Sinopharm Tech innovatively launches lottery anti-counterfeiting traceability solution

Sinopharm Tech Holdings Limited ("Sinopharm Tech" and its subsidiaries, together, the "Group", stock code: 8156) is pleased to announce that, the Group has cooperated with Beijing Cai-Yan Technology Co., Ltd. ("CY Technology") to innovatively launch a scientific, efficient and unique anti-counterfeiting traceability solution with anti-counterfeiting packaging devices and online anti-counterfeiting information verification platform as the core content. Through the commercialization of lottery anti-counterfeiting technologies, the solution will enable the consumers to easily and reliably identify the authenticity of the product. The Group targets to tap the anti-counterfeiting demand and commercial revenue potential of products with high value-added attributes.

Driven by favorable national policies, China's anti-counterfeiting traceability industry has developed rapidly. According to data from the Newsijie Industry Research Center, China's anti-counterfeiting market reached RMB151.2 billion in 2018, spanning across various industries including medicine, food, cosmetics, tobacco and alcohol, and luxury goods. More and more brands are putting effort into anti-counterfeiting traceability, and the demand is increasing. It is estimated that the anti-counterfeiting traceability market will reach RMB198.7 billion in 2023, portraying a huge growth potential for the industry.

Innovatively anti-counterfeiting patents combining the lottery characteristics of credibility and public welfare features

CY Technology has obtained the authorization to use two patented technologies, namely product anti-counterfeiting packaging device (being notified in granting the patent, patent application number: 201921449828.X) (the "Anti-counterfeiting Traceability"), and adhesive parts and components and anti-counterfeiting packaging device (patent number: ZL 2019 2 1579150.7) (the "Anti-counterfeiting Device(s)"). The Group also has the right to use these patents through signing a licensing agreement with CY Technology ("Authorization"), authorizing the use of such anti-counterfeiting patent solutions for market promotion, and the formation of an overall solution for the patented technology to be applied to consumer products (the "Commercial Cooperation").

The two anti-counterfeiting patents mainly provide efficient and unique anti-counterfeiting methods for consumer products circulated in the market through the use of lottery as an anti-counterfeiting mechanism. With the combination of the unique anti-counterfeiting characteristics of lottery tickets and other product design and technological elements such as Radio Frequency Identification, the goals of anti-counterfeiting, easy identification and traceability can be achieved. The planned overall anti-counterfeiting patent application solution innovatively combines the lottery characteristics of credibility endorsement, anti-counterfeiting and public welfare features together with anti-counterfeiting packaging. When the anti-counterfeiting packaging is opened, the integrity of the effective area of the lottery ticket is also destroyed, effectively avoiding loopholes of secondary use. The national lottery industry has a complete management system and mature laws and regulations to protect the legitimate rights and interests of lottery participants. In addition, these lottery tickets are recognized and issued by national institutions and are unique and unforgeable. At the same time, the public welfare characteristic of the lottery itself is not available in other existing anti-counterfeiting technologies. This anti-counterfeiting patent solution encourages the consumers to actively participate in authenticity verification and form the consumers' authenticity verification habits, while the promotion of the sales of goods will also increase the demand for the Anti-counterfeiting Devices by merchants, which will establish the demand closed-loop.

Promoting the commercialization of anti-counterfeiting patent solutions while targeting products with high value-added

These patented solutions are designed to help companies capture the demand for genuine goods, increase sales revenue, increase industry and corporate credit, while the companies participate in public welfare undertakings at the same time. In this Commercial Cooperation, the Group plays an important role in the development of the market and the formation of overall solutions for practical applications and promotes the full commercialization of anti-counterfeiting patent solutions. The Group will set up a large-scale technology applications R&D and marketing team to provide strong support to the new business sector from the front line to the back end. The Group's revenue from the Commercial Cooperation is divided into two parts: Firstly, for every product sold by a manufacturer that adopts the patented overall application solution, the Group will receive a certain percentage of service fees from the sales revenue of the solution. Secondly, the patented overall application solution is embedded with lottery elements, the Group will obtain a certain lottery sales commission through the sale of lottery tickets.

The Anti-counterfeiting Traceability and the Anti-counterfeiting Device are connected to the entrance of the anti-counterfeiting information interactive system from which the consumers can enter the authenticity verification platform. Interactive functions such as real-time authenticity verification, lottery ticket redemption, and marketing lottery draw attract the customers. After completion of the online business platform jointly established by the Group's e-commerce system and genuine goods manufacturers, the accumulated customer base can be tapped into and the multi-dimensional marketing function will be fully utilized.

The Group is optimistic about the anti-counterfeiting demand and commercial revenue potential of products with high value-added attributes. The first batch of targeted users are in the tobacco, medicine, and alcohol industries with relatively strong consumer demand, higher consumption amount, and high anti-counterfeiting requirements. The Anti-counterfeiting Devices help limit and crack down on the circulation of counterfeit goods, help businesses regain real market demand, and consolidate corporate image.

Mr. CHAN Ting, Executive Director and Chief Executive Officer of Sinopharm Tech, said, "the Group has been deeply involved in the lottery industry for more than ten years with a foresight of the market and knows how to make use of the unique technologies to create and capture market share. In the future, the Group will strive to promote the in-depth integration of lottery sales, the Anti-counterfeiting Device, 'Internet Plus' and block chain technology. While implementing multi-dimensional marketing functions in the backend of the anti-counterfeiting information system, the Group will ensure the security and integrity of data information. The Group is confident in creating new application scenarios, tapping potential demand in the anti-counterfeiting industry, and accelerating the market-oriented practice of combining lottery and anti-counterfeiting technologies."

About Sinopharm Tech Holdings Limited

Sinopharm Tech Holdings Limited is a comprehensive business development company that provides lottery, "Internet Plus" solutions and personal protective equipment. In 2019, the Group successfully introduced Sinopharm Traditional Chinese Medicine Co. Ltd., a member of China Traditional National Chinese Medicine Co., Ltd., as one of the main strategic shareholders.

The Group has been deeply involved in China's welfare lottery and sports lottery industries for more than 20 years, and is committed to bringing different innovative solutions to the industry, from lottery systems to interactive marketing to the latest anti-counterfeiting business. Meanwhile, the Group has established 7 cleanrooms in Hong Kong SAR and Mainland China with more than 20 mask production lines, producing 3-ply adult masks, 3-ply student masks, N95 folding masks, N95 cup-shaped masks and other personal protective equipment.

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