SHENZHEN, CHINA – On March 17, China Medical System Holdings Limited (“CMS” or the “Company”) released its 2024 annual results. The Company recorded a turnover of RMB7,469 million, representing a year-on-year decrease of 6.8%; in the case that all medicines were directly sold by the Company, the turnover would be RMB8,622 million, representing a year-on-year decrease of 9.0%. Profit for the year was RMB1,613 million, and normalized profit for the year that excluding the provisions of impairment losses on related assets was RMB 1,714 million. The results announcement shows that in 2024, the performance decline of the Company was mainly influenced by the implementation of the National Volume Based Procurement (the “National VBP”), resulting in a year-on-year turnover (in the case that all medicines were directly sold by the Company) decrease of 28.8% to RMB2,691 million for three original drugs that were not selected.

However, for the Company, 2024 was both a “year of restructuring” amidst challenges and a “year of breakthroughs” with emerging potentials. Although the overall performance is experiencing short-term pains, the development of exclusive and innovative drugs has many highlights and their potential has begun to emerge. In 2024, in the case that all medicines were directly sold by the Company, the turnover of exclusive and innovative products was RMB4,551 million, representing a year-on-year increase of 4.1%, accounting for 52.8% of the total turnover. This year, the Company has cumulatively had 5 innovative drugs enter into commercialization, but they were all in the early market introduction stage. In the future, as the marketed innovative drugs gradually expand into large-scale clinical applications and their sales ramp up rapidly, and as the quality innovative pipeline continues to be approved for marketing, the Company will enter a new cycle of quality and sustainable development driven by exclusive and innovative drugs.

According to the announcement, in 2024, CMS submitted the NDAs for two novel drugs in China, including the innovative drug for the vitiligo treatment, ruxolitinib cream, established three innovative drug collaborations and three medical aesthetic product collaborations. As of the end of 2024, the Company has accumulated a total of nearly 40 short-term, medium-term, and long-term innovative pipeline products. In addition, the Company’s Southeast Asia business is poised for takeoff. This year, it has promoted more than five innovative drugs to submit market registration applications. The preparatory work for the Singapore factory of the associated company has been basically completed, and it is about to fully launch pharmaceutical CDMO and sales promotion businesses, cultivating a second growth curve.

Product Competitiveness as the Core to Solidify the Innovation Growth Engine

As a pharmaceutical commercialization leader with over three decades of experience in the pharmaceutical market and having promoted multiple marketed drugs to achieve leading market positions, CMS also maintains a keen market insight when deploying innovative drugs. It selects global FIC (First-in-Class) and BIC (Best-in-Class) innovative drugs based on front-line market demands, adhering to the “three-good-variety” screening criterias: having academic differentiated advantages, significant market potential and good competitive landscape, and high comprehensive return on investment.

Looking at the Company’s marketed innovative drugs, the five products either have clear differentiation advantages compared to the existing products in the market or fill market gaps in particular areas. Therefore, they can provide valuable innovative treatment options for patients. For example, VELPHORO (Sucroferric Oxyhydroxide Chewable Tablets), used for phosphorus reduction in chronic kidney disease (CKD) patients, is the first iron-based, non-calcium phosphate binder (PB) approved by China’s NMPA, and filled the gap of phosphorus-lowering treatment for Chinese paediatric patients aged 12 to 18 years old with CKD stages 4-5 or CKD on dialysis. According to multiple global clinical studies and real-world research data (as published in academic journals including International Urology and Nephrology, and Clinical Nephrology) and the Chinese instruction of the product that compared with other PBs, patients maintained on VELPHORO used about 50% fewer PB pills/day, and a proportion of patients achieving target sP increased by 95%. ILUMETRI (Tildrakizumab Injection) is an innovative biological agent targeting to the p19 subunit of IL-23 for the treatment of moderate-to-severe plaque psoriasis. It only requires dosing once every three months during the maintenance period. With its excellent long-term efficacy, convenient dosing cycle, and good safety profile, the patient compliance is improved. With the excellent product strength as the core and leveraging the rich academic resources and promotional experience accumulated over the years, the Company is expected to rapidly enhance the market penetration and brand influence of its marketed products.

The Company’s two innovative drugs, ruxolitinib cream and Desidustat Tablets, which are, currently in the NDA review stage in China and expected to be launched in 2025, are both considered to have good market potential. According to the announcement, ruxolitinib cream is the first and only topical JAK inhibitor approved by the U.S. FDA and the European EMA for repigmentation in vitiligo as of now. If successfully approved for marketing, it will bring treatment hopes to more than ten million vitiligo patients in China who are suffering from the lack of effective drugs. Desidustat Tablets are used for treating anemia in non-dialysis adult, CKD patients and are administered orally. Its Chinese Phase III clinical trial shows that it performs well in efficacy, safety, and tolerability. Data shows that there are approximately 132 million CKD patients in China, and anemia is one of the frequent complications. After approved for marketing, the product is expected to further meet the anemia treatment needs of CKD patients.

In addition, among the innovative pipeline products that the Company has reserved and are expected to be approved for marketing within the next 2 to 4 years, there are also several products with high market attention and industry-assessed potential to become FIC and BIC blockbuster drugs, such as Y-3 for stroke treatment, the highly selective small-molecule oral JAK1 inhibitor povorcitinib (for non-segmental vitiligo and hidradenitis suppurativa), the URAT1 inhibitor ABP-671 (for gout), the anti-IL-4Rα humanized monoclonal antibody injection MG-K10 (for atopic dermatitis), the oral improved new drug ZUNVEYL (for Alzheimer’s disease), etc. These products will strongly support the Company’s continuous growth in future performance.

Notably, CMS has always adhered to an efficient innovation strategy of “Collaborative R&D and In-house R&D” and attached great importance to maximizing the efficiency of R&D investment. From 2018 to 2024, the Company recorded cumulatively R&D expenditures of around RMB4,350 million, accounting for 7.6% of the turnover during the same period in the case that all medicines were directly sold by the Company, of which the R&D expenses were RMB880 million, accounting for 1.5% of the turnover during the same period in the case that all medicines were directly sold by the Company. Through relatively prudent R&D investment, the Company has successfully realized the project initiation, clinical development, and marketing of several quality innovative products, achieving extremely high innovation input-output efficiency. In addition, as of the end of 2024, the cash and bank deposit recorded RMB3,707 million, sufficiently safeguarding the continuous innovation and in-depth exploration of cutting-edge fields.

Refining the Commercialization System Focused on Specialty to Empower the Release of Product Value

The synergy between strong product power and efficient commercialization capabilities is the key to maintain the competitive advantage of the Company. CMS continuously upgrades its specialty-focused commercialization system, and forms an in-depth layout focusing on core specialties of cardio-cerebrovascular/gastroenterology, dermatology/medical aesthetics, and ophthalmology. Leveraging its accumulated extensive professional promotion networks and academic platforms, CMS will safeguard the successful commercialization of innovative products.

Since its independent operation in 2021, “CMS Skinhealth”, is developing into a “leading, innovation-driven pharmaceutical company in China, specializing in skin health”. CMS Skinhealth has formed a comprehensive product portfolio centered on dermatology prescription drugs and extended to dermatology-grade skincare products and light medical aesthetic products. As of the end of 2024, the dermatology prescription portfolio of CMS Skinhealth has comprehensively covered dermatology diseases, such as vitiligo, psoriasis, atopic dermatitis, phlebitis, varicose veins, and hidradenitis suppurativa. As for dermatology-grade skincare products, the “Heling Soothing Product Series”, which are dedicated to sensitive skin care, have been further perfected. The Hirudoid^® Azelaic Acid Skincare Series has been newly launched to provide a comprehensive acne-care solution. In the field of light medical aesthetic, the registration application of Poly-L-lactic Acid Microparticle Filler Injection in China has been accepted. Additionally, the Company has introduced three regenerative products, Polycaprolactone Microsphere Gel for Injection, Calcium Hydroxylapatite Microsphere Gel for Injection, and Decellularized Extracellular Matrix Implant, which are currently under the registrational clinical trial stages in China, further enhancing the light medical aesthetic product portfolio. CMS Skinhealth offers a diverse matrix of dermatological health and aesthetic products, providing comprehensive and integrated solutions to individuals with varying needs for skin health and beauty.

Concurrently, “CMS Vision”, an independently operated ophthalmology business, focuses on the development and commercialization of ophthalmic prescription drugs, medical devices, and consumables. In China, a large number of patients suffer from ophthalmic diseases, and the burden of ophthalmic diseases is increasing significantly due to the population growth and aging. Leveraging on professional ophthalmic product portfolio, extensive network and channel resources, CMS Vision continuously strengthens its brand strength and academic position, aspiring to become a leading ophthalmic pharmaceutical and device company in China.

As of the end of 2024, CMS had approximately 4,700 professional marketing and promotion related employees, with a promotion network covering over 50,000 hospitals and medical institutions, and approximately 300,000 retail pharmacies in China. Leveraging its efficient marketing and promotion team along with an extensive promotion network, the Company focuses on the marketed innovative drugs and core exclusive products, dynamically optimizes the marketing strategy, initiates real-world studies and post-marketing clinical trials, continuously accumulates academic evidence, strengthens the products academic influence, and accelerates the transformation into market value. Simultaneously, the Company has strengthened its expansion in the breadth and depth of coverage in the out-of-hospital market. Through integrated online and offline strategies and multi-channel collaboration, it has achieved a dual improvement in the out-of-hospital prescription traffic diversion and patient benefits.

Starting with Southeast Asia and Cultivating the Second Growth Curve of Overseas Business

While deeply developing in the Chinese market, CMS is also accelerating its pace of internationalization. Starting with Southeast Asia and leveraging the favorable opportunity of the rapidly growing local demand for high cost-effective pharmaceutical products, the Company is actively nurturing the growth engine of its overseas business, injecting new momentum into its long-term and sustainable development.

In 2024, the Southeast Asia business, Rxilient Health, focusing on regional characteristics and disease spectrum features, executed a precise planning of its product portfolio and commercial pathways, and achieved notable milestones in the marketing registration for multiple products, laying the foundation for future market promotion and the realization of sales. Within this year, Rxilient Health has obtained the exclusive licenses in eleven Southeast Asian countries for povorcitinib, a selective small-molecule JAK1 Inhibitor, with the potential to provide a new treatment option for patients with autoimmune and inflammatory skin diseases. Meanwhile, Rxilient Health is actively advancing the registration of several innovative products in Southeast Asia, and/or in Hong Kong, Macau, and Taiwan, including ruxolitinib cream, ILUMETRI, LUMEBLUE, VALTOCO, VELPHORO and so on. Among them, ruxolitinib cream has been approved for marketing in Macau and Hong Kong for the treatment of vitiligo, and also submitted the registration applications in Singapore and Taiwan. Additionally, intravenous toripalimab (anti-PD-1 monoclonal antibody drug), collaborated by Rxilient Health and Junshi Biosciences, has submitted registration applications in Malaysia, the Philippines, Indonesia, Thailand, and Vietnam.

Regarding the CDMO business, the associate company PharmaGend’s manufacturing plant in Tuas, Singapore has received the U.S. FDA GMP certification and successfully passed an on-site inspection by the Singapore HSA. It will provide CDMO services to global pharmaceutical companies and play a critical role in ensuring the safety of the Company’s overseas manufacturing supply chain.

At the outset of a new journey, CMS proactively adapts to change and strides toward innovation, steadfastly executes the strategy of “innovation-driven, efficiency -priority, specialty breakthrough, and international expansion”. By reshaping the growth curve and cultivating a more diversified and resilient business framework, the Company is advancing into a new phase of quality development, providing patients with more quality therapeutic options while generating long-term stable returns for shareholders.

CMS Disclaimer and Forward-Looking Statements

This press release is not intended to promote any products to you and is not for advertising purposes. This press release does not recommend any drugs, medical devices and/or indications. If you want to know more about the diagnosis and treatment of specific diseases, please follow the opinions or guidance of your doctor or other medical and health professionals. Any treatment-related decisions made by healthcare professionals should be based on the patient’s specific circumstances and in accordance with the drug package insert.

This press release which has been prepared by CMS does not constitute any offer or invitation to purchase or subscribe for any securities, and shall not form the basis for or be relied on in connection with any contract or binding commitment whatsoever. This press release has been prepared by CMS based on information and data which it considers reliable, but CMS makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this press release. Certain matters discussed in this press release may contain statements regarding the Group’s market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. Any forward-looking statements and projections made by third parties included in this press release are not adopted by the Group and the Company is not responsible for such third-party statements and projections.

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Source: China Medical System Holdings Ltd.