they were taken or deemed to have under such provisions of the SFO), or (ii) required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or (iii) required, pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers to be notified to the Company and the Stock Exchange, were as follows:

		Number of
		Shares/	Approximate
		underlying	percentage of
Name of Director/		shares	shareholding
Chief executive	Nature of interest	interested	interest(1)
Mr. REN Jinsheng(2)	Interest in controlled	2,035,922,965	77.72%
	corporations/Interest
	of concert parties
Mr. ZHAO John	Interest in controlled	107,065,613	4.09%
Huan(3)	corporations

Notes:

(1) The calculation is based on the total number of 2,619,578,618 issued shares of the Company as of the Latest Practicable Date.
(2) Mr. Ren Jinsheng, together with the Ultimate Controlling Shareholders collectively and indirectly hold 2,035,922,965 Shares, including (i) 606,810,031 Shares and 1,196,009,986 Shares directly held by Artking Global Limited and Simcere Pharmaceutical Holding Limited, respectively, both of which are companies controlled by the Ultimate Controlling Shareholders; and (ii) 112,141,578 Shares and 120,961,370 Shares directly held by Simcere Investments Group Limited and Fortune Fountain Investment Limited, respectively, both of which are companies controlled by Mr. Ren Jinsheng. By virtue of the SFO, as the Ultimate Controlling Shareholders are deemed to be persons acting in concert under the Takeovers Code, each of them is deemed to be interested in the Shares held by each other.

– 49 –

APPENDIX

GENERAL INFORMATION

(3) Premier Praise Limited (尚嘉有限公司) (the “ Premier Praise ”) directly holds 107,065,613 Shares. Premier Praise is held as to 82.22% by Hony Capital Fund V, L.P. The general partner of Hony Capital Fund V, L.P. is Hony Capital Fund V GP, L.P., whose general partner is Hony Capital Fund V GP Limited. Hony Capital Fund V GP Limited is wholly owned by Hony Group Management Limited, 80% equity interest of which is held by Hony Managing Partners Limited, which in turn is wholly owned by Exponential Fortune Group Limited. Exponential Fortune Group Limited is held as to 49% by Mr. Zhao John Huan and as to 51% by two other individuals who are Independent Third Parties, respectively. Therefore, Mr. Zhao John Huan is deemed to be interested in the Shares held by Premier Praise by virtue of the SFO.

Save as disclosed above, as of the Latest Practicable Date, so far as is known to the Directors, none of the Directors and the chief executive of the Company had or were deemed to have any interest or short position in the shares, underlying shares or debentures of the Company or its associated corporations (within the meaning of Part XV of the SFO), which were required to be notified to the Company under Divisions 7 and 8 of Part XV of the SFO or recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO or otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.

3. DIRECTORS’ SERVICE CONTRACTS

As of the Latest Practicable Date, none of the Directors had any existing or proposed service contract with any member of the Group which will not expire or may not determinable by the relevant member of the Group within one year without payment of compensation (other than statutory compensation).

4. COMPETING INTERESTS OF DIRECTORS AND CLOSE ASSOCIATES

As of the Latest Practicable Date, none of the Directors or their respective close associates (as defined in the Listing Rules) was interested in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group.

– 50 –

APPENDIX

GENERAL INFORMATION

5. DIRECTORS’ INTERESTS IN ASSETS AND/OR CONTRACTS

As of the Latest Practicable Date, none of the Directors had any direct or indirect interest in any asset which had been, since December 31, 2020, being the date to which the latest published audited consolidated financial statements of the Group were made up, acquired or disposed of by or leased to, or were proposed to be acquired or disposed of by or leased to, any member of the Group.

Save for the contractual arrangements and continuing connected transactions as disclosed in the sections headed “Contractual Arrangement” and “Connected Transactions” in the Prospectus and the section headed “Continuing Connected Transactions” in the 2020 Annual Report of the Company published on April 26, 2021, as of the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement subsisting as of the Latest Practicable Date and which was significant in relation to the business of the Group.

6. SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

As of the Latest Practicable Date, the interests or short positions of persons (other than the Directors and chief executives of the Company) in the shares or underlying shares of the Company (within the meaning of Part XV of the SFO) which were required to be notified to the Company under Divisions 2 and 3 of Part XV of the SFO or recorded in the register required to be kept by the Company pursuant to section 336 of the SFO were as follows:

		Number of	Approximate
		shares or	percentage of
		underlying	shareholding
Name of shareholder	Nature of Interest	shares	interest(1)
Mr. Ren Yong(2)(3)	Interest in controlled	2,035,922,965	77.72%
	corporations/Interest of
	concert parties/Founder
	of a discretionary trust
Ms. Li Shimeng(2)(3)(4)	Interest in controlled	2,035,922,965	77.72%
	corporations/Interest of
	concert parties/Interest
	of spouse

– 51 –

APPENDIX

GENERAL INFORMATION

		Number of	Approximate
		shares or	percentage of
		underlying	shareholding
Name of shareholder	Nature of Interest	shares	interest(1)
P&H Holdings Group Ltd.	Interest in controlled	2,035,922,965	77.72%
(“P&H Holdings”)(2)(3)	corporations/Interest of
	concert parties
Mr. Ren Weidong(2)(4)	Interest in controlled	2,035,922,965	77.72%
	corporations/Interest of
	concert parties
Right Wealth	Interest in controlled	2,035,922,965	77.72%
Holdings Limited	corporations/Interest of
(“Right Wealth”)(2)(4)	concert parties
Ms. Ren Zhen(2)(5)	Interest in controlled	2,035,922,965	77.72%
	corporations/Interest of
	concert parties
Ms. Peng Suqin(2)(6)	Interest in controlled	2,035,922,965	77.72%
	corporations/Interest of
	concert parties
Artking Global Limited	Beneficial interest	606,810,031	23.16%
(“Artking”)(7)
	Interest in controlled	1,196,009,986	45.66%
	Corporations
	Interest of concert parties	233,102,948	8.90%
Simcere Holding Limited	Interest in controlled	1,196,009,986	45.66%
(“Simcere Holding”)(8)	Corporations
	Interest of concert parties	839,912,979	32.06%
Excel Investments Group	Interest in controlled	1,196,009,986	45.66%
Limited (“Excel	Corporations
Investments”)(9)
	Interest of concert parties	839,912,979	32.06%
Simcere Pharmaceutical	Beneficial interest	1,196,009,986	45.66%
Holding Limited
(“SPHL”)(10)	Interest of concert parties	839,912,979	32.06%

– 52 –

APPENDIX

GENERAL INFORMATION

		Number of	Approximate
		shares or	percentage of
		underlying	shareholding
Name of shareholder	Nature of Interest	shares	interest(1)
Simcere Investments Group	Beneficial interest	112,141,578	4.28%
Limited (“SIG”)(2)(11)
	Interest in controlled	120,961,370	4.62%
	Corporation
	Interest of concert parties	1,802,820,017	68.82%
Fortune Fountain	Beneficial interest	120,961,370	4.62%
Investment Limited
(“FFI”)(12)	Interest of concert parties	1,914,961,595	73.10%

Notes:

(1) The calculation is based on the total number of 2,619,578,618 issued shares of the Company as of the Latest Practicable Date.
(2) Mr. Ren Jinsheng, together with the Ultimate Controlling Shareholders collectively and indirectly hold 2,035,922,965 Shares, including (i) 606,810,031 Shares and 1,196,009,986 Shares directly held by Artking and SPHL, respectively, both of which are companies controlled by the Company’s Ultimate Controlling Shareholders; and (ii) 112,141,578 Shares and 120,961,370 Shares directly held by SIG and FFI, respectively, both of which are companies controlled by Mr. Ren Jinsheng. As the Company’s Ultimate Controlling Shareholders are deemed to be persons acting in concert under the Takeovers Code, each of them is deemed to be interested in the Shares held by each other by virtue of the SFO.
(3) Mr. Ren Yong, son of Mr. Ren Jinsheng and spouse of Ms. Li Shimeng, is the settlor of the P&H Family Trust, which holds the entire equity interest in P&H Holdings. Mr. Ren Yong, Ms. Li Shimeng and P&H Holdings are the Company’s Ultimate Controlling Shareholders and are deemed to be interested in the Shares collectively held by the Company’s Ultimate Controlling Shareholders.
(4) Mr. Ren Weidong is the brother of Mr. Ren Jinsheng and holds the entire equity interest in Right Wealth. Mr. Ren Weidong and Right Wealth are the Company’s Ultimate Controlling Shareholders and are deemed to be interested in the Shares collectively held by the Company’s Ultimate Controlling Shareholders.
(5) Ms. Ren Zhen is the sister of Mr. Ren Jinsheng. She is one of the Company’s Ultimate Controlling Shareholders and is deemed to be interested in the Shares collectively held by the Company’s Ultimate Controlling Shareholders.
(6) Ms. Peng Suqin is the mother of Mr. Ren Yong. She is one of the Company’s Ultimate Controlling Shareholders and is deemed to be interested in the Shares collectively held by the Company’s Ultimate Controlling Shareholders.
(7) Artking directly holds 606,810,031 Shares and indirectly holds 1,429,112,934 Shares, including (i) 1,196,009,986 Shares directly held by SPHL, a controlled corporation of Artking, and (ii) an aggregate of 233,102,948 Shares directly held by SIG and FFI, both of which are companies controlled by Mr. Ren Jinsheng and are deemed to be acting in concert with Artking under the Takeovers Code. Therefore, Artking is deemed to be interested in the Shares held by SPHL, SIG and FFI by virtue of the SFO.

– 53 –

APPENDIX

GENERAL INFORMATION

(8) Simcere Holding indirectly holds 2,035,922,965 Shares, including (i) 1,196,009,986 Shares directly held by SPHL, a controlled corporation of Simcere Holding, and (ii) an aggregate of 839,912,979 Shares, which comprises of 606,810,031 Shares directly held by Artking, a company controlled by the Company’s Ultimate Controlling Shareholders, and 233,102,948 Shares directly held by SIG and FFI, both of which are companies controlled by Mr. Ren Jinsheng. Artking, SIG and FFI are deemed to be acting in concert with Simcere Holding under the Takeovers Code. Therefore, Simcere Holding is deemed to be interested in the Shares held by SPHL, Artking, SIG and FFI by virtue of the SFO.
(9) Excel Investments indirectly holds 2,035,922,965 Shares, including (i) 1,196,009,986 Shares directly held by SPHL, a controlled corporation of Excel Investments, and (ii) an aggregate of 839,912,979 Shares, which comprises of 606,810,031 Shares directly held by Artking, a company controlled by the Company’s Ultimate Controlling Shareholders, and 233,102,948 Shares directly held by SIG and FFI, both of which are companies controlled by Mr. Ren Jinsheng. Artking, SIG and FFI are deemed to be acting in concert with Excel Investments under the Takeovers Code. Therefore, Excel Investments is deemed to be interested in the Shares held by SPHL, Artking, SIG and FFI by virtue of the SFO.
(10) SPHL directly holds 1,196,009,986 Shares and indirectly holds an aggregate of 839,912,979 Shares, including 606,810,031 Shares directly held by Artking, a company controlled by the Company’s Ultimate Controlling Shareholders, and an aggregate of 233,102,948 Shares directly held by SIG and FFI, both of which are companies controlled by Mr. Ren Jinsheng. Artking, SIG and FFI are deemed to be acting in concert with SPHL under the Takeovers Code. Therefore, SPHL is deemed to be interested in the Shares held by Artking, SIG and FFI by virtue of the SFO.
(11) SIG directly holds 112,141,578 Shares and indirectly hold 1,923,781,387 Shares, including (i) 120,961,370 Shares directly held by FFI, a controlled corporation of SIG and ultimately controlled by Mr. Ren Jinsheng, and (ii) an aggregate of 1,802,820,017 Shares directly held by SPHL and Artking, both of which are deemed to be acting in concert with SIG under the Takeovers Code. Therefore, SIG is deemed to be interested in the Shares held by FFI, SPHL and Artking by virtue of the SFO.
(12) FFI directly holds 120,961,370 Shares and indirectly hold an aggregate of 1,914,961,595 Shares directly held by SPHL, Artking and SIG, all of which are deemed to be acting in concert with FFI under the Takeovers Code. Therefore, FFI is deemed to be interested in the Shares held by SPHL, Artking and SIG by virtue of the SFO.

Save as disclosed above, as at the Latest Practicable Date, there was no other person (other than the Directors or chief executive of the Company) who had an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO, or as otherwise notified to the Company and the Stock Exchange.

Except for (i) Mr. Ren Jinsheng, being an executive Director, who is also a director of each of Artking, SIG, FFI, SPHL, Excel Investments and Simcere Holding; (ii) Mr. Wan Yushan, being an executive Director, who is also a director of FFI; and (iii) Mr. Zhao John Huan, being a non-executive Director, who is also a director of Simcere Holding, as of the Latest Practicable Date, none of the Directors or any proposed Director of the Company was a director or an employee of a company which had, or was deemed to have, an interest or a short position in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.

– 54 –

APPENDIX

GENERAL INFORMATION

7. MATERIAL ADVERSE CHANGE

As of the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since December 31, 2020, being the date to which the latest published audited consolidated financial statements of the Group were made up.

8. QUALIFICATION AND CONSENT OF EXPERT

The following are the qualifications of Altus Capital Limited, who has given its opinions or advices, which are contained or referred to in this circular:

Name

Qualifications

Altus Capital Limited a corporation licensed to conduct Type 4 (advising on securities), Type 6 (advising on corporate finance) and Type 9 (asset management) regulated activities under the SFO

As of the Latest Practicable Date, Altus Capital Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and the references to its name in the form and context in which they respectively appear.

As of the Latest Practicable Date, Altus Capital Limited did not have (i) any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group; and (ii) any direct or indirect interest in any assets which had, since December 31, 2020, being the date to which the latest published audited consolidated financial statements of the Group were made up, acquired or disposed of by, or leased to any member of the Group, or were proposed to be acquired or disposed of by, or leased to any member of the Group.

9. DOCUMENTS AVAILABLE FOR INSPECTION

The following documents will be available for inspection during normal business hours at the registered office of the Company in Hong Kong at 43/F, AIA Tower, 183 Electric Road, North Point, Hong Kong from the date of this circular up to and including the date of the EGM:

(a) a copy of the 2021 RSU Scheme;
(b) the letter from the Independent Board Committee, the text of which is set out in this circular;
(c) the letter from Independent Financial Adviser to the Independent Shareholders, the text of which is set out in this circular;

– 55 –

APPENDIX

GENERAL INFORMATION

(d) the written consent referred to in the paragraph headed “Qualification and Consent of Expert” in this appendix; and
(e) this circular.

– 56 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

==> picture [44 x 34] intentionally omitted <==

Simcere Pharmaceutical Group Limited 先聲藥業集團有限公司

(Incorporated in Hong Kong with limited liability)

(Stock code: 2096)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the extraordinary general meeting (the “ EGM ”) of Simcere Pharmaceutical Group Limited (the “ Company ”) will be held at No. 699-18, Xuanwu Road, Xuanwu District, Nanjing, Jiangsu, PRC on Monday, November 1, 2021 at 9:00 a.m. for the following purposes:

ORDINARY RESOLUTIONS

To consider and if thought fit, pass the following resolutions (with or without modification) as ordinary resolutions of the Company:

“ That the proposed grant of 2,025,000 restricted share units (“ RSUs ”) to Mr. Wan Yushan pursuant to the restricted share unit scheme of the Company adopted by the Board on May 20, 2021 (“ 2021 RSU Scheme ”) is hereby approved and confirmed.”
“ That the proposed grant of 3,000,000 RSUs to Mr. Tang Renhong pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
“ That the proposed grant of 411,000 RSUs to Mr. Shi Ruiwen pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
“ That the proposed grant of 615,000 RSUs to Mr. Cheng Xianghua pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
“ That the proposed grant of 615,000 RSUs to Mr. Lu Jianxue pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
“ That the proposed grant of 492,000 RSUs to Ms. Wang Xi pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”

– 57 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

“ That the proposed grant of 492,000 RSUs to Mr. Wang Feng pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
“ That the proposed grant of 306,000 RSUs to Ms. Ma Yan pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
“ That the proposed grant of 165,000 RSUs to Ms. Chen Yanqiong pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
“ That the proposed grant of 129,000 RSUs to Mr. Yu Qingzhu pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
“ That the proposed grant of 63,000 RSUs to Ms. Chen Qianjie pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
“ That the proposed grant of 96,000 RSUs to Ms. Cong Yuehua pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
“ That the proposed grant of 225,000 RSUs to Mr. Peng Shaoping pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
“ That the proposed grant of 78,000 RSUs to Mr. Zhang Rong pursuant to the 2021 RSU Scheme is hereby approved and confirmed.”
To authorize any one or more of the Directors to do all such acts and things and execute all such documents which he/they consider necessary, desirable or expedient for the purpose of, or in connection with, the implementation of and giving effect to the grant of RSUs and the transactions contemplated thereunder, including but not limited to the allotment and issue of the shares of the Company pursuant to the 2021 RSU Scheme.

By order of the Board Simcere Pharmaceutical Group Limited Mr. Ren Jinsheng Chairman and Chief Executive Officer

Hong Kong, October 12, 2021

Registered office

43/F, AIA Tower 183 Electric Road North Point Hong Kong

Headquarters in the PRC No. 699-18, Xuanwu Road Xuanwu District, Nanjing Jiangsu PRC

– 58 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

Notes:

(1) The resolutions at the EGM (except those related to the procedural or administrative matters, which should be taken by a show of hands as the chairman of the EGM may decide, in good faith) will be taken by a poll pursuant to the Listing Rules and the results of the poll will be published on the websites of Stock Exchange ( www.hkexnews.hk ) and the Company ( www.simcere.com ) in accordance with the Listing Rules.
(2) Any shareholder of the Company entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy need not be a shareholder of the Company.
(3) In order to be valid, a form of proxy must be deposited at the Company’s share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong together with the power of attorney or other authority (if any) under which it is signed (or a certified copy thereof) not less than 48 hours (excluding any part of a day that is a public holiday in Hong Kong, i.e. 9:00 a.m. on Friday, October 29, 2021) before the time appointed for the holding of the above meeting or not less than 48 hours before the time appointed for the holding of any adjournment thereof. Completion and return of a form of proxy will not preclude a member from attending and voting in person if he is subsequently able to be present and in such event the form of proxy shall be deemed revoked.
(4) The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under its common seal or under the hand of an officer or attorney or other person duly authorized.
(5) The form of proxy must be signed by the appointor or by his attorney authorized in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person duly authorized to sign the same.
(6) Where there are joint registered holders of any share of the Company, any one of such persons may vote at any meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of such joint holders be present at any meeting personally or by proxy, that one of the said persons so present whose name stands first on the register in respect of such Share shall alone be entitled to vote in respect thereof.
(7) For the purposes of holding the EGM, the register of members of the Company will be closed from Wednesday, October 27, 2021 to Monday, November 1, 2021 (both days inclusive), for the purpose of determining the entitlement to attend and vote at the EGM scheduled to be held on Monday, November 1, 2021. In order to be eligible to attend and vote at the EGM, all transfer forms accompanied by the relevant share certificates must be lodged with the Company’s share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, not later than 4:30 p.m. on Tuesday, October 26, 2021.

– 59 –

NOTICE OF EXTRAORDINARY GENERAL MEETING

(8) In view of the ongoing COVID-19 epidemic, the Company will implement the following prevention and control measures targeting COVID-19 at the EGM to protect Shareholders from the risk of infection:
(i) Compulsory body temperature check will be conducted, and any person with a body temperature of over 37.0 degree Celsius will be denied entry into the venue;
(ii) Every Shareholder or authorized representative must wear a surgical mask throughout the EGM;
(iii) No refreshment will be served; and
(iv) The Company will maintain appropriate distance and space in the venue.

(9) References to time and dates of this notice are to Hong Kong time and dates.

As at the date of this notice, the Board comprises Mr. REN Jinsheng as the Chairman and executive Director, Mr. WAN Yushan and Mr. TANG Renhong as the executive Directors; Mr. ZHAO John Huan as the non-executive Director; and Mr. SONG Ruilin, Mr. WANG Jianguo and Mr. WANG Xinhua as the independent non-executive Directors.

– 60 –

AI assistant

Simcere Pharmaceutical Group Limited — Proxy Solicitation & Information Statement 2021

48856_rns_2021-10-11_f9169403-8d8e-4652-948b-d4d9155162d2.pdf

Simcere Pharmaceutical Group Limited 先聲藥業集團有限公司

CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED GRANT OF RSUS TO THE CONNECTED GRANTEES AND NOTICE OF EXTRAORDINARY GENERAL MEETING

ALTUS CAPITAL LIMITED

PRECAUTIONARY MEASURES FOR THE EXTRAORDINARY GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

Simcere Pharmaceutical Group Limited 先聲藥業集團有限公司

(Stock code: 2096)

CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED GRANT OF RSUS TO THE CONNECTED GRANTEES AND NOTICE OF EXTRAORDINARY GENERAL MEETING

1. INTRODUCTION

2. CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED GRANT OF RSUS TO THE CONNECTED GRANTEES

Issue and Allotment of the Underlying Shares

Market Value

General Mandate

Application for Listing

Impact on the Shareholding Structure of the Company

Information about the Company

Reasons for and Benefits of the Proposed RSU Grants

Proposed grant of RSUs to the executive Directors of the Company

Proposed grant of RSUs to the Other Connected Grantees

Listing Rules Implications

Independent Board Committee and Independent Financial Adviser

3. CLOSURE OF REGISTER OF MEMBERS

4. EXTRAORDINARY GENERAL MEETING

5. RECOMMENDATION

6. GENERAL

7. MISCELLANEOUS

Simcere Pharmaceutical Group Limited Mr. Ren Jinsheng Chairman and Chief Executive Officer

Simcere Pharmaceutical Group Limited 先聲藥業集團有限公司

CONNECTED TRANSACTIONS IN RELATION TO PROPOSED GRANT OF RSUS TO THE CONNECTED GRANTEES

Yours faithfully,

Simcere Pharmaceutical Group Limited

CONNECTED TRANSACTIONS IN RELATION TO THE PROPOSED GRANT OF RSUS TO THE CONNECTED GRANTEES

INTRODUCTION

LISTING RULES IMPLICATIONS

THE INDEPENDENT BOARD COMMITTEE

THE INDEPENDENT FINANCIAL ADVISER

BASIS OF OUR ADVICE

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Background information of the Group

1.1 Principal business of the Group

1.2 Financial information of the Group

FY2020 compared to FY2019

1H 2021 compared to 1H 2020

1.3 Pre-IPO Share Incentive Scheme

1.4 Recent development and outlook of the Group

2. Reasons for and benefits of the Proposed RSU Grants

3. Principal terms of the Proposed RSU Grants

4. Background information of the Connected Grantees

Proposed grant of RSUs to the executive Directors of the Company

Proposed grant of RSUs to the Other Connected Grantees

5. Comparable analysis

5.1 Size of grant

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

5.1.1. Proposed grant of RSUs to the executive Directors of the Company

5.1.2. Proposed grant of RSUs to the Other Connected Grantees

5.2 Vesting period and conditions

5.3 Section summary

6. Potential impact of the Proposed RSU Grants

6.1 Potential financial impact

6.2 Potential shareholding impact

RECOMMENDATION

Yours faithfully, For and on behalf of Altus Capital Limited

Jeanny Leung

Leo Tam

1. RESPONSIBILITY STATEMENT

2. DIRECTORS’ AND CHIEF EXECUTIVES’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

3. DIRECTORS’ SERVICE CONTRACTS

4. COMPETING INTERESTS OF DIRECTORS AND CLOSE ASSOCIATES

5. DIRECTORS’ INTERESTS IN ASSETS AND/OR CONTRACTS

6. SUBSTANTIAL SHAREHOLDERS’ INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES

7. MATERIAL ADVERSE CHANGE

8. QUALIFICATION AND CONSENT OF EXPERT

Qualifications

9. DOCUMENTS AVAILABLE FOR INSPECTION

Simcere Pharmaceutical Group Limited 先聲藥業集團有限公司

Simcere Pharmaceutical Group Limited Proxy Solicitation & Information Statement 2021