Fosun Pharma: To boost industry innovation and international development

27 August 2014, Fosun Pharmaceutical (Group) Co., Ltd. ("FosunPharma" or the “Company”; stock code: 600196-SH, 02196-HK), a leading healthcare company in the PRC, announced its unaudited interim results for the six months ended 30 June 2014.

During the first half of 2014, the Group realized revenue of RMB5, 502 million, representing an increase of 22.99% as compared with the corresponding period of 2013; of which, the Group realized revenue of RMB3, 360 million in pharmaceutical manufacturing and research and development (‘‘R&D’’) segment, representing an increase of 10.71% as compared with the corresponding period of 2013. Revenue from healthcare services segment was RMB550 million, representing an increase of 231.33% as compared with the corresponding period of 2013. During the first half of 2014, the Company recorded net profit after extraordinary gains and losses of RMB 670 million, representing a substantial increase of 34.54% over the same period last year.


Continued to increase investment in R&D, primary business saw steady growth

During the reporting period, the pharmaceutical manufacturing and R&D segment of the Group continued to grow steadily and the development of its professional operational team was further strengthened. The Group continued to optimize its pharmaceutical R&D system that integrates imitation and innovation, increased investment in the ‘‘4+1’’ R&D platform and completed its capital increase in Shanghai Henlius Biotech Co., Ltd. (‘‘Shanghai Henlius’’) and Chongqing Fochon Pharmaceutical Research Co., Ltd. (‘‘FochonPharma’’) so as to effectively advance the R&D of generic biopharmaceutical drugs and innovative drugs.During the reporting period, the Group applied for a total of 24 patents, including 4 U.S. patents, in its pharmaceutical manufacturing segment; each of Shanghai Henlius and Chongqing Pharmaceutical Research Institute Co., Ltd. (‘‘Chongqing Pharma Research’’) obtained clinical approvals of their rituximab biosimilars and loxoprofen sodium gels and iloperidone APIs and tablets, respectively. As at the end of the reporting period, the Group had 125 pipeline drugs and vaccines.

In the first half of 2014, the sales of the Group’s major products in therapeutic areas such as cardiovascular system, metabolism and alimentary tract and anti-infection areas maintained relatively faster growth, recording a year-on-year growth of 30.12%, 12.19% and 58.41%, respectively. Among the new products, the sales of You Di Er (alprostadil dried emulsion), a product in the cardiovascular system therapeutic area, and You Li Tong (febuxostat tablets), a product in the metabolism and alimentary tract therapeutic area, had experienced prominent growth.

The Group has focused on innovation and R&D in long run and continued to increase investment in R&D. During the reporting period, the R&D expenses were RMB254 million, up 54.56% as compared with the corresponding period of 2013, of which the R&D expenses in the pharmaceutical manufacturing and R&D segment were RMB195 million, representing 5.74% of the revenue of the pharmaceutical manufacturing and R&D segment.

During the first half of 2014, the Group innovatively integrated its domestic resources and continued to enhance its R&D capabilities. The ‘‘Technology Innovation Strategic Alliance’’ formed by the Company with prestigious research institutes in China is one of the ‘‘industry, academia and research strategic alliances’’ under the national major project of innovation and manufacturing of new drugs. The Group has also successfully passed inspection by the panel members of the Major Special Project Office of China, and received municipal government and major special project subsidies for three projects.

Increased efforts in recruiting talents and proactively developed healthcare services business

In the first half of 2014, the Group further increased its investment in healthcare services industry, and based on its substantially completed deployment of its healthcare services business integrating high-end healthcare institutions in the more developed coastal cities and the business of medical services integrating specialty and general hospitals in second-tier and third-tier cities, further strengthened the operating capabilities of the healthcare institutions controlled by the Group, deepened hospitals’ internal management, progressively implemented total cost management, increased efforts in recruiting talents, and facilitated the regional development of the Group’s healthcare services business. During the reporting period, a new complex of Chancheng Hospital was completed and commenced operation, which laid a foundation for creating the differentiated healthcare service platform. The tumor centre jointly established by Chancheng Hospital and Nanyang Hospital and the project in respect of establishment of a rehabilitation and body-check hospital initiated by Zhongwu Hospital have further diversified the healthcare service platform of the Group. As at the end of the Reporting Period, the total number of beds available for the public in Jimin Cancer Hospital, Guangji Hospital, Zhongwu Hospital and Chancheng Hospital, controlled by the Group, was 2,090.

In addition, the Group proposed to participate in the privatization of Chindex by contributing not more than US$223.62 million and actively support and facilitate the development and deployment of hospital and clinic network under ‘‘United Family Hospital’’, a leading premium healthcare services brand under Chindex. In the first half of 2014, the United Family Hospital’s businesses in Beijing, Shanghai and Tianjin grew significantly and maintained a good momentum. During the reporting period, revenue of the United Family Hospital increased by 20.33% to US$105.34 million as compared with the corresponding period of 2013, reflecting the growing market demand for premium healthcare services and the strong brand recognition of ‘‘United Family Hospital’’.

Boost industry development by innovation and internationalization

While boosting the development of pharmaceutical manufacturing and healthcare services businesses, the Group also actively explored the transformation of the pharmaceutical retail business model and tried new business models. During the first half of 2014, the Group’s pharmaceutical retail brands, For Me Pharmacy and Golden Elephant Pharmacy realized sales of RMB427 million and had a total of over 670 retail pharmacies, maintaining leading market share in respective regions. Sinopharm, an associate of the Group, put continuous efforts in accelerating industry consolidation, expanding distribution network of pharmaceutical products and maintaining rapid growth in business.

Meanwhile, the Group proactively promoted its internationalization strategy and furthered its development in the medical diagnosis and medical devices segment by increasing investments and enhancing business cooperation. During the reporting period, the Group has invested in miacom Diagnostics GmbH, a German enterprise principally engaged in developing low-cost, efficient and convenient in-vitro diagnostic reagents of low cost, efficiency and convenience and also entered into a share subscription agreement with Nature’s Sunshine Products, Inc. (‘‘NSP’’), a company listed on NASDAQ principally engaged in manufacturing and sale of healthcare products, to subscribe for approximately 15% equity interest in NSP, for a consideration of not more than US$46.26 million.


In respect of the medical devices segment, the Group actively fostered the business development of Alma Lasers Ltd. (‘‘Alma Lasers’’) and reorganized the business operations of Chindex Medical Limited (‘‘CML’’). In 2014, Alma Lasers further reinforces the development of new products, particularly those for use in medical treatment devices. The product line expanded towards the clinical treatment sector, its self-developed tabletop laser diode was approved by the FDA of the U.S. and its 1470 nano surgical laser system also passed the CE certification in July 2014.

Chen Qiyu, Chairman of FosunPharma said, in 2014, the Group will continue to be committed to its mission of improving human health, adhere to its company philosophy of ‘‘Innovation for Good Health’’, and endeavor to capture the opportunities presented by the rapid development of the pharmaceutical market in China as well as the rapid growth in generic drugs in mainstream markets such as Europe and the U.S.. The Company will adhere to the development pattern of organic growth, external expansion and integrated development focus its superior resources on the core business of pharmaceutical manufacturing and research and development, as well as persevere in product innovation, with a view to further enhancing the competitiveness of its products. Meanwhile, the Company will continue to increase investment in healthcare services sector, proactively implement internationalization strategy and accelerate the progress of international acquisition to promote its business scale.