Category: BioTech

Maintained Steady Financial Performance under COVID-19 Pandemic
Proceed with Hospital Group Business

The board (the “Board”) of directors (the “Directors”) of Genertec Universal Medical Group Company Limited (the “Company” or “Universal Medical”) is pleased to announce the interim results of the Company and its subsidiaries (together, the “Group”) for the 6 months ended 30 June 2020.

2020 INTERIM RESULTS HIGHLIGHTS
– The revenue amounted to approximately RMB4,024.2 million, representing an increase of 25.9% as compared with that of approximately RMB3,195.4 million for the corresponding period of 2019.
– The profit for the period amounted to approximately RMB861.0 million, representing a decrease of 1.3% as compared with that of approximately RMB872.5 million for the corresponding period of 2019.
– The profit for the period attributable to owners of the parent amounted to approximately RMB793.4 million, representing a decrease of 2.3% as compared with that of approximately RMB812.0 million for the corresponding period of 2019.
– The total assets amounted to approximately RMB59,199.2 million, representing an increase of 2.3% as compared with that of approximately RMB57,852.5 million as at 31 December 2019.
– The equity attributable to owners of the parent amounted to approximately RMB9,851.0 million, representing an increase of 3.8% as compared with that of approximately RMB9,489.3 million as at 31 December 2019.
– For the six months ended 30 June 2020, the return on equity was 16.41% and the return on total assets was 2.94%.

In the first half of 2020, Universal Medical was actively engaged in epidemic prevention and control of the new novel coronavirus (COVID-19) epidemic. A total of 23 member medical institutions were identified as designated hospitals for treatment and isolation, and all Grade II Class A and above hospitals have established fever clinics and participated in the joint prevention and control work of communities, stations, terminals, and airports. Additionally, the headquarters of the Group has implemented various medical supplies for the hospitals and strived to ensure the smooth development of the epidemic prevention and control work in the hospitals. Universal Medical orderly promoted the resumption of work and production and minimize the impact of the epidemic as much as possible, while adapting to the new normal of ongoing epidemic control. In the first half of 2020, the operating results of the Group were generally stable.

Maintained Steady Financial Performance and Proceed with Hospital Group Business
The Group recorded revenue of RMB4,024.2 million, representing an increase of 25.9% as compared to the corresponding period of the previous year, as a result of more medical institutions being consolidated into the Group’s financial statements in the second half of 2019 and the first half of 2020; recorded profit for the period of RMB861.0 million, representing a slight decrease of 1.3% as compared to the corresponding period of the previous year due to the impact of the epidemic; recorded profit for the period attributable to the owners of the parent of RMB793.4 million, representing a slight decrease of 2.3% as compared to the corresponding period of the previous year; and recorded total assets of RMB59,199.2 million as of 30 June 2020, representing an increase of 2.3% as compared to the end of 2019, with asset quality generally safe and controllable.

Hospital group is the most essential resources of building a medical and health conglomerate. In the first half of 2020, the Group continued to actively participate in the integration and takeover of medical institutions of SOEs, and build up a tightly-knit medical networks surrounding key regions and cities across China. As of 30 June 2020, the Group had entered into contracts in relation to takeover of 48 medical institutions (including 5 Grade III Class A hospitals and 24 Grade II hospitals) with actual capacity of over 15,000 beds. Meanwhile, the Group continued to improve the post-investment management of our medical institutions, and comprehensively improved the medical technology, management efficiency and service capabilities of our medical institutions by focusing on discipline construction, operation management, organization management innovation, service system construction, hospital digitalization, supply chain management, hospital renovation and expansion, so as to ensure their sound and orderly development.

Affected by the epidemic control in the first half of 2020, the number of outpatient visits of the medical institutions decreased by approximately 15% as compared to the corresponding period of the previous year, the number of inpatient visits decreased by approximately 18% as compared to the corresponding period of the previous year, and the number of medical examination services decreased by approximately 25% as compared to the corresponding period of the previous year, resulting in varying degrees of decline in the income of medical institutions of the Group and their profit contribution to the Group. The Group believes that the impact of the epidemic on the business of member medical institutions is temporary. With the epidemic under control in the second quarter, the number of patient visits of the medical institutions of the Group has rebounded significantly. Since May 2020, the overall monthly income has basically recovered to the same level for the corresponding period of the previous year, and the monthly income of most medical institutions in June 2020 has exceeded the level of the corresponding period of the previous year.

Steady Develop Finance and Advisory Business with Safe and Controllable Asset Quality
The Group’s finance business, which is the cornerstone underpinning the Group’s steady development and mainly provides finance lease services for county level public hospitals, and provides financial support for the Company, was affected by the epidemic control policies. The development of the Group’s finance and advisory business and collection of receivables from hospital customers relatively slowed down. Meanwhile, due to the continued and steady downward adjustment of the national monetary policies after the Loan Prime Rate (LPR) reform, the interest rate of the Group’s new leasing business decreased accordingly. Therefore, the average yield dropped as compared to the corresponding period of the previous year, and the operating performance of the finance and advisory business experienced short term fluctuations. During the reporting period, the finance and advisory business of the Group recorded revenue of RMB2,480.5 million, increased by 0.4% as compared to the corresponding period of the previous year; recorded gross profit of RMB1,521.5 million, decreased by 1.7% as compared to the corresponding period of the previous year. Finance lease business recorded revenue of RMB2,049.7 million, increased by 8.3% as compared to the corresponding period of the previous year; recorded gross profit of RMB1,090.7 million, increased by 10.9% as compared to the corresponding period of the previous year; the net interest spread was 3.55% and the net interest margin was 4.13%, still a high ranking among domestic competitors. As at 30 June 2020, the Group’s interest-bearing assets reached RMB50,869.6 million, representing an increase of 2.2% as compared with the beginning of the year; non-performing assets ratio was 0.98% and the overdue ratio (30 days) was 0.92%. The Group strictly controlled the operating risks, and continuously enhanced internal management. Although the non-performing assets ratio and the overdue ratio (30 days) slightly increased due to the epidemic, the overall asset quality was safe and controllable and continued to maintain its leading position in the industry.

Layout the Health Industry Chain and Explore New Opportunities in the Health Industry
In the first half of 2020, the Group continued to promote model exploration, pilot projects and layout in various fields of the health industry chain based on our hospital group, and focused on the Internet medical business. As of 30 June 2020, 4 member medical institutions of the Group, namely XD Group Hospital, Genertec Universal Xi’an Aero-Engine Hospital, Xianyang Caihong Hospital and Yantai Port Hospital, were approved for conducting Internet hospital business. A total of 13 member medical institutions went online based on the Internet platform, with the offline to online conversion rate reaching 5.1% within 4 months, over 30% of online patients showing needs for offline medical services and the patient satisfaction rate reaching 99%. In addition, based on full evaluation of our existing advantages, market prospects and our talent strategies, the Group actively developed businesses of equipment sales and maintenance, and third-party inspection center through various cooperation modes, such as acquisition of majority interest, investment in minority interest and strategic alliance, to build a health industry ecosystem and realize win-win results enjoyed by all.

Prospect for the Future
In the future, the Group will continue to uphold the philosophy of whole industry chain and whole life cycle, which is centered on medical services and supported by financial services, to build a shared and win-win health industry ecosystem, strive for a trustworthy medical and health group, and contribute to construction of “Healthy China”.

About Genertec Universal Medical Group Company Limited
Genertec Universal Medical Group Company Limited (“Universal Medical”) is a listed subsidiary (Stock code: HK.02666) of China General Technology (Group) Holding Co., Ltd (“Genertec”), one of the backbone SOEs directly administrated by the central government. Universal Medical is a diversified healthcare company focused on China’s rapidly evolving healthcare industry. With reliance on modern management concepts, professional teams, high-quality medical resources, solid financial strength and inclusive corporate culture, Universal Medical upholds the philosophy of whole industry chain and whole life cycle, which is centered on medical services and supported by financial services, to build a shared and win-win health industry ecosystem, strive for a trustworthy medical and health group, and contribute to construction of “Healthy China”.

This press release is issued by Institutional Capital Advisory (Asia) Limited on behalf of Genertec Universal Medical Group Company Limited.

For further information, please contact:
Institutional Capital Advisory (Asia) Limited
E-mail: unimedical@icaasia.com

Revenue and Profit Attributable to Owners of the Company from Continuing Operations are RMB1,054.5 million and RMB170.5 million, respectively;
Multiple R&D and Production Platforms as Core of the Group, with Investment and Incubation, etc. Supporting the Group’s Development;
Innovation-driven, Imitation and Creation Co-exist, Multiple Carefully Incubated R&D Platforms have Significant Progress;
Focus on the Rapid Development of the Therapeutic Areas with a Rich Product Pipeline

Sihuan Pharmaceutical Holdings Group Ltd. (HKEX: 0460 “Sihuan Pharmaceutical” or the “Company”, together with its subsidiaries, the “Group”) is pleased to announce its interim results for the 6 months ended 30 June 2020 (the “Period”).

Financial Summary

Under the influence of pharmaceutical policies and COVID-19 during the Period, the Group recorded a revenue of approximately RMB1,054.5 million, representing a year-on-year decrease of 36.4%. Gross profit amounted to approximately RMB786.1 million, decreased 42.4% year-on-year. Gross profit margin is 74.5%, decreased 7.9 p.p. from the same period last year. The lower gross profit margin was resulted from decreased sales of drugs which had better profit margin but were captured in the Key Monitoring Drug List during the Period. Profit attributable to owners of the Company for the Period amounted to approximately RMB170.5 million.

During the Period, revenue from CCV products recorded approximately RMB609.6 million, decreased 58.0% year-on-year, accounting for 57.8% of the Group’s total revenue. The sales decline was mainly due to the drop in patient flow in hospital during the COVID-19 pandemic and products exclusion from PRDL and NRDL starting from the second half of last year.

Revenue from non-CCV products sharply by 114.6% year-on-year to approximately RMB444.9 million, accounting for 42.2% of the Group’s total revenue. This sales growth was mainly attributable to the group’s strong sales platform, hospital coverage has sharply increased.

The Group maintained strong financial position during the Period, with net cash of approximately RMB4,336.0 million recorded as at 30 June 2020. The Group’s net cash-to-equity ratio is 50.3%, and debt-to-equity ratio is 7.1%.

An interim cash dividend of RMB0.1 cents per share and special cash dividend of RMB3.0 cents per share were declared by the Board.

Strategic planning

The Group values the development of innovative drug R&D center, generic drug R&D center and high-quality production enterprises as its core: During the Period, innovative drug R&D center Xuanzhu Biopharmaceutical spun off and became independent. WIth the support of the Group, it is able to quickly develop innovative drugs that are differentiated, effective and safe, and with global intellectual property rights, therefore achieves the goal of solving the huge and unmet clinical needs in oncology, metabolic diseases and anti-infective field, etc. Jilin Huisheng Biopharmaceuticals, a biopharmaceutical R&D center, is committed to building a full product-line platform in the field of diabetes, covering products from biosimilar insulin products to oral preparations and compound preparations. It is actively introducing other varieties and plans to become an independent spin-off and get listed in the future. Beijing Aohe Research Institute, a generic drug R&D center which has very mature technology, and is looking for varieties with high-tech barriers in APIs, dosage forms, and preparation processes in key therapeutic areas for R&D process. In addition, Beijing Sihuan, Jilin Sihuan, Jilin Jinsheng and other manufacturing companies will rely on their high-efficiency, low-cost, modern production lines for unique formulations and dosage forms and experienced production technical teams. The Group’s superior sales teams will support the above-mentioned companies, and quickly promote product commercialization. As a result, Sihuan Pharmaceutical will thus become a group which integrates production, sales, and research.

Innovation-driven, imitation and creation co-exist

Significant progress has been made in multiple R&D platforms that are carefully incubated by the Group. Xuanzhu Biopharmaceutical is one of the few domestic innovative drug companies that have a complete R&D industry chain, and with more than ten innovative products, mainly covering oncology, diabetes, metabolic diseases, digestive system, male reproduction, anti-infection and other fields for product line R&D layout. Some of the products have already entered their late clinical stage. The key product Birociclib, a CDK4/6 inhibitor for advanced breast cancer, has successfully carried out multiple clinical trials. Another blockbuster product, Janagliflozin, an SGLT-2 inhibitor for the treatment of diabetes, can reduce blood sugar while protecting the heart and kidneys, and has entered clinical phase III and is expected to bring hope to patients in China. Biopharmaceutical R&D platform, Jilin Huisheng Biological Co., Ltd. focuses on the treatment of diabetes and complications, covering biological drugs and chemical drugs, and has a comprehensive product pipeline. Currently, the products under research include insulin and its analogues, GLP-1 analogues and oral solid preparations. In addition, Beijing Aohe Generic Drug R&D Center, a generic drug R&D platform has obtained many product approvals: rivastigmine hydrogen tartrate capsule and levetiracetam tablets have obtained pharmaceutical production approval, midazolam oromucosal solution has been granted drug registration, ibuprofen injection has been granted production approval, and the paediatric compound amino acid injection (18AA-II) also obtained drug registration approval.

At the same time, the Group is actively enhancing international business cooperation through investment and mergers and acquisitions, with businesses covering multiple therapeutic areas with huge clinical needs. In 2020, the Group became equity investment partners with Zhongrui and Chempion to ensure the stable supply of the Group’s related preparations and raw materials and strengthen the Group’s R&D capabilities in high-tech barrier raw materials, continuous flow processes, and enzymatic processes. The Group also reached a cooperation framework agreement with HETETO, India to cooperate in the R&D of high-end generic drugs in the field of cardiovascular and cerebrovascular, central nervous system and anti-infection.

Focus on the rapid developing therapeutic fields, lay out the investment and optimization of APIs

Oncology, diabetes, metabolic, non-alcoholic hepatitis and other diseases have become the fastest growing therapeutic areas in global pharmaceutical market, especially in China pharmaceutical market. The Group focuses on products layout in these areas, including independently developed innovative products, biosimilars and generic drugs with huge clinical demand.

On the premise of ensuring science and quality, the Group will reduce operating and production costs, especially the in investment and optimization of APIs, so as to increase the competitiveness and product profits of future products, and thus to create greater value. The Group also values the unique sales model and marketing network which have rich experience, high performance and extensive hospital coverage, as well as a multi-dimensional international business cooperation platform.

Dr. Che Fengsheng, Chairman and Executive Director of Sihuan Pharmaceutical Holdings Group said, “Sihuan Pharmaceutical values innovative drug R&D center, generic drug R&D center and high-quality manufacturing companies as its core value, supplemented with investment, mergers, incubation, holdings, spin-offs, etc., for a group of independently operating subsidiary companies. The Company will realize the initiative of each sub-enterprise through the introduction of capital, CMO and other independent operations, and to improve the efficiency and competitiveness of Sihuan Pharmaceutical, therefore adapt to MAH and a series of policy changes and industry competition patterns. At the same time, the Company will help the subsidiaries to be able to land in the capital market soon, also add value to the parent company. This dual approach of strategic planning and core values will enable Sihuan Pharmaceutical to focus on global level, focus on the pharmaceutical field, and form the most competitive, international and professional pharmaceutical group enterprise.

Future prospects

With regard to existing products on sale, the Group will continue to improve the evidence-based research system, promote key products to be included in the diagnosis and treatment guidelines, and evaluate the launched exclusive and major products. At the same time, giving full play to the advantages of diversified product structure, actively promote products in the growth period through refined market management, and strengthen the Group’s pipeline layout and market advantages in the fields of cardiovascular, oncology and diabetes, and establish a sustainable drug product line. The group will also increase its resources for drug R&D projects and establish a sustainable drug product line, adjust the product structure through mergers and acquisitions and international cooperation. In order to enrich the project resources and optimize the product portfolio continuously, domestic and overseas mergers and acquisitions will be the Group’s sustainable strategy to provide short-, medium- and long-term growth engines. Several products are expected to be launched on the market in the next year or two, including leading generic drugs, such as midazolam oromucosal solution and rivastigmine hydrogen tartrate capsule, specialty drugs, such as quetiapine fumarate SR tablet, and innovative drugs, such as Janagliflozin and Anaprozole sodium.The Group also conforms to policies and market trends, seizes policy opportunities, studies and judges market development directions, focuses on business synergy and resource integration, accelerates the cultivation of new businesses, and continuously improves the Group’s core competitiveness by adjusting the business structure and encouraging model innovation. Under the assistance of the Group’s experienced, high-performance, and comprehensive hospital coverage professional sales team and marketing network, and under the leadership of an international management team, Sihuan Pharmaceutical will steadily enhance its competitive advantage in the pharmaceutical industry.

About Sihuan Pharmaceutical Holdings Group Ltd.
Founded in 2001, Sihuan Pharmaceutical is a pharmaceutical group with 21 subsidiaries and integrated R&D, production and marketing and sales capabilities. It is one of the China’s largest suppliers of cardiovascular and cerebrovascular prescription drugs. Sihuan Pharmaceutical integrates production, R&D, and marketing. It has an excellent and professional marketing model, a nationwide distribution network, and a diversified product portfolio with great market potential. The Group continues to increase investment in R&D every year. Because of the continuing efforts over the past decade, Sihuan Pharmaceutical has a R&D platform with over 1,000 researchers conducting more than 110 pharmaceutical research projects currently. More than 300 patents on innovative drugs were granted in China and over 80 are PCT patents, covering pipeline projects including important areas of diabetes, oncology, anti-infectives and non-alcoholic steatohepatitis etc.

For more information about Sihuanpharm, please visit the company website https://www.sihuanpharm.com/.

– Investigational first-in-class glucokinase activator, with a novel mode of action, focused on fixing the glucose sensor and restoring glucose homeostasis for Type 2 diabetes mellitus (“T2DM”) patients, with sustained efficacy in phase III clinical trial in Chinese T2DM patients.
– 116 million T2DM patients in China, with an unsatisfied treatment and control rate.
– Agreement further strengthens Bayer’s diabetes management leadership in China.

Bayer and Hua Medicine, a leading innovative drug development company, today announced a commercialization agreement and strategic partnership for dorzagliatin, a novel diabetes treatment, in China. The agreement aims to provide Chinese diabetes patients with access to a new treatment option, building on Bayer’s existing strength and leadership in diabetes management in China and the innovation capabilities of Hua Medicine.

“Bayer has been long committed to Chinese patients living with diabetes and diabetic macular edema (DME) by offering innovative treatment options including Glucobay and Eylea,” said Wei Jiang, Executive Vice President and President of Bayer Pharmaceuticals Region China & APAC and President of Bayer Group Greater China. “In the face of significantly increasing challenges caused by diabetes to public health in China, our collaboration with Hua Medicine will further address unmet medical needs of Chinese patients living with diabetes. By leveraging Bayer’s well-established products as well as the upcoming continuous glucose monitoring system under the partnership with WaveForm, we will be able to provide integrated solutions ranging from prevention, diagnosis, treatment and complication management.”

Type 2 diabetes continues to be an important health challenge. According to the China Mainland National Cross Sectional Study in the British Medical Journal, the prevalence rate of T2DM for adults in China is 11.2%, but the proportion of patients who have their hemoglobin A1c (HbA1c) levels controlled is 49.4%(1). Among patients taking oral anti-diabetic drugs, fasting plasma glucose and 2-hour postprandial plasma glucose level lower than or equal to target were only achieved by 51.3% and 53.4%, respectively. These observations from real-world data highlights the unmet medical needs in diabetes, and are the reasons why biotech companies continue to explore novel therapies to improve diabetes management. With a novel mechanism of action, dorzagliatin is an investigational first-in-class glucokinase activator (“GKA”) targeting the restoration of glucose homeostasis in T2DM patients by addressing the defect of the glucose sensor function in the pancreas. A recently completed phase III clinical study of dorzagliatin monotherapy by Hua Medicine showed positive 52-week efficacy data. In addition, 24-week topline results were announced recently: The phase III metformin combination clinical trial met the primary efficacy endpoint.

“We are very excited to have this great opportunity, joining forces with Bayer to bring a first-in-class diabetes medicine, dorzagliatin, to Chinese patients,” said Dr. Li Chen, CEO of Hua Medicine. “Bayer has been a leader in diabetes treatment for the past 10 years in China and will be a great partner for Hua Medicine to advance diabetes care. T2DM currently affects approximately 463 million patients worldwide, 116 million of which are in China(2). Over the last ten years, Hua Medicine has translated the novel concept of glucose homeostasis management into a breakthrough T2DM therapy that aspires to cure diabetes. For the first time, a drug has demonstrated, in clinical trials, the potential ability to improve glucose metabolism and Bata-cell function in T2DM patients. The partnership between Hua Medicine and Bayer will bring this medical innovation to a broader patient population in China even faster.”

Under the terms of the agreement, Hua Medicine as the market authorization holder shall be responsible for clinical development, registration, product supply and distribution, whilst Bayer as the promotion service provider shall be responsible for marketing, promotion and medical education activities in China. Hua Medicine will receive an upfront payment of RMB 300 million and additional payments could reach up to RMB 4.18 billion if certain milestones are met. Bayer receives the exclusive rights to commercialize the product in China and will receive tiered service fee based on the net sales. Initially, both parties will share equally in sales derived from China net sales, with adjusting sales percentages based on agreed China net sales thresholds.

“China is a key focus of Bayer’s partnering efforts and we are continuously looking for assets and health technologies to help address significant unmet medical needs of patients,” said Marianne De Backer, PhD, Member of the Executive Committee and Head of Strategy and Business Development & Licensing, Pharmaceuticals Division of Bayer AG. “Through this new partnership, we further expand treatment options for millions of Type 2 diabetes patients in China by leveraging our commercial expertise and diabetes leadership position in China and combining it with the external know-how of a strong partner.”

The Pharmaceuticals Business Development & Licensing team of Bayer facilitated this collaboration.

(1). British Medical Journal. Prevalence of diabetes recorded in China using 2018 diagnostic criteria from the American Diabetes Association: national cross sectional study. https://www.bmj.com/content/369/bmj.m997
(2). International Diabetes Federation. 9th Edition of IDF Diabetes Atlas. https://www.diabetesatlas.org/en/

About Dorzagliatin
Dorzagliatin is an investigational first-in-class, dual-acting glucokinase activator, designed to control the progressive degenerative nature of diabetes by restoring glucose homeostasis in patients with T2DM. By addressing the defect of the glucose sensor function of glucokinase, dorzagliatin has the potential to restore the impaired glucose homeostasis state of patients with T2DM and serve as a standard-of-care therapy for the treatment of the disease, or as a combination therapy with currently approved anti-diabetes drugs. For more information, please go to www.huamedicine.com

About Bayer
Bayer is a global enterprise with core competencies in the life science fields of health care and nutrition. Its products and services are designed to benefit people by supporting efforts to overcome the major challenges presented by a growing and aging global population. At the same time, the Group aims to increase its earning power and create value through innovation and growth. Bayer is committed to the principles of sustainable development, and the Bayer brand stands for trust, reliability and quality throughout the world. In fiscal 2019, the Group employed around 104,000 people and had sales of 43.5 billion euros. Capital expenditures amounted to 2.9 billion euros, R&D expenses to 5.3 billion euros. For more information, go to www.bayer.com.

About Hua Medicine
Hua Medicine is a leading, clinical-stage innovative drug development company in China focused on developing novel therapies for the treatment of diabetes to satisfy unmet medical needs. Founded by an experienced group of entrepreneurs and international investment firms, Hua Medicine advanced a first-in-class oral drug for the treatment of T2DM into NDA-enabling stage and is currently evaluating the therapy in adults with diabetes in two Phase III trials in China and various earlier stage clinical trials in China and the United States. Dorzagliatin has achieved its primary endpoint in both of its Phase III monotherapy and combination trials in China over the 24-week trial period, and completed its 52-week Phase III monotherapy trial. The Company has initiated product life-cycle management studies of this novel diabetes therapy and advanced its use in personalized diabetes care. Hua Medicine is working closely with disease experts and regulatory agencies in China and across the world to advance diabetes care solutions for patients worldwide.

Contact Bayer:
Bayer China Communications – Pharmaceuticals
Tel No.: (86)10-5921-8499
Email: pharma.china.comm@bayer.com

Contact Hua Medicine
Investors: ir@huamedicine.com
Media: pr@huamedicine.com

Bayer Forward-Looking Statements
This release may contain forward-looking statements based on current assumptions and forecasts made by Bayer management. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. These factors include those discussed in Bayer’s public reports which are available on the Bayer website at www.bayer.com. The company assumes no liability whatsoever to update these forward-looking statements or to conform them to future events or developments.

Hua Forward-Looking Statements
This press release may contain statements that constitute “forward-looking statements”, including, but not limited to, statements relating to the implementation of strategic initiatives, and other statements relating to Hua Medicine’s future business development and economic performance. While these forward-looking statements represent Hua Medicine’s judgments and future expectations concerning the development of business, a number of risks, uncertainties and other statutory requirements may render actual developments and results to differ materially from our expectations. For more information, go to www.huamedicine.com.

Turnover (excl. the effect of “two-invoice system”) up 4.6% to RMB3,557.1 Million;
Profit up 11.4% to RMB1,300.5 Million;
Continuous Expansion of Innovative Pipeline;
Positive Progress Made in China Registration and Clinical Work;
Driven by Product Competence, Promotion Capability, Efficient Management System;
Operating Performance Hit a New High

China Medical System Holdings Limited (“CMS”, or the “Company”, SEHK:867), together with its subsidiaries (the “Group”), a well-established, innovation-driven specialty pharma with a focus on sales and marketing in China, announced its unaudited results for the 6 months ended 30 June 2020 ( the “Reporting Period”).

In the first half of 2020, the Group recorded a turnover of RMB3,108.1 million (H1 2019: RMB2,964.4 million), an increase of 4.8% over the same period last year; excluding the effect of the “two-invoice system”, turnover was up 4.6% to RMB3,557.1 million (H1 2019: RMB3,401.5 million). Profit for the period recorded an increase of 11.4% to RMB1,300.5 million (H1 2019: RMB1,167.5 million). Declared interim dividend was up 11.8% compared with the same period last year to RMB0.2105 per share (H1 2019: RMB0.1883).

Mr. Lam Kong, Chairman and Chief Executive of CMS, said: “Sustainable product competence is the key competitive factor for future development of enterprises. Adhering to the development strategy with innovative products as the core, the Group constantly expanded the innovative pipeline, while accelerating the registration progress of innovative products in China, so as to fulfill the unmet medical needs in China pharmaceutical market. Meanwhile, the Group continued to optimize the professional promotion system as well as the compliant and refined management system. Empowered by the product competence, promotion capability and efficient management system, the Group achieved steady and good growth.”

Product Pipeline
The Group concentrates on the innovative products that are global first-in-class or with the best efficacy or best cost-effectiveness in the same class due to their innovative formulations or drug delivery systems. Capitalizing on its resources of global product development accumulated for more than two decades, as well as the market reputation earned, the Group has established strategic cooperation relationships with a number of leading pharmaceutical companies around the world and made equity investments in innovative R&D companies from the U.K., France, the U.S. and Switzerland. The Group’s product pipeline includes 20 innovative products with great market potential and competitive differentiation advantages at relatively high innovation level, covering therapeutic fields including nervous system, ophthalmology, dermatology, endocrine system, oncology, nephrology, immune system, digestive system, anti-infection, etc.

During the Reporting Period, the Group’s innovative pipeline continued to expand. The Group successively acquired exclusive licenses of the innovative product Desidustat (a patented new molecular entity for the treatment of anemia in patients with chronic kidney disease) and PLENITY (the U.S. FDA-cleared safe and effective orally-administered weight management product made from naturally derived materials) in Mainland China, HK SAR, Macau SAR, TWN and/or other countries in Asia. Meanwhile, the registration and clinical work of innovative products was accelerated. Two blockbuster innovative products (Diazepam Nasal Spray and Cyclosporine Eye Drops 0.09%) have been granted clinical trial notices issued by China NMPA for comparative PK study and confirmatory clinical trial respectively; the confirmatory clinical trial application of one blockbuster innovative product (Tildrakizumab) has been accepted by China NMPA; and the Phase II clinical trial of one innovative product (CF102) in Israel has yielded positive top line results.

Meanwhile, the Group deployed complex generics and competitive generics and actively worked on their registration in China, so as to capitalize on the opportunities brought by the National Volume-based Procurement to capture additional driving forces for the future development of the Group. As at 30 June 2020, two generics were under the review for marketing approval in China and one was granted clinical trial notice in China.

Existing Product Development
The Group’s existing products mainly involve products under cardio-cerebrovascular line (mainly include Plendil, XinHuoSu and Deanxit), digestion line (mainly include Ursofalk, Salofalk, Bioflor and Combizym), ophthalmology line (mainly include Augentropfen Stulln Mono Eye Drops) and dermatology line (mainly include Hirudoid). Through deeply exploring and enhancing the evidence-based medical evidence and reinforcing the expert network construction and academic platform integration, the Group constantly increased products’ academic influence and solidified the competitive advantages of the existing products. During the Reporting Period, the Group recorded solid growth across core product lines. The revenue of products under cardio-cerebrovascular line would increase by 4.4% to RMB2,026.6 million if excluding the effect of the “two-invoice system”; the revenue of products under digestion line increased by 12.7% to RMB1,157.9 million; the revenue of products under ophthalmology line decreased by 1.2% to RMB113.8 million; the revenue of products under dermatology line decreased by 0.9% to RMB85.2 million.

Promotion System
During the Reporting Period, the Group focused on the expansion of the promotion network and strengthened the market segmentation as well as the lower-tier market penetration. The Group actively explored the improvement and innovation of the promotion model while solidifying the existing promotion system, so as to accumulate experiences and make deployments in advance for the academic promotion of innovative products. In the meantime, aiming to building a more professional and compliant promotion team with higher execution capability, the Group further perfected the job qualification and employee training system, optimized the remuneration and incentive system, and intensified the compliance training and inspection. In addition, the Group capitalized on digital tools to hold online academic conferences with high frequency. Complying with the industry trend, the Group steadily promoted the construction of the retail network, expanded the coverage of retail chains and terminal stores, and further strengthened the cooperation with e-commerce platforms.

During the Reporting Period, the Group’s promotion network covered about 57,000 hospitals and medical institutions in China.

Manufacturing Facilities
As at 30 June 2020, the Group owned pharmaceutical manufacturing sites in Hunan, Hebei and Shenzhen, occupying a total area of more than 110,000 square meters. The Group has the Pharmaceutical Production License and the Pharmaceutical GMP Certificate for various dosage forms such as powder, oral solution, small-volume injections, tablets, hard capsules, etc. With more than two decades of pharmaceutical production experiences, the Group has instituted stringent quality management standards and regulations to guarantee the product quality, ensuring the localized preparation manufacturing of overseas innovative products in China.

Mr. Lam Kong concluded, “The Group focuses firmly on the two core values in the pharmaceutical industry chain: product competence and promotion capability. Capitalizing on our extensive global resources, the Group will continue to expand the innovative pipeline and facilitate the further development and commercialization of drugs in China, so as to enhance product competence. At the same time, the Group will continuously strengthen the professional, compliant and efficient promotion system to achieve sustainable and steady growth. Adhering to the mission of “Offering competitive products and services to meet China’s unmet medical needs”, CMS will benefit and provide Chinese patients with more effective, safer, and more cost-effective drugs.”