On November 6, 2024, Hengrui Medicine, the "pharmaceutical leader" listed on the A-share market, announced that the second lock-up period of the company's 2022 employee stock ownership plan will expire on November 7, 2024. After the expiration, the management committee will dispose of the rights and interests in accordance with the provisions of this employee stock ownership plan based on the arrangements of this employee stock ownership plan, market conditions and other comprehensive factors. This also means that hundreds of core employees of Hengrui Medicine will share a big "red envelope" again.

Hengrui's employee stock ownership plan was established in November 2022. The shares came from the company's repurchase special securities account, totaling 12 million shares; according to the disclosed information at the time, the transfer price was only 4.97 yuan/share. As of November 6, 2024, Hengrui Medicine's closing price was 48.75 yuan/share, which is nearly 10 times the original transfer price. Of course, the expiration of the shareholding plan does not mean that employees can naturally obtain the share benefits. The most critical thing is whether the lifting conditions linked to performance appraisal are met.

At the company level, the performance appraisal indicators corresponding to the lifting conditions include: sales revenue of innovative drugs, the number of new molecular entity IND approvals, and the number of NDA applications submitted and accepted for innovative drugs (including new indications). According to the completion of the indicators, three unlocking ratios of 100%, 90%, and 0% are set. According to the announcement information of Hengrui Medicine, the lifting conditions at the company level have been fully met.

Specifically, Hengrui Medicine's cumulative innovative drug revenue including tax from 2022 to 2023 is greater than 19 billion yuan, the number of new molecular entity IND approvals is greater than 21, and the number of NDA applications submitted and accepted for innovative drugs (including new indications) is greater than 13. The above performance has met the conditions for 100% unlocking. In addition to the performance indicators at the company level, there are also performance indicators linked to individual employees. According to the employees' positions, each person's specific performance indicators are different. The results of personal performance appraisals are based on the performance appraisal documents signed between the company and the employees and are finally determined by the management committee. For some stocks that cannot be unlocked due to personal performance appraisals that do not meet the standards, the management committee has the right to decide to recover and transfer them to transferees who are eligible to participate in the employee stock ownership plan. In other words, although the employee stock ownership plan has expired and has met the unlocking conditions at the company level, it is a pity that employees who have not completed their personal performance appraisals cannot enjoy the corresponding benefits.

According to the previous announcements, the total number of participants in this stock ownership plan does not exceed 1,158, and there are 932 holders who meet the unlocking conditions in 2024. There is still a difference of more than 200 people per month, most of whom should be employees who have not completed their personal performance appraisals, and may also include a small number of resigned employees. So how much benefit can these 932 people share? According to the lifting of the ban information, the number of stock rights is 2.7632 million shares, accounting for 0.04% of the company's total share capital. According to the latest closing price, the corresponding amount is approximately 135 million yuan, and the average per capita is approximately 144,500 yuan. Considering that this is an employee stock ownership plan that lasts for 3 years, the employees' income in 3 years is about 400,000 to 500,000 yuan, which is indeed a very good benefit. And this is only the 2022 employee stock ownership plan. At present, Hengrui Medicine has established three employee stock ownership plans, named after the year of establishment, namely the 2022, 2023, and 2024 employee stock ownership plans. At present, the 2023 employee stock ownership plan has also entered the survival period, and its stock price cost is 23.85 yuan/share. Although it is much higher than the 2022 employee stock ownership plan, it is still nearly 50% discounted relative to the secondary market.

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