China Medical System Holdings Limited 2021 Interim Results Announcement

Business Performance Reached Record High
Turnover Increased by 23.6% to RMB3,843.0 Million
Profit Increased by 25.5% to RMB1,631.6 Million
Industrial Investment Enables Innovation Incubation
New Businesses Boost Future Development

Performance Highlights

• Maintained Good Business Growth: Turnover increased by 23.6% to RMB3,843.0 million; in the case that all medicines were directly sold by the Group, turnover increased by 28.7% to RMB4,269.3 million; profit for the period increased by 25.5% to RMB1,631.6 million.
• Initiated the Industrial Investment in Chinese Biotech: Capitalized on strong capabilities on clinical execution, commercialization and capital strength to empower the clinical development and commercialization of domestic innovative products; made equity investment in Trinomab, would establish a joint venture, and added two natural fully human antibody drugs into the pipeline.
• Upgraded the Innovative Pipeline: Deployed more than 20 innovative products, among which 9 products had been approved for marketing in the U.S./Europe, and 4 had completed or were under registration clinical trials in China. The harvest of innovation is coming.
• The Professional Dermatology and Medical Aesthetic Business System Has Taken Shape: Acquired the dermatology and medical aesthetic specialty company Luqa to enrich the dermatological product portfolio and extend its reach to the medical aesthetic field; acquired Carnation, entered into collaboration with EC Healthcare and Shandong Chuangxin successively, to constantly expand the dermatology and medical aesthetic business layout.
• Expanded and Optimized the Healthcare Business: Flagship stores have been launched on three mainstream cross-border e-commerce platforms, namely JD Worldwide, Youzan Mall and Tmall International. A total of 88 quality products from 14 well-known European and American brands have been put on the stores.

HONG KONG, Aug. 24, 2021 /PRNewswire/ -- 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 2021 (the "Reporting Period").

In the first half of 2021, the Group had a turnover of RMB3,843.0 million (H1 2020: RMB3,108.1 million), an increase of 23.6% over the same period last year; in the case that all medicines were directly sold by the Group, turnover increased by 28.7% to RMB4,269.3 million (H1 2020: RMB3,316.6 million). Profit for the period recorded an increase of 25.5% to RMB1,631.6 million (H1 2020: RMB1,300.5 million). Declared interim dividend was RMB0.2641 per share.

Mr. Lam Kong, Chairman and Chief Executive of CMS, said "In the first half of 2021, CMS achieved sound business growth under the synergy of positive brand images of its products, the professional academic promotion, and the compliant, efficient and refined management. With the rich experience in international development and academic promotion network resources in multiple therapeutic fields, the Group achieved in-depth development in the pharmaceutical business, while constantly expanding its business boundaries and rapidly promoting the development of the dermatology and medical aesthetic business as well as the healthcare business. At the same time, the Group actively explored on innovation and change, and initiated a new model of industrial investment in Chinese Biotech, injecting new momentum for the sustainable development of the Group, building a more proactive and promising "New CMS"."

Initiating the Industrial Investment in Chinese Biotech
Since the second half of 2017, the Group has been investing and deploying overseas innovative products in relatively mature stages due to the fact that overseas biotechnologies have outpaced China's for many years, so as to shorten the gap between the launching time of innovative medicines at home and abroad, and improve the accessibility of Chinese patients to innovative medicines with real clinical needs. However, in recent years, under the leadership of top scientists, Chinese Biotech have continuously made breakthroughs in innovative biotechnologies via leveraging their talent advantages, flexible R&D strategies, favorable policies and capital supports. Meanwhile, their innovative products that were once in early R&D stage have gradually moved into the commercialization stage. For focusing on their own strengths and improving the efficiency of pharmaceutical industry development, an international mainstream industry ecosystem will be formed in China's pharmaceutical industry that biotech companies will be responsible for innovation, while big pharmaceutical companies responsible for commercialization. The trend for the Group to become an incubation platform of innovative product for Chinese Biotech has emerged. Following the trend, during the Reporting Period, the Group capitalized on its previous accumulated advantages, such as efficient clinical execution, commercialization capability and capital strength, to initiate the industrial investment in Chinese Biotech, in order to empower the rapid launching of the innovative products in China.

In April 2021, the Group announced that it would make equity investment in and establish a joint venture with Trinomab Biotech Co., Ltd ("Trinomab"). Trinomab will be responsible for drug discovery and preclinical studies, while the Group responsible for clinical development, registration, and commercialization, etc. This collaboration initiated a new model for the Group's industrial investment in Chinese Biotech.

Innovative Pipeline
The Group will continue to empower the clinical development and commercialization of innovative medicines in China through industrial investment in Chinese Biotech, equity investment in Overseas Biotech, and strategic collaboration with Global Biopharma.

In the first half of 2021, the Group's innovative pipeline continued to expand. The Group successively reached cooperation with Trinomab on the innovative products developed through its fourth-generation antibody technology platform HitmAb^®, the Fully Human Anti-SA Hlα Antibody (a natural fully human antibody drug with Hlα neutralizing activity) and Fully Human Anti-HCMV Antibody (a natural fully human antibody drug with HCMV neutralizing activity). Meanwhile, the clinical development of innovative products was accelerated in China. By now, the New Drug Application of 1 blockbuster product (Diazepam Nasal Spray) has been accepted, the bridging trial of 1 blockbuster product (Tildrakizumab Solution for Injection) has met the primary endpoint, and the bridging trials of 4 blockbuster products (Cyclosporine Eye Drops 0.09% and Desidustat Tablets, Methylthioninium Chloride Enteric-coated Sustained-release Tablets, and Methotrexate Injection, Pre-filled Syringe) have been actively moved forward.

Pipeline - Launched Overseas or Under Marketing Application Review

^* In July 2021, the New Medicine Application of Diazepam Nasal Spray was accepted by NMPA in China.
^** In August 2021, the clinical trial application of Methylthioninium Chloride Enteric-coated Sustained-release Tablets was approved by NMPA in China.
^*** In August 2021, the clinical trial application of Methotrexate Injection, Pre-filled Syringe was approved by NMPA in China.

Pipeline - Under Clinical Stages

Dermatology and Medical Aesthetic Business
The Group has been deeply engaged in the dermatology field for many years, and established rich promotion network resources, including the dermatologists and the hospital and retail channel resources. In order to fully utilize the existing advantageous resources and improve the operation efficiency in the dermatology field, the Group split the dermatology line (including the products and teams) for independent operation, so as to achieve comprehensive diseases management in the dermatology field while further expanding its business boundary to the field of medical aesthetics.

During the Reporting Period, the Group acquired Luqa Ventures Co., Limited ("Luqa"), a dermatology and medical aesthetic specialty company, to enrich the dermatological product portfolio and enter the medical aesthetic field that is featured with consumption attributes. The Group acquired Shanghai Carnation Medical Technology Co., Ltd. ("Carnation"), a R&D and manufacturing platform company of medical aesthetic devices with focused ultrasound technology, and obtained FUBA5200 Focused Ultrasound Body Contouring System, which is a non-invasive body shaping and fat reduction device using focused ultrasound technology with independent intellectual property rights. As a R&D platform for energy-based medical aesthetic devices, Carnation will continually provide cutting-edge medical aesthetic devices with focused ultrasound technology for the Group. The Group entered into a strategic collaboration memorandum with EC Healthcare, the largest non-hospital medical service provider in Hong Kong, and both sides would explore to set up a medical aesthetic training and education platform for registered medical aesthetic practitioners in China. The Group entrusted Shandong Chuangxin Pharmaceutical Research and Development Co., LTD. ("Shandong Chuangxin") for development of dermatology and medical aesthetic products, so as to promote the in-depth deployment in the dermatology and medical aesthetic field. As at 30 June 2021, the dermatology and medical aesthetic business system of the Group has been gradually enhanced, and "CMS Aesthetics", a professional dermatology and medical aesthetic company, has taken shape.

Healthcare Business
The Group continued to stringently select functional and quality healthcare products with unique ingredients globally according to medical concept and high standards, via leveraging its strengths accumulated over years, including overseas channel resources, mature product evaluation system and efficient global supply chain system. While continuously launching new products, the Group also created a number trending products. As at 30 June 2021, the Group has collaborated with 14 well-known European and American brands on more than a hundred of products, 88 of which have been launched in "CMS Health Overseas Flagship Store" or "CMS Overseas Flagship Store" on the three mainstream cross-border e-commerce platforms, JD Worldwide, Youzan Mall and Tmall International. At the same time, the Group actively explored the new retailing business mode for the healthcare products, to capitalize on the professional client resources in its promotion channels to provide professional guidance and services to consumers, to help consumers understand and cope with sub-health, and to create better consumer experience, providing consumers with healthy lives.

Commercialization System
The Group has a comprehensive commercialization system and possesses of proven successful experience in sales and promotion, having created professional brand images and good sales records for a number of branded original medicines and exclusive medicines. As a number of the Group's innovative products are about to enter the commercialization stage, the value of its commercialization platform will be further released.

During the Reporting Period, the Group continued to explore and refine the products' academic differentiation advantages, and organized and participated in online and offline academic conferences, to deepen the brand building. The Group also actively expanded and optimized the academic promotion network. At the same time, the Group deepened the retail market deployment and increased investment in e-commerce channels to better prepare for the prescription outflow. For medical aesthetic products and dermatology grade skincare products with stronger consumption attributes, the Group actively utilized its mature dermatologist resources as well as academic platforms to analyze the academic value and efficacy of products, built brands influence via new media marketing, and directed customer traffic through online and offline channels to facilitate the rapid growth of sales volume. In addition, the Group also strengthened construction of the compliance system as well as the professional teams, and enhanced the refined team management to facilitate the efficient implementation of marketing strategies.

As at 30 June 2021, the Group's commercialization network covered about 57,000 hospitals and medical institutions, and more than 200 thousand drugstores nationwide.

Marketed Products
The Group's marketed products recorded good growth. The marketed products mainly involve products under the 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). During the Reporting Period, the products under cardio-cerebrovascular line recorded a revenue of RMB1,789.0 million, an increase of 23.2% compared with the same period last year. In the case that all medicines were directly sold by the Group, the revenue of products under cardio-cerebrovascular line would increase by 29.9% to RMB2,321.1 million compared with the same period last year; the revenue of products under digestion line increased by 25.7% to RMB1,455.2 million compared with the same period last year; the revenue of the product under ophthalmology line increased by 45.9% to RMB166.0 million; the revenue of the product under dermatology line increased by 54.4% to RMB131.6 million.

In addition to the above products, the Group's major marketed products also included products from the dermatology and medical aesthetic business, such as the prescription medical aesthetic product Aethoxysklerol (the international brand for the treatment of sclerotherapy of varicose veins with years of clinical application); the medical aesthetic products Stratamark (clinically proven topical silicone gel with efficacy and safety to prevent and treat stretch mark), Strataderm (an effective silicone gel indicated for prevention of hyperplasia and improvement of new and old scars for a wide population), Mesoestetic-Mesohyal Series (matching therapies to provide customized medical aesthetic solutions), and Neauvia Hyaluronic Acid Series (based on the cross linker technology SMART and having excellent rheology, high biocompatibility and good integrity); the dermatology grade skincare products Atopic Piel Series (a combination of washing and moisturizing to repair the damaged skin barrier and effectively relieve itching of sensitive skin).

Mr. Lam Kong concluded, "In the future, the Group will continue to invest in quality products of all business segments, improve the commercialization capability and the refined management system, and fully synergize different business segments, to promote the synchronous development of three businesses segments, including the pharmaceutical business, the dermatology and medical aesthetic business, as well as the healthcare business, and to accelerate the enterprise value growth. Meanwhile, the Group will consolidate its strengths to further enhance the abilities in project planning, clinical execution, commercialization, and capital strength, etc., so as to build a professional and efficient incubation platform of innovative medicines for global biotech companies, facilitating more domestic innovative products to produce world-class impacts, and contributing to the Healthy China construction."

About China Medical System Holdings Limited
CMS is a well-established, innovation-driven specialty pharma with a focus on sales and marketing in China, dedicated to offering competitive products and services to meet China's unmet needs for health and beauty. The Group focuses on deploying innovative products that are global first-in-class, or with the best efficacy, safety or cost-effectiveness in the class due to their innovative formulations or drug delivery systems; it has deployed more than 20 innovative products with relatively high innovation level, good market potential and competitive differentiation advantages. The Group covers extensive hospital networks and expert resources in various therapeutic fields, which can accelerate the clinical development of innovative medicines in China. The Group has strong commercialization capability and has created leading market positions for a number of medicines. Jointly driven by the strong product competence, the powerful commercialization capability and the refined management system, the Group has become one of the pharmaceutical companies with the highest operation efficiency in China. The Group has formed a business layout with core business in pharmaceuticals, together with development of the dermatology and medical aesthetic business and the healthcare business, building a solid foundation for the rising of "new CMS".

Issued by Porda Havas International Finance Communications Group for and on behalf of China Medical System Holdings Limited.