Fosun Pharma Reports 2018 Annual Results with Revenue of RMB 24.918 Billion, Up 34.45% Year-over-Year

On the evening of March 25, 2019, Shanghai Fosun Pharmaceutical (Group) Co., Ltd. (“Fosun Pharmaceutical”; stock codes: 600196.SH, 02196.HK), a leading healthcare industry group in China, announced its full-year results for 2018 and simultaneously released its “2018 Corporate Social Responsibility Report.”

Fosun Pharmaceutical Group’s business spans the entire pharmaceutical and healthcare industry chain, with pharmaceutical manufacturing and R&D as its core focus and medical services as a key area for development. In 2018, Fosun Pharmaceutical Group achieved operating revenue of RMB 24.918 billion, representing a year-on-year increase of 34.45%. Among these, the pharmaceutical manufacturing and R&D segment experienced rapid growth, generating business revenue of RMB 18.681 billion, an increase of 41.57% compared to 2017; the medical services segment recorded operating revenue of RMB 2.563 billion, up 22.72% from 2017; and the medical devices and medical diagnostics segment achieved operating revenue of RMB 3.639 billion, a 13.22% increase over 2017.

Annual report data show that Fosun Pharmaceutical Group achieved sales growth and strong collection of receivables, with operating cash flow maintaining a continuous upward trend. In 2018, the net cash flow from operating activities amounted to RMB 2.95 billion, representing a 14.34% increase compared to 2017.

Wu Yifang, President and CEO of Fosun Pharmaceutical, stated, “The Group is currently in a period of intensive R&D investment. At this critical juncture of transformation in the pharmaceutical industry, Fosun Pharmaceutical is firmly committed to a strategy of innovation and internationalization.”

Fosun Pharmaceutical Group regards innovative R&D as its core growth driver, continuously advancing the construction of its innovation system and refining a drug R&D framework that integrates generic and innovative drugs. In 2018, Fosun Pharmaceutical Group further increased its R&D investment in areas including monoclonal antibody-based innovative biologics, biosimilars, and small-molecule innovative drugs, while actively promoting the one-time evaluation of generic drugs.

During the reporting period, Fosun Pharmaceutical Group’s R&D investment amounted to RMB 2.507 billion (including capitalized expenditures), representing a year-on-year increase of over 63.92%. The cumulative R&D expenses for the full year totaled RMB 1.480 billion, with actual R&D expenses rising by 44.14% year on year. In 2018, the R&D expenses for Fosun Pharmaceutical Group’s pharmaceutical business reached RMB 1.255 billion, accounting for 6.7% of the pharmaceutical business’s sales revenue.

As of the end of the reporting period, Fosun Pharmaceutical Group had 215 projects under development, including new drugs, generic drugs, biosimilars, and generic drug consistency evaluation programs. These comprised: 15 small-molecule innovative drugs, 10 biologic innovative drugs, 17 biosimilars, 117 international-standard generic drugs, 54 generic drug consistency evaluation projects, and 2 traditional Chinese medicine products.

During the reporting period, Fosun Pharmaceutical Group obtained clinical trial approvals in mainland China for 9 small-molecule innovative drug products (including one improved new drug) covering 9 indications; 13 monoclonal antibody products and one combination therapy regimen completed clinical trial applications for 22 indications and obtained 27 clinical trial approvals globally. In addition, during the reporting period, 9 domestic products passed the consistency evaluation for generic drugs; Gland Pharma received marketing approval from the U.S. FDA for a total of 5 generic drug products. In February 2019, Rituximab Injection (brand name: Hanlikang®) was approved for marketing, becoming the first domestically produced biosimilar. These products will lay a solid foundation for the sustained growth of the Company’s future operating performance.

Focusing on unmet needs in the healthcare sector, Fosun Pharmaceutical has also introduced multiple advanced and cutting-edge domestic and international products and technologies through product collaborations and market rights licensing. FKC876, the first product of Fosun Kite, Fosun Pharmaceutical’s immunotherapy industrial platform, has received clinical trial approval from the National Medical Products Administration (NMPA) and initiated clinical studies. Meanwhile, Fosun Lingzhi, serving as the Group’s technological innovation incubation platform, has established a presence in several high-potential fields, including innovative drug R&D, portable medical imaging, and gene therapy.

To align with its competitive advantages, Fosun Pharmaceutical’s R&D projects have continued to focus on therapeutic areas including oncology, the cardiovascular system, the central nervous system, the hematologic system, metabolism and the digestive system, and anti-infectives, with its major products maintaining leading positions in their respective market segments. In 2018, core products in Fosun Pharmaceutical’s key therapeutic areas—such as Febuxostat Tablets (Ulitong), Pitavastatin (Bangzhi), Quetiapine Fumarate Tablets (Qiwei), the anti-tuberculosis series, Vancomycin, Enoxaparin Sodium Injection, Alfacalcidol Tablets (Liqing), and Piperacillin Sodium and Sulbactam Sodium for Injection (Qiangshuxilin)—continued to achieve rapid growth, while the construction of specialized operational teams was further strengthened. In international markets, the artemisinin-based antimalarial product portfolio has gained high recognition in Africa, with Artesunate for Injection recommended by the World Health Organization as the first-line treatment for severe malaria.

In the healthcare services sector, Fosun Pharmaceutical Group holds controlling interests in Chancheng Hospital, Hengsheng Hospital, Zhongwu Hospital, Wenzhou Geriatric Hospital, Guangji Hospital, Jimin Hospital, Zhuhai Chancheng, and Wuhan Jihe Hospital, with a combined total of 4,118 approved beds. Notably, Chancheng Hospital passed the international Joint Commission International (JCI) accreditation with high scores, becoming one of the first three private general hospitals in China to meet the sixth edition of JCI standards.

In the fields of medical devices and medical diagnostics, sales revenue from HPV diagnostic reagents and T-SPOT kits, as well as the surgical volume of the “da Vinci Surgical System” in mainland China and Hong Kong, all achieved rapid growth. Sisram Medical (Sisram) has further strengthened the expansion of its clinical treatment product portfolio while accelerating global market development with a particular focus on emerging markets.

While strengthening its product capabilities, Fosun Pharmaceutical has continued to enhance its marketing system, establishing a domestic and international marketing team of nearly 5,300 employees, including an overseas marketing force of more than 1,000 people.

In 2018, Fosun Pharmaceutical established subsidiaries in the United States and Europe to continuously cultivate and expand its international capabilities. In emerging markets such as India and Africa, Gland Pharma performed well during the reporting period, with year-on-year growth in operating revenue and net profit reaching 26.62% and 39.92%, respectively. Fosun Pharmaceutical has established a mature pharmaceutical sales network and upstream-downstream customer resources in Africa. By leveraging Tridem Pharma’s marketing resources in French-speaking African countries and regions, the company has further strengthened its competitiveness in Africa and improved its international marketing platform.

Fosun Pharmaceutical is actively advancing the internationalization of its pharmaceutical manufacturing operations. During the reporting period, four finished dosage form manufacturing facilities and three active pharmaceutical ingredient (API) manufacturing facilities of Gland Pharma passed regulatory audits/certifications in the United States, Europe, Brazil, and other regions; Guilin Nan Yao had one oral solid dosage production line, three injectable production lines, and five APIs pass the WHO Prequalification (WHO-PQ) certification inspection; and Youyou Pharmaceutical had one oral solid dosage production line certified by Health Canada and the U.S. FDA. Going forward, Fosun Pharmaceutical will continue to promote industrial upgrading in its pharmaceutical manufacturing business and further accelerate its internationalization process to increase the market share of its products in the global market.

Chen Qiyu, Chairman of Fosun Pharmaceutical, stated: “Innovation is the most critical responsibility for the sustainable development of pharmaceutical enterprises. The core competitiveness of Fosun Pharmaceutical Group is reflected in its multi-tiered product portfolio, high-efficiency R&D capabilities, highly standardized production management, high-quality service capabilities, specialized marketing expertise, international business development and integration capabilities, as well as the ability to build a globally competitive manufacturing and supply chain system with cost advantages. We will further seize policy and market opportunities, leverage our strengths, and adhere to a path of organic growth, inorganic expansion, and integrated development to achieve sustained growth and strengthening.”