China Medical System （867.HK）2023 Annual Results

Despite of the Temporary Financial Performance Pressure Fresh Catalysts Emerged from Successive Innovation Breakthroughs

SHENZHEN, CHINA, March 27, 2024 (GLOBE NEWSWIRE) -- On March 27, 2024, China Medical System (“CMS” or the “Company”) released its 2023 annual results. The Company recorded a turnover of RMB8,013 million, a year-on-year decrease of 12.4%; in the case that all medicines were directly sold by the Group, the turnover would be RMB 9,472 million, a year-on-year decrease of 9.8%. Profit for the year was RMB2,384 million, and normalized profit for the year that excluding provisions of impairment losses on related assets was RMB2,709 million. The results announcement shows that in 2023, the Company has affected by the implementation of the National Volume Based Procurement (the “National VBP”) of its three marketed original products (sales of these three products recorded a decrease of RMB1,708.7 million, and the sales of them for the second half of the year declined approximately 50% compared with the second half of last year), resulting in temporary turbulence and decline of its overall operation performance. Although three products have not been selected in the National VBP, they are all original medicines for chronic diseases with oral administration, with good brand recognition and large retail market shares. Therefore, the overall impact from National VBP could be expected. The Company’s exclusive non-VBP products has continued to grow. In addition, the Company’s newly marketed innovative product portfolio has been expanded to 4 drugs, and the commercialization and large-scale clinical application of innovative products has provided the Company fresh driving forces. Based on above, CMS has successfully entered into its “New Period” of innovation and internationalization development.

4 innovative drugs have started large-scale clinical application, unveiling CMS’s first year of commercialization era of innovative drugs.

In 2023, CMS delivered quality innovation outcomes. Its three innovative drugs, Diazepam Nasal Spray (VALTOCO), Tildrakizumab Injection (ILUMETRI), Methotrexate Injection-psoriasis (METOJECT), have been included in the National Reimbursement Drug List (NRDL) after obtaining approvals of marketing in China, and have steadily entered into the commercialization stage, further enriching CMS’s marketed product matrix in the specialty therapeutical fields, and supporting CMS to accelerate commercialization process of innovative products.