Fast-Growing Pharmaceutial and Medical Device Sales, Quickened Medical Service Layout

2015 Fosun Pharma Continued Its High-Growing Recurrent Income

On March 30, 2016, Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun Pharma” or the “Company”; stock code: 600196-SH, 02196-HK), a leading healthcare company in China, announced the approved annual performance as of December 31, 2015.

In 2015, Fosun Pharma had achieved about RMB 12609 million yuan, higher 4,85% than that in 2014 (15.07% if the contributions of newly-sold retail business of Fosun Pharma, For me Pharmacy, Golden Elephant Pharmacy and Handan Pharma and newly-purchased Erye Pharmaceutical were deducted). Of the total, pharmaceutical manufacturing and R&D created 8934 million yuan operating revenue, higher 21.78% than the last year; medical service obtained 1379 million yuan, higher 16.26% than the last year.

In 2015, the Company earned 3297 million yuan operating profit, 3371 million yuan profit aggregate and 2460 million yuan net profit attributable to equity holders, higher 37.71%, 24.05% and 16.43% than the last year respectively.

Fosun Pharma’s revenue and profit growth mainly benefited from expanding revenues in pharmaceutical manufacturing, medical service and device agency. In 2015, Fosun Pharma’s net profit attributable to equity holders with incidental gains and losses deducted increased by 24.43% YoY. Facing this, Chen Qiyu, Chairman of Fosun Pharma, said, Fosun Pharmaceutical now orients itself to pharmaceutical manufacturing and R&D, and will focus on medical service in near future; what epitomizes the Company’s core competency is expanding product portfolio, strong R&D capability, premium service, professional marketing team and international business development. In future, Fosun Pharma will devote itself as ever to pharmaceutical manufacturing and R&D, and at the same time, grasp every policy-and-market chance to boost medical service without neglecting any opportunity about medical diagnosis or medical device.

Fosun Pharma Got 19 Over-100-Million-Sale Products, and Increased the Investment in R&D

Fosun Pharma had formed a well-structured product portfolio in six medical fields—cardiovascular system, metabolism and alimentary system, central nervous system, blood system, anti-infection and anti-tumor, each having the greatest potential. Also, all the main products have their leading advantages on the market segments. In 2015, there were 19 formulations and series whose sales exceeded 100 million yuan, including first-over-100-million drugs like You Li Tong (Febuxostat Tablets), Ke Yuan (calcium dobesilate) as well as over-500-million items such as Ao De Jin (Deproteinised Calf Serum Injection), Atomolan (Reduced Glutathione).

Through expanded investment, in recent years Fosun Pharma has witnessed international R&D pattern and strong R&D capability. Through the concerted effort of nearly 900 researchers, the Company has established an interactive integrated R&D system located in Shanghai, Chongqing, Taiwan and San Francisco with efficient four major R&D platforms in small molecular innovative chemical drugs, large molecular biosimilars, high-value generic drugs, special formulation technology.

In 2015, Fosun Pharma’s R&D expenditures reached 830 million (including capital expenditures), higher over 21.27% year-on-year, including 538 million yuan expenses in drug manufacturing and R&D that accounts for 6% of the entire segment’s revenue.

Through years’ R&D accumulation, by the end of the report period, Fosun Pharma had finished or was doing 161 projects, including but not limited to pipeline drugs, generic drugs, biosimilars, vaccines: within the report period, applied clinical applications for one type 1 innovative drug, two type 1.1 innovative drugs and ten type 3.1 unsold new drugs in China, to China Food and Drug Administration; got clinical approvals for 23 drugs; were conducting clinical trials on 13 products. Besides, during that period, Shiningleaf Pharmaceutical’s Piperacillin Sodium and Sulbactam Sodium for Injection had obtained the CFDA’s marketing approval; likewise, YaoPharma’s Venlafaxine Extended Release Tablets had got the FDA’s marketing approval. In 2015, Fosun Pharma had, in the drug manufacturing and R&D segment, applied for 89 patents, 15 being awarded.

At the same time, Fosun Pharma had broken new ground in many ways through strategic alliance, project cooperation, joint venture establishment, etc. to intensify the R&D competency. The Company set up “Fosun Pharmaceutical Innovation Fund on Chinese Medicine Technology” in Shanghai University of Traditional Chinese Medicine to create an innovative drug R&D platform; signed strategic cooperation framework agreement with Shanghai Institute of Materia Medica, CAS to establish industry-university-institute cooperative relationship and thus quicken commercialization of technical outcomes. In 2015, Fosun Pharma even invested in Ambrx Inc., which specializes in discovering and developing cutting-edge innovative protein drugs.

Fosun Pharma, quite early in initiating international development strategy, has initially been able to internationally manufacture drugs as there are several internationally certified production lines available, let alone some formulations and raw medicines that have massively entered the international market. Fosun Pharma has been a global leader in developing and manufacturing anti-malarial drugs. As of December 31, 2015, the Company’s13 APIs had passed the certifications of state health authorities including US Food and Drug Administration, European certification, JMHW and t German Health Authority; Guilin Pharma’s 1 oral solid formulation production line, 4 injection production lines and 2 raw medicine production lines had passed the WHO-PQ certification; YaoPharma’s 1 oral formulation production line had obtained the certifications of Health Canada and FDA.

Exploration New Business and Model in Medical Service

In 2015, Fosun Pharma had continuously strengthened its fledging strategic deployment in medical service covering seaside advanced cities’ high-end medical treatment and second and third-tier cities’ special and general hospitals, thus accelerating the growth development of online medical treatment, actively exploring greater-health industrial deployment and constantly improving business scale and profit capability. As of December 31, 2015, the total of Fosun Pharma’s authorized beds in Chancheng Hospital, Jimin Cancer Hospital, Guangji Hospital and Zhongwu Hospital had been up to 2,770.

In 2015, Jingjin Building, a new complex of Chancheng Hospital, had been put into service to pave the way for building a differentiated healthcare service platform; construction of Zhongwu Hospital’s convalescence and examination home commenced to make the Company’s medical service platform more diversified; Fosun Pharma participated in establishing Wenzhou Senile Disease Hospital Co., Ltd. and Qingdao Shandong University Qilu Hospital Investment and Management Co., Ltd.  to explore a new model of doing medical business through social capital; initiated construction of Taizhou City Zhedong East Medical Raising Investment Management Co., Ltd  and participated in establishing Shanghai Xingshuangjian Medical Investment and Management Co., Ltd. to integrate medical service resources with elder-care service resources for discovering a new medical model in this regard; entered the field of blood dialysis and deployed the layout therein to plan integration of the whole industry chain. Besides, by strategically cooperating with Registration Network and taking a lead in offering A fund for “Famous doctor work”, Fosun Pharma arrived at seamless link between online and offline services to form O2O enclosed loop, thus pioneering medical services business and modelling.

Besides, the Company actively supported and facilitated the development and deployment of hospital and clinic network under “United Family Hospital”, a leading premium healthcare services brand under Chindex. In 2015, the United Family Hospital remained a famous brand leading the domestic high-end medical sector of core cities like Beijing, Shanghai; Qingdao United Family Hospital started business in 2015; Guangzhou United Family Hospital has been under construction.

Not only did the company engage in the domestic medical service sector, it also paid close attention to trials about new operation models on the mainstream medical service market overseas. In 2015, the Company invested in Sovereign Medical Services, Inc. with 30% or so equities in the hope of finding how to further carve out a new medical service model fit for future China.

Driven by “endogenous operation and external merger”, Fosun Pharma’s Business Grew Rapidly

In 2015, Fosun Pharma witnessed fast growth in medical diagnosis and device through endogenous operation and external merger. The Company actively promoted the business of Alma Lasers and intensified the agency business of Chindex Medical Limited. The operations made by “da Vinci Surgical System” increased with fast speed. Presently, Alma Lasers held 15% share of the global laser cosmetic equipments market and 30-40% of the domestic market. Such surgical system, for which Fosun Pharma acts as the agent, as the first of its kind, got the marketing approval by the FDA and China Food and Drug Administration. In 2015, Alma Lasers further expanded the international market and focused on emerging markets like China and India. Alma Lasers, in 2015, achieved 688.4862 million yuan, higher 10.79% YoY; at the same time, Alma Lasers products won 5 new EU CE certificates and 1 FDA 510 (k) certificate.

In 2015, Fosun Pharma together with Sinopharm conducted integration of drug distribution and retail for optimizing resources allocation of the business of Fosun Pharma, For me Pharmacy, Golden Elephant Pharmacy and Handan Pharma. In the same year, Sinopharm obtained 227.069 billion yuan operating revenue, 5.696 billion net profit and 3.761 billion net profit attributable to equity holders, higher 13.46%, 25.15% and 30.81% YoY respectively. GuoDa Drugstore owned 3,080 retail stores. In addition, the Group attempted to cooperate with Guahao.com to explore a new business model.

Chairman Chen Qiyu stated that, as a medical giant going global quite early, Fosun Pharma will benefit much from the present medicine market and industry policies. So, the Company will further intensify its medical operation and invest more resources in product innovation and market expansion, and purchase companies in the medical treatment areas involved to make itself a larger and stronger giant; in the favourable policy environment, the Company will accelerate its expansion in healthcare service sector by seizing any opportunity available.

In 2016, to continuously promote human health, Fosun Pharmaceutical will, under the “Innovation for Good Health” philosophy and the three strategies—endogenous growth, external expansion and integrated development, expand its purchase of excellent enterprises within the industry, constantly optimize and integrate industry resources, intensify construction of innovation system and production marketing system, actively promote the industrial globalization so as to further improve the core competitiveness and operating performance.