3SBio Inc. (Form: 20-F, Received: 06/29/2007 12:09:33)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

¨	Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934

x	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2006

¨	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

¨	Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of event requiring this shell company report

Commission file number 001-33295

3SBio Inc.

(Exact Name of Registrant as Specified in Its Charter)

Cayman Islands

(Jurisdiction of Incorporation or Organization)

No. 3 A1, Road 10

Shenyang Economy & Technology Development Zone

Shenyang 110027

People’s Republic of China

(Address of Principal Executive Offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:


Title of Each Class		Name of Each Exchange on Which Registered
American Depositary Shares, each representing seven ordinary shares, par value US$0.0001 per share		The NASDAQ Stock Market LLC

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the Issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

152, 084,155 Common Shares, represented by

21,726,308 American Depositary Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ¨ No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x

Indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ¨ Item 18 x

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ¨ No x

3SBIO INC.

FORM 20-F ANNUAL REPORT

FISCAL YEAR ENDED DECEMBER 31, 2006

TABLE OF CONTENTS


		Page
INTRODUCTION		1

PART I		1

ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	1

ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	1

ITEM 3.	KEY INFORMATION	1

ITEM 4.	INFORMATION ON THE COMPANY	30

ITEM 4A.	UNRESOLVED STAFF COMMENTS	60

ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	60

ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	80

ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	87

ITEM 8.	FINANCIAL INFORMATION	89

ITEM 9.	THE OFFER AND LISTING	90

ITEM 10.	ADDITIONAL INFORMATION	91

ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	95

ITEM12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	95

PART II		96

ITEM13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	96

ITEM14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	96

ITEM15.	CONTROLS AND PROCEDURES	97

ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	97

ITEM 16B.	CODE OF ETHICS	97

ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	97

ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	98

ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	98

PART III		98

ITEM 17.	FINANCIAL STATEMENTS	98

ITEM 18.	FINANCIAL STATEMENTS	98

ITEM 19.	EXHIBITS	99

INTRODUCTION

In this annual report, unless otherwise indicated:

•

the term “our company,” “we,” “us,” or “our,” or any like terms, are to 3SBio Inc. and its subsidiaries;

•

references to “China” or “PRC” are to the People’s Republic of China, excluding Hong Kong, Taiwan and Macau;

•

references to “provinces” of China are to the provinces and provincial-level municipalities and autonomous regions of China;

•

all references to “RMB” or “Renminbi” are to the legal currency of China; and

•

all references to “U.S. dollars” or “US$” are to the legal currency of the United States of America.

PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.

KEY INFORMATION

A. Selected Financial Data

The selected consolidated financial data presented below for the years ended December 31, 2004, 2005 and 2006 are derived from our audited consolidated financial statements included elsewhere in this annual report, which are prepared in accordance with U.S. GAAP. The selected balance sheet data as of December 31, 2003 is derived from our unaudited balance sheet as of December 31, 2003, which is not included in this annual report.

Selected consolidated financial data as of and for the years ended December 31, 2002 were omitted because the presentation of such data would require us to incur significant expense and devote extraordinary time.


	Year ended December 31,
	2003		2004		2005		2006		2006
	RMB		RMB		RMB		RMB		US$
	(in thousands, except per share, share, per ADS and ADS data)
Statement of Income Data:
Net revenues(1):
EPIAO	44,787		64,937		84,804		98,836		12,665
TPIAO	—		—		2,795		16,056		2,057
Intefen	22,820		7,680		6,827		4,995		640
Inleusin	4,264		2,738		1,606		1,132		145
Export	896		1,736		4,990		5,878		753
Others	73		157		991		883		113

Total	72,840		77,248		102,013		127,780		16,373

Cost of revenues	(12,653	)	(15,027	)	(15,497	)	(11,598	)	(1,486	)

Gross profit	60,187		62,221		86,516		116,182		14,887

Operating expenses:


	Year ended December 31,
	2003		2004		2005		2006		2006
	RMB		RMB		RMB		RMB		US$
	(in thousands, except per share, share, per ADS and ADS data)
Statement of Income Data:
Research and development	(3,073	)	(3,699	)	(3,196	)	(6,100	)	(782	)
Sales, marketing and distribution	(37,021	)	(38,762	)	(49,205	)	(61,280	)	(7,852	)
General and administrative	(15,789	)	(13,600	)	(13,956	)	(12,269	)	(1,572	)

Total operating expenses	(55,883	)	(56,061	)	(66,357	)	(79,649	)	(10,206	)

Operating income	4,304		6,160		20,159		36,533		4,681
Other income/(expense), net
Interest expense, net	(5,748	)	(5,948	)	(5,407	)	(3,809	)	(488	)
Grant income	2,518		6,442		3,771		3,146		403
Others	288		—		(850	)	(192	)	(25	)

Total other income/(expense), net	(2,942	)	494		(2,486	)	(855	)	(110	)

Income before income tax expense and minority interests	1,362		6,654		17,673		35,678		4,571
Income tax expense	(1,201	)	(226	)	(1,762	)	(5,217	)	(668	)

Income before minority interests	161		6,428		15,911		30,461		3,903
Minority interests, net of tax	349		182		144		28		4

Net income	510		6,610		16,055		30,489		3,907

Net income per share, basic and diluted	0.01		0.07		0.16		0.30		0.04

Weighted average number of shares outstanding	100,000,998		100,000,998		100,000,998		100,000,998		100,000,998

Net income per ADS, basic and diluted	0.04		0.46		1.12		2.13		0.27

Weighted average number of ADSs outstanding	14,285,857		14,285,857		14,285,857		14,285,857		14,285,857


	As of December 31
	2003		2004		2005		2006		2006
	RMB		RMB		RMB		RMB		US$
	(in thousands)
Balance Sheet Data:
Cash	10,691		20,151		25,746		25,372		3,251
Working capital(2)	(1,887	)	11,851		(8,239	)	49,300		6,317
Total assets	138,220		146,249		150,561		142,475		18,256
Short-term bank loans	49,000		69,000		89,000		15,000		1,922
Long-term bank loans	50,000		30,000		—		25,000		3,203
Total liabilities	119,436		121,038		109,439		68,667		8,799
Minority interests	829		646		502		474		60
Total shareholders’ equity	17,955		24,565		40,620		73,334		9,397

(1)	Net revenues consist of the invoiced value of goods sold, net of value-added taxes, or VAT, discretionary sales returns, trade discounts and allowances.

(2)	Working capital is calculated as current assets minus current liabilities.

Exchange Rate Information

Our business is primarily conducted in China, and all of our revenues and operating expenses are denominated in Renminbi. However, for the convenience of the readers, periodic reports made to shareholders will include current period amounts translated into U.S. dollars using a current exchange rate. Unless otherwise indicated, all translations from Renminbi to U.S. dollars for financial data have been made at a rate of RMB7.8041 to US$1.00, the noon buying rate as certified for customs purposes by the Federal Reserve Bank of New York on December 29, 2006, the last business day in year 2006.

The following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated based on the noon buying rate in The City of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York.


		Noon Buying Rate
	<

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