“Singapore has geographical and policy advantages in Southeast Asia, the Middle East, and broader emerging markets. In recent years, it has become a global hub for capital and innovation, thanks to its excellent financial system, open and inclusive policy environment, and rapidly developing pharmaceutical industry.”
The move comes at a time when CMS, founded in 1992 in Shenzhen by clinician Lam Kong, is seeking to establish itself as a vertically integrated player across the pharmaceutical value chain in high-growth emerging markets. The group states that it is actively leveraging its market advantages in China to scale internationally, using Singapore as the pivot for expansion into Asia Pacific.
After growing in China during its initial stages, is now “committed” to expanding to the rest of the Asia-Pacific market by leveraging its market and resource advantages in China. It aims to become a “pioneer” in the industrial internationalisation of Chinese pharmaceutical enterprises, the spokesperson added. “Singapore is precisely the key fulcrum for CMS to deeply connect with emerging markets in the Asia-Pacific region.”
Notably, CMS is not raising any funds through the listing. “This secondary listing in SGX is by way of introduction, meaning there is no public shares issued or funds raised,” the spokesperson says. “Currently, we have sufficient operational funds to support our business development.”
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Year to date, CMS’s Hong Kong traded shares have gained more than 76% to close at HK$13.06 on July 16, valuing the company at HK$30.9 billion. The company has built up a pretty strong analysts’ following. Of the 11 active coverages tracked by Bloomberg, there are 10 “buy” or equivalent calls, and just 1 “hold”. The most bullish analyst is Linda Shu of HSBC, who has a target price of HK$14.60 on this counter. The most recent call was made on July 8 by Chen Ziyi of Goldman Sachs, whose target price is HK$14.33.
Shares of CMS started trading on SGX on July 15. On its first trading day, CMS shares gained more than 11% to close at $2.28 but dropped to $2.16 the following day.
Regional ecosystem
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Since 2022, CMS has been building out a regional ecosystem from Singapore. Its portfolio includes CMS R&D, Rxilient, PharmaGend and a local venture capital platform, which collectively cover the pharmaceutical chain of research and development, manufacturing, commercialisation and investment.
“CMS actively advances its ‘Industrial Internationalisation’ strategy, with Singapore as its regional headquarters for its Southeast Asia and Middle East business,” says the spokesperson. “The group has set up companies in Singapore covering the entire pharmaceutical value chain of research & development (R&D), manufacturing, commercialisation and investment, working together to provide local patients with greater access to high-quality and affordable treatment options.”
Rxilient, the commercialisation arm, is currently active across more than ten countries in Southeast Asia and the Middle East, including Malaysia, Thailand, Vietnam, the Philippines, Indonesia and the UAE. “Rxilient is committed to integrating global innovation to benefit countless patients,” says the spokesperson. “To date, Rxilient has submitted marketing applications for nearly 20 drugs and medical devices in Southeast Asia, the Hong Kong-Macau-Taiwan region, and the Middle East, covering disease areas such as dermatology, ophthalmology, oncology, autoimmune, and central nervous system.”
On the manufacturing front, PharmaGend is leading the group’s push to establish a full-scale production capability in the region. “PharmaGend is dedicated to advancing the pharmaceutical industry through cutting-edge technology and aims to become the largest and most trusted Contract Manufacturing Organisation (CMO) and Contract Development and Manufacturing Organisation (CDMO) enterprise in Southeast Asia,” the spokesperson adds. Its Singapore facility spans 30,000 sqm and has already obtained dual certifications from the US Food Drug Administration and Singapore’s Health Sciences Authority. It is currently producing tablets and capsules, with additional lines for injections, ointments, and nasal sprays under planning.
According to the group, its fully integrated value chain sets it apart in a region where most pharmaceutical companies rely on fragmented outsourcing models. “Our end-to-end development value chain, including CMS R&D in Asia (China and Singapore), CDMO PharmaGend in Singapore, and registration and commercialisation via Rxilient, positions CMS group as a unique integrated player in Asean,” shares the spokesperson. “This vertical integration not only reduces supply chain risks but also enables us to tailor solutions for regional needs.”
Setback to drug recovery
CMS’s move to broaden its international footprint also comes on the back of regulatory headwinds in its home market, particularly from China’s national volume-based procurement (VBP) policy, which has led to price pressures on certain generic drugs.
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“Since the pilot implementation of the ‘4+7’ city centralised drug procurement programme in 2019, National VBP has become a routine practice. The policy primarily targets off-patent drugs with high prescribing volumes in hospitals and with intense homogeneous generics competition, rather than innovative or exclusive products,” shares the spokesperson.
In 2024, three of CMS’s original drugs — Deanxit, Plendil and Ursofalk — were not selected in the national procurement process, resulting in a negative impact on the group’s financial performance. The spokesperson shares that these batches were implemented successively in November 2022 and July 2023, respectively, and three original drugs mentioned above were not selected, which had a negative impact on CMS’s financial performance.
However, CMS believes that the worst is over. “We believe that the significant negative impact from VBP-related issues has essentially been resolved,” the spokesperson says. “Excluding these three National VBP products, the majority of CMS’s core products are exclusive/branded and innovative products that aren’t affected by the government’s VBP rules.”
The group’s non-VBP exclusive and innovative drugs generated RMB4.55 billion ($812.2 million) in revenue in 2024, up 4.1% y-o-y and accounted for 52.8% of total group revenue.
Looking ahead, the group’s outlook is centred around its growing portfolio of innovative drugs. “CMS has a pipeline of about 40 new drugs in development, with five of them (covering six indications) — Lumeblue, Valtoco, Ilumetri, Metoject and Velphoro making strong debuts in the market,” the spokesperson says. “As innovative drugs gradually enter large-scale clinical application … the company is poised to enter a new cycle of high-quality and sustainable development driven by exclusive and innovative drugs.”
Second growth curve
CMS believes its three-pronged strategy — innovation, speciality therapeutic focus and internationalisation — will power the next phase of its growth. “The Chinese pharmaceutical sector is currently experiencing a strategic opportunity for innovative products. We are building the new growth engines and to form us a ‘New CMS’ with ‘New Rise’,” says the spokesperson.
Within its core therapeutic fields, CMS continues to deepen its presence in cardio-cerebrovascular, gastroenterology, ophthalmology, and skin health — the last of which has become a leading business segment. Among them, the group shares that the skin health business has become a leading enterprise in its field, bringing economies of scale in the speciality therapeutic field.
The group is also exploring partnerships as well as mergers and acquisitions to strengthen its platform, having acquired a manufacturing facility in Singapore through PharmaGend in December 2023. “We are looking forward to working hand-in-hand with pharmaceutical companies, academic partners, and international capital across countries to drive innovation in the pharmaceutical industry in emerging markets,” says the spokesperson.
Despite the complexities of operating in a highly regulated industry across multiple jurisdictions, CMS says it is well-positioned to adapt to market-specific rules. Its Asean companies have been established by local teams who are very familiar with the local regulations. “As we have built strong capabilities across the full lifecycle of drug development … we are well-positioned to serve as pioneers in the internationalisation of the pharmaceutical industry,” says CMS.
On governance, the group emphasises that it is privately owned, with founder Lam Kong holding 48% of the shares. “We are not a state-owned enterprise, while we comply with all relevant regulations and maintain good relationships with governmental authorities,” the spokesperson noted.
In addition, CMS has maintained a dividend payout ratio of 40% since its listing on the Hong Kong Stock Exchange in 2010 and has no intention of altering that. “We also plan to maintain this dividend payout ratio in the future.”
With its international strategy in place, CMS sees its SGX listing as more than a milestone but a launchpad for its expansion plans. “It demonstrates the group’s determination to deepen its presence in Southeast Asia and the Middle East and further promotes CMS’s comprehensive and sustainable development in the Asia-Pacific market.”
