According to its lodgement release, the company comes with 30 years of experience in China’s pharmaceutical market, particularly in clinical demand-oriented product identification and management as well as clinical development and commercialisation.
However, in 2023 and 2024, China Medical System’s financial performance was negatively affected by China’s volume-based procurement (VBP) policy that was designed to lower the cost of medical devices and drugs by guaranteeing certain procurement volumes from public hospitals at “significantly reduced prices” through a bidding process.
To mitigate this impact, the company says it is progressing “steadily” towards an innovative product-driven business model, which typically enjoys a pricing advantage and is supported by favourable government policies. The company adds that it has since seen a “steady business recovery” from the impact of the VBP policy and expects to see growth momentum accelerate from its innovative product pipeline of about 40 projects as of Dec 31, 2024.
Based on its proven track record in China’s pharmaceutical industry, China Medical System says it is looking to replicate its success in Southeast Asia. The region, which has a population of nearly 700 million, is experiencing a surge in pharmaceutical demand due to several factors including rapid economic growth, the rise of the middle class, an ageing population, and the increasing burden of non-infectious diseases.
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To capitalise on this trend, the company has established Rxilient Health, which focuses on licensing medicines globally and offers end-to-end commercialisation capabilities in local markets, from development and registration to sales. Rxilient Health operates in Singapore as its regional hub and has subsidiaries or offices in Malaysia, Vietnam, the Philippines, Indonesia, and Thailand.
China Medical System has also acquired a contract development and manufacturing organisation (CDMO) in Singapore through its associated company, PharmaGend Global. The company has a manufacturing site in Singapore measuring 60,290 sqm and has an annual production capacity of 1 billion oral solid dosage tablets and capsules. The site began commercial supply production at the end of 2024. The facility has also received the Good Manufacturing Practice certification issued by the US Food and Drug Administration and passed an on-site inspection by Singapore’s Health Sciences Authority (HSA).
According to China Medical System, a secondary listing on the SGX would help deepen the company’s presence in Southeast Asia and tap into a “new and sophisticated investor base” in Singapore. The company would also be able to enjoy wider visibility among regional healthcare investors and “build long-term market access to support expansion plans” in the region.
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China Medical System has already received a letter of eligibility from the Singapore Exchange Securities Trading Limited (SGX-ST).
For the FY2024 ended Dec 31, China Medical System reported earnings of RMB1.62 billion ($288.2 million), 32.5% lower y-o-y. During the year, the company’s revenue fell by 6.79% y-o-y to RMB7.47 billion while gross profit fell by 11.2% y-o-y due to the lower revenue and higher cost of goods sold. Profit for the year also fell by 32.3% y-o-y to RMB1.61 billion.
Shares in China Medical System closed 2 HK cents higher or 0.17% up at HK$12 ($1.95) on the HKEX.
