CHINA MEDICAL SYSTEM HOLDINGS LIMITED 康哲藥業控股有限公司

(STOCK CODE867)

2018 Annual Results Announcement

Accelerated the Arrangement of Innovative Products

Provided the Core Development Driving Force Upgraded and Made Breakthrough of the Promotion System

Achieved the Steady Growth

On 19 March 2019, the 2018 Annual Results Announcement Conference of China Medical System Holdings Limited (the "Company", together with its subsidiaries, the "Group", or "CMS") was held successfully in Island Shangri-La Hotel in Hong Kong. In 2018, with closely following the pace of upgrading of industrial structure, the Group determined the innovative research and development as its core strategy, aiming to provide a source of strength for the sustainable development of the Group's performance.

While deepening the transformation of innovative drug strategy, the Group continued to dig deeply into the differentiated academic characteristics of the commercialized products, and to create a broader product market space by means of continuing education for doctors, disease management for patients, academic research support and improvement of diagnosis and management level of various diseases. During the Reporting Period, with high-quality product portfolio, in-depth covered academic network, innovative promotion mode and efficient and refined management system, the Group has achieved the steady growth, providing strong resources and financial support for its innovative development strategy.

Financial Highlights

For the Year ended 31 December

2018 (RMB million)

2017 (RMB million)

Change

(%)

Turnover (excl. the effect of "two-invoice system")

6,134.5

5,578.6

+10.0%

Net Profit for the Year

1,844.6

1,669.9

+10.5%

Basic EPS (RMB yuan)

0.7441

0.6734

+10.5%

Total Dividend Per Share (RMB yuan)

0.2970

0.2686

+10.6%

The Group's Turnover (excl. the effect of "two-invoice system") & Profit for the Latest Ten Fiscal Years are as Follows:

Supported by the Driving Force of Future Development, Creating Impetus for the

Sustainable Development

In line with the market trend, CMS determined the innovative research and development as its engine for the development. At the same time, the Group strengthened the commercialization development of overseas launched products in China, and continued to seek for the development of launched products in China, aiming to provide the impetus for the sustainable development of the Group's performance. During the Reporting Period, the Group invested in the equities of overseas pharmaceutical R&D companies with the research and development ability in the specialized fields, to enrich the pipelines of innovative patent products in various research areas multi-dimensionally. During the Reporting Period, the Group acquired the markets rights of mainly 7 innovative patented products in China and some Asia-Pacific countries. Among them, the Group has been working on the relevant preparations of the registration and application of two products to launch in China: PoNS, for the treatment of balancing disorders in brain related diseases, and NRL-1, for the treatment of acute repetitive seizures. Hopefully these two innovative products could be launched in China soon. While benefiting patients and families who are troubled by relevant indications in China, they would contribute to the Group's revenue.

Meanwhile, for the commercialization development of overseas launched products in China, the Group officially opened a new chapter to make arrangement of the overseas high quality generics. During the Reporting Period, the Group acquired all assets of a German company--Venus Pharma GmbH's current generic portfolio related to the market in China (HK SAR, Macau SAR and Taiwan incl.). By taking the advantages of the pharmaceutical techniques and high quality standards of overseas matured pharmaceutical companies, the Group expected to directly introduce the overseas generic drugs with proven quality and affordable price to the domestic market with a relatively light-asset mode, aiming to earn a place in Chinese generics competition and create the incremental market. In addition, with closely following the development trend of the industry, the Group continued to seek for the domestically launched products which were suitable for its development.

During the Reporting Period, the Group signed a Business Promotion Delegation Agreement with its current cooperative partner, Asahi Kasei Pharma Corporation, under the framework of strategic cooperation for its product Elcitonin (Elcatonin Injection), which is an anti-osteoporosis drug and is included in the Class B ofNational Reimbursement Drug List. The Group gained exclusive promotion rights of Elcitonin in China (HK SAR, Macau SAR & Taiwan excl.). The promotion activities started from August 2018.

As at 18 March 2019, the development process of the Group's innovative patented productshuman clinical trial is ongoing/completedis as below:

Acquisition

Method

R&D Company

Product

Indication

Ownership Territory

Phase I

Phase II

Phase III

FDA/EMA Marketing Approval Application

Equity Investment

Helius

Medical Technologies

PoNSMedical Device

Physical Adjuvant Therapy for Balance Disorders Related Symptoms due to Mild to Moderate Traumatic Brain Injury (TBI)

ChinaHK SAR, Macau SAR& Taiwan incl.

Neurelis, Inc

NRL-1

Acute Repetitive Seizures

ChinaHK SAR, Macau SAR& Taiwan incl.

In-house R&D

In-house

R&D

CMS024

Primary Liver Cancer

ChinaHK SAR, Macau SAR& Taiwan incl.

Rights Purchase

Can-Fite BioPharma

CF101

Rheumatoid Arthritis (RA)

ChinaHK SAR, Macau SAR& Taiwan incl.

Psoriasis

Equity Investment

Midatech Pharma*

MTD201

Acromegaly and Neuroendocrine Tumours (NETs )

China (HK SAR, Macau SAR and Taiwan incl.) and certain Southeast Asian

Rights Purchase

Can-Fite BioPharma

CF102

Hepatocellular Carcinoma (HCC)

countries

ChinaHK SAR, Macau SAR& Taiwan incl.

Non-Alcoholic Fatty Liver Disease (NAFLD) / Non-Alcoholic Steatohepatitis (NASH)

Equity Investment

Destiny Pharma

XF-73

Prevention of Post-surgical Staphylococcal Infections

ChinaHK SAR, Macau SAR& Taiwan incl.and other Asian Countries (Japan excl.)

Blueberry Therapeutics

BB2603

Onychomycosis and Tinea Pedis

ChinaHK SAR, Macau SAR& Taiwan incl.), Korea, North Korea& Mongolia

Acticor Biotech

ACT017Biological

Agent

Acute Phase of Ischemic Stroke

ChinaHK SAR, Macau SAR& Taiwan incl.and Other Designated Asian Countries (Japan etc. excl.)

VAXIMM

AG

VXM01Biological

Agent

Recurrent Glioblastoma (GBM)

ChinaHK SAR, Macau SAR& Taiwan incl.and Other Designated Asian Countries(Japan etc. excl.)

Midatech Pharma*

MTX110

Diffuse Intrinsic Pontine Glioma (DIPG)

China (HK SAR, Macau SAR and Taiwan incl.) and certain Southeast Asian countries

*Midatech PharmaThe Group did equity investment in Midatech Pharma and acquired its products MTX110 and MTD 201 in February 2019

Accelerate the Innovation and Upgrade of the Promotion Network, Improving its

Carrying Capacity for Products

During the Reporting Period, to adapt to the strategic arrangement of which treating the innovative products as its core, on the one hand, the Group fully encouraged the use of digital marketing tools to accelerate the innovation and upgrade of promotion model, so as to improve the promotion efficiency of its team. On the other hand, the Group constantly strengthened all kinds of medical knowledge, drug academic knowledge andcompliance awareness of its promotional staff, in order to build up a more professional, compliant and efficient promotional team. At the same time, the Group proactively promoted the expansion, development and training of the retail team, and constantly improved the analysis management system of retail data, to steadily promote the arrangement and coverage of the retail business. For the year ended 31 December 2018, the Group's promotion network had covered over 53,000 hospitals and medical institutions in China.

Outlook and Future Development

As a pharmaceutical company with more than two decades of experience in the pharmaceutical industry, the Group has foreseen and constantly witnessed the innovation process of the pharmaceutical industry in China. The Group will continually explore the future driving forces in line with the market trend through the prospective perspective, bringing the sustainable growth of the performance. The Group believes that "no future without endurance, no development without accumulation", with the continuous self-revolution, CMS is bound to blaze a strategic path with quality and sustainability, creating value for customers, shareholders, society and employees!

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China Medical System Holdings Ltd. published this content on 19 March 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 19 March 2019 12:34:03 UTC