China Medical System (00867) Released its 2024 Interim Results: Steady Increase in Revenue and Profit Compared with 2H 2023

CMS enters the “New Product Era” driven by exclusive and innovative products, with exclusive and innovative drugs revenue accounts for over 56%.

SHENZHEN, CHINA – On August 15, 2024, China Medical System Holdings Limited (“CMS” or the “Company”) released its 2024 interim results announcement, with a steady increase in overall revenue and profit for the period compared to the second half (2H) of 2023. In the first half (1H) of 2024, the Company recorded a turnover of RMB3,611.1 million, representing a decrease of 21.7% compared with 1H 2023, an increase of 6.1% compared with 2H 2023. In the case that all medicines were directly sold by the Company, the turnover was RMB4,287.5 million, representing a decrease of 22.6% compared with 1H 2023, an increase of 8.9% compared with 2H 2023; Among which, the total revenue of non-National VBP exclusive products and innovative products was RMB2,404.7 million, accounting for 56.1% of CMS’s revenue in the case that all medicines were directly sold by the Company. Profit for the period was RMB903.4 million, representing a decrease of 52.8% compared with 1H 2023, a substantial increase of 92.8% compared with 2H 2023.

The year 2024, not only marks the first year of the commercialization of CMS’s innovative products, but also a crucial point for the release of National Volume Based Procurement (“National VBP”) impact on its financial performance. Deanxit entered the seventh batch of National VBP in November 2022, Plendil and Ursofalk entered the eighth batch of National VBP in July 2023, and none of the three original drugs were selected, which had a negative impact on the Company’s business performance. In 1H 2024, the Company’s overall performance showed a growth trend compared with 2H 2023, indicating that CMS has basically digested the impact of National VBP and successfully entered the “New Product Era” where non-national VBP exclusive products and innovative products drive its growth.

With the approval for marketing of LUMEBLUE (Methylthioninium Chloride Enteric-coated Sustained-release Tablets) in June and METOJECT (Methotrexate Injection)’s additional indication of active rheumatoid arthritis (RA) in adults in July this year, CMS’s innovative drug portfolio in the commercialization stage has expanded into 5 products (including 6 indications); simultaneously with a rich and differentiated innovative pipeline reserve. Gathering the power of innovation and riding the momentum of development, CMS is comprehensively shaping new drivers for development with a healthier product structure, further opening up a new cycle of quality development.

The “Collaborative and In-house” dual-engine R&D model drives the simultaneous improvement in quantity and quality of the pipeline, accelerating the transformation of innovative biotechnology

A profound innovative drug R&D pipeline is an important driving force for the long-term development of CMS. The Company adheres to the purpose of innovation for meeting the unmet clinical needs and solving the difficulties of patient medication, and promotes innovation development through a two-wheel drive of “Collaborative R&D and In-house R&D”, continuously deploying FIC (first-in-class) and BIC (best-in-class) innovative products, and enhancing the capabilities and efficiency of research and clinical development to achieve a rapid transformation of scientific outcomes into social and commercial values.

As of now, CMS’s innovative product portfolio approved for marketing in China has been expanded into 5 products (including 6 indications), among which, 4 innovative drugs (VALTOCO, ILUMETRI, METOJECT – psoriasis indication, VELPHORO) have been included in the National Reimbursement Drug List (NRDL) and entered large-scale clinical application; also, CMS newly added LUMEBLUE and METOJECT (RA), for being approved for marketing in China recently.

CMS has also steadily advanced the clinical development of innovative products. Currently, Desidustat Tablets is under NDA review in China; Also, a total of about 10 projects have been prepared/launched for their registrational clinical trials, mainly randomized controlled trials (RCT).

At the same time, the Company had continued to strengthen basic research and independent innovation capabilities, and successfully promoted more than 10 in-house R&D projects, among which, three innovative drugs (VEGFA/ANG2 Tetravalent Bispecific Antibody, Highly Selective TYK2 Inhibitor CMS-D001 Tablets, and GnRH Receptor Antagonist CMS-D002 Capsules) have entered the clinical development stage.

In addition, the Company’s innovative pipeline has continued to expand. CMS Skinhealth collaborated with Incyte once again, and has obtained exclusive license to research, develop, register and commercialize povorcitinib, a selective oral small-molecule JAK1 inhibitor, in countries/territories including Mainland China, Hong Kong, Macau, Taiwan Region and 11 Southeast Asian countries. This further enriched the product portfolio of CMS Skinhealth in the treatment of vitiligo and other immune-mediated dermatology diseases.

Subsequently, CMS will continue to produce innovative products with higher efficiency and more controllable costs every year, accelerating the release of innovative value and embracing quality and sustainable performance growth through a healthy product structure dominated by non-National VBP exclusive products and innovative products.

Successful commercialization system releases the clinical value of innovative products in an efficient and collaborative manner

After 32 years of deep cultivation in specialty therapeutical fields, successful commercialization capability is one of CMS’s core competitiveness. By continuously reinforcing and integrating its commercialization platform, it has achieved in-depth development of its three major business segments including cardio-cerebrovascular/gastroenterology, dermatology, and ophthalmology, and expanded its boundaries in related fields. Additionally, the Company established a highly qualified, professional promotion team with strong execution, as well as extensive channel and resource coverage, which has laid a solid foundation for the rapid market entry and brand building of its innovative products.

Four innovative drugs of CMS have entered large-scale clinical applications, covering various disease fields such as central nervous system, dermatology, nephrology, and gastroenterology, and developed synergistically with the existing marketed products in promotion team and channels. Meanwhile, leveraging on the opportunity of being included in the NRDL, CMS is advancing hospital development, brand building, real world studies and medically-driven academic promotion. CMS is improving patients’ accessibility to innovative drugs with the help of patient aid and disease knowledge popularization programs, promoting the release of products’ clinical value.

The Dermatology and Medical Aesthetic Business “CMS Skinhealth” regards dermatology prescription products as its core, and extends to light medical aesthetic products and dermatology-grade skincare products, continuously improving the construction of a full life-cycle skin-health management platform covering dermatological treatment, skincare, and medical aesthetics through internal development and external collaboration. In terms of clinical development of dermatology prescription drugs, CMS has completed the Pivotal Real World Study for ruxolibinib cream in vitiligo, and is advancing the registration application process in Mainland China. At the same time, it has continuously complemented the regenerative light medical aesthetic portfolio, among which the China’s medical device registration application of the Poly-L-lactic Acid Microparticle Filler Injection has been accepted by the NMPA during the Reporting Period; and the Company has newly obtained exclusive licenses of three regenerative light medical aesthetic 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 stage in China.

The results announcement shows that, as of the end of June, the promotion network of CMS has covered over 55,000 hospitals and medical institutions, and approximately 280 thousand retail pharmacies in China.

Leveraging the accumulated advantages in cardio-cerebrovascular, gastroenterology, central nervous system, nephrology, ophthalmology, dermatology and other specialty therapeutical fields, CMS steadily releases the scale effect of its specialty businesses, and builds high competition barriers, creating broad commercial potential for its innovative products and exclusive products.

Drawing up the internationalization layout to gather momentum for the incremental market

Integrating the advantageous resources of the Company, its Southeast Asia business “Rxilient Health”, shares and expands the successful experience of CMS gained from the China market, as well as global quality products and innovative technological resources, into the Southeast Asia market. This accelerates the improvement of the platform integrating “R&D, manufacture, and commercialization” of the Southeast Asia business, empowering Chinese and global pharmaceutical companies to implement the “overseas development” strategy, and also opening up a larger space for incremental development opportunities for CMS.

As of the end of June, Rxilient Health has established a competitive product portfolio with more than ten differentiated products, covering therapeutic areas such as oncology, central nervous system, autoimmune, dermatology, and ophthalmology, etc. Rxilient Health is accelerating the relevant work on the market registration processes in Southeast Asian countries for innovative pipeline products, such as ruxolitinib cream, Methylthioninium Chloride Enteric-coated Sustained-release Tablets, and Diazepam Nasal Spray, etc. Furthermore, Rxilient Health collaborated with Junshi Biosciences to promote the registration process of toripalimab (anti-PD-1 monoclonal antibody) in multiple countries in Southeast Asia, aiming to benefit local cancer patients as soon as possible.

In December last year, the Company and Rxilient Health joined hands with Pharmaron and other partners to complete the purchase of the Singapore manufacturing plant. This year, all relevant parties have been orderly advancing a series of work for the Singapore manufacturing plant, including equipment testing, quality verification, and production quality system certification, etc., so as to accelerate the CDMO business development, and to optimize the Company’s overseas supply chain and manufacturing capabilities. The business layout will further facilitate more inter-industry cooperation between CMS and global partners in the future, thus jointly building a win-win medical innovation ecosystem with mutual benefits.

Conclusion

Since its establishment in 1992, CMS has followed the development pattern of the industry and has promoted three significant strategic transformations successfully with a forward-looking vision. The Company started as an agent of imported original drugs, gradually developed to control the rights of original/exclusive products, and then achieved a comprehensive innovative transformation. Each step of the transformation is in sync with the industry development trends. CMS steadily aims towards the ultimate goal, and constantly builds up its strength and resilience to persist through the industry development cycle. With the gradual release of the impact of national VBP on its financial performance, CMS has been transforming into a brand-new company. While embracing the innovation achievements in each stage, CMS is fully prepared for a sustainable and healthier development in the future.

About CMS

CMS is a platform company linking pharmaceutical innovation and commercialization with strong product lifecycle management capability, dedicated to providing competitive products and services to meet unmet medical needs.

CMS focuses on the global first-in-class (FIC) and best-in-class (BIC) innovative products, and efficiently promotes the clinical research, development and commercialization of innovative products, enabling the continuous transformation of scientific research into clinical practices to benefit patients.

CMS deeply engages in several specialty therapeutic fields, and has developed proven commercialization capabilities, extensive networks and expert resources, resulting in leading academic and market positions for its major marketed products. CMS continues to promote the in-depth development of its advantageous specialty fields and expand business boundaries. While strengthening the competitiveness of the cardio-cerebrovascular/gastroenterology business, CMS independently operates its dermatology and medical aesthetics business, and ophthalmology business, aiming to gain leading positions in specialty therapeutic fields, whilst enhancing the scale and efficiency. At the same time, CMS has expanded its business territory to the Southeast Asian market, striving to become a “bridgehead” for global pharmaceutical companies to enter the Southeast Asian market, further escorting the sustainable and healthy development of the Group.

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.